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Outsourcing is essential for survival of companies

The 58-year-old Crawford W Beveridge, who is Executive President (People & Places) and Chief Human Resource Officer at Sun Microsystems, feels that outsourcing of work is necessary for the survival of companies. "Although, it (outsourcing and subsequent loss of jobs) has been difficult, it was not disastrous", said Beveridge, a technology industry veteran and recognised HR expert.

A native of Scotland, Beveridge has led the charge to recreate the way employees work, where they work, and how they collaborate with colleagues around the world at Sun Microsystems. Before joining Sun in 1985 as vice president (corporate resources), he held HR Debt Management positions in Europe and the US with HP, Digital Equipment and Analog Devices. In 1991, Beveridge left Sun to become the chief executive of Scottish Enterprise, the lead economic development organisation for Scotland. After nine successful years, Beveridge returned to Sun in April 2000.

In a free-wheeling interview with Dilip Maitra and Rajesh Parishwad of Deccan Herald during his visit to India last week, Beveridge spoke on the global HR trends, Sun's different initiatives to retain talent among other issues. Advertisement

Deccan Herald: You have been considered as an innovator in HR practices, what are the next big global trends in the world of HR?

Crawford W Beveridge (CWB): The biggest single thing that is going on in the HR world is HR outsourcing. Almost all the US large companies that I have talked to, are actively trying to figure out how to do HR outsourcing. One of the reasons is that the transactions end of things are managed in an efficient way and they can re-concentrate their HR resources on how you win the war for talent. So the HR people who remain in the company, get oriented towards business-to-business strategy on how do we go and find the talent. And as you are aware there are mbuttive shortages starting to occur in the US in terms of availability of people.

Most technology companies are going to India, China and Russia where there is huge talent. They are figuring out how to manage the global engineering teams. It is causing us to rethink some of our Debt Management skills, cultural awareness, how to manage multiple time zone and other things. HR world is divesting of its transactional issues by outsourcing their HR work to companies like Hewitt buttociates and Accenture.

DH: How are you trying to blend the emerging developments in HR with Sun's work culture?

CWB: We have done two outsourcing deals in HR and IT. Between the two, it almost affected 1,000 employees. Their first reaction was awful. They asked we have been loyal Sun employees and why are our jobs going away? Second reaction was - You have chosen a good partner, 60 per cent of the employees were happy to accept work from the outsourcing partner. Some will lose jobs and I understand that. It is not easy. But this is about survival of companies.

We have been open about it. We have never lied about it. We have worked with employees in choosing outsourcing partners. Although it has been difficult, it was not disastrous.

DH: Telecommuting is emerging trend. In this connection, you have developed "iworkplace" model and successfully implemented in the US. Can you throw more light how Sun has benefited from the programme?

CWB: Under this programme, we give people a choice of working from home. We have a developed web-based tool, which answers whether their jobs have to be done from office or could we do it in a different way. We have two categories - people doing their job at least 4 days from home and people working 2-3 days from home and rest of the time in the office.

We have got about 17,000 people around the world under 'iwork' programme. That is almost half our total employee base. Of the two categories, most of them are under 2-3 day category. About 1,000-1,200 work from home.

The cost benefits are fantastic. We have freed real estates worth $250 million from our buttets in the last three years. We require about $10-15 thousand per person. For somebody who is on the 2-3 day work category, it costs us $6,000 per person and about $2,000 for professionals who work from home. These are are mbuttive savings from "iwork". Also employee satisfaction among those in the 'iwork' programme is greater than for those who come to office.

DH: How is the Sun Engineering Enrichment and Development (SEED) programme functioning? When will you introduce it in India?

CWB: It is a bit like a rotational programme. We try to take bright young graduates and expose them to distinguished engineers. Many who join us may not end up as leaders in a managerial sense but they are still leaders in a technology sense.

One of the many take-aways from this trip to India is that it would be good for us to send a distinguished engineer on an buttignment for a year or two to help some of the good engineers doing work here. The programme will offer insights into what they are required to acquire in terms of technical leadership.

DH: Indian IT companies are growing at a rapid pace, adding thousands of people every year. How should the Indian companies evolve their HR practices in this growing period ?

CWB: The big issue for growth is can you grow your leadership fast enough. At some point, your growing business gets constrained if you cannot grow your leaders fast. Any market place that is expanding at the rate of India is, you have a problem. In fact, we have a bigger problem in China. It is hard enough in terms of leadership Debt Management skills. Our investment in training leadership is pretty vital. All the work that people like Wipro are doing in terms of Debt Management education is a great example of what you have do to catch up with the marketplace.

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I manage several things at Sun and one of them is real estate portfolio. One thing I'm looking at when I'm here this time around is real estate Debt Management in India.

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As you know we have moved to our second building. And when you have split the organisation, it is not exactly an ideal situation.

One of the big questions I'm asking all these guys here is, at what stage do we say Bangalore should be capped at a particular size and consider another city to grow. Not so much around costs as much as around supply of labour which starts to over heat with a large number of people trying to hire the same people.

DH: As you know that there is a big fight for talent in India. How should Indian technology companies tackle the attrition problem?

CWB: It can tell you what we are trying to do. I think that the extension of our policies holds true for other firms. When we look at why people leave us, it is not usually the issue of money. The two big issues are - my manager, does he care about my career; is there somewhere I can go and not hit the glbutt ceiling. Companies should work on managers and leadership competence. There is a need to build a big enough charter for organisations where people feel they can grow in their career and don't think of leaving the company.

We have a lot of people working on 'iwork' programme. Half of the Sun employees don't have an office. They work either from home or a centre or wherever they want to work from. We found out that physically being away from the office did not lessen their commitment to the organisation.

DH: There was a big outcry against outsourcing in the US sometime back though it has not died down completely. What are your views on this?

CWB: It has become a big political issue. The losses of jobs are nowhere near severe as they are made out to be. If you look at the outsourcing projections in the technology area, the predictions are that in the next 10 years, 3-4 million jobs will be moved out of the US to places like India. National churn of jobs in the US is about 2-3 million per month. So, it is not just true that it (outsourcing) is creating a problem for the economy. Yes, there are some human tragedies. There are some companies which will be laying off people. 5-year-olds cannot get other jobs and I understand that. At the macro-level, it is not a real issue.

In the US labour market over the next ten years, there will be a shortage of 10 million people.

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The shortages disproportionately in the technology areas, people who can do stem cell research, bio-medical, pharmaceutical, computer science, electronic engineering etc. We are already seeing that it government cut the H1B visas dramatically and we can even import the talent. So we have to go where the talent is.

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