How big IT companies like Accenture, CSC, Capgemini, and Cognizant are sustaining? And what is their profit, revenue structure for the success?
How big IT giants are sustaining with large manpowers. Let's say the example - In a Banking IT project 1000 manpower has been employed for 3 years, Once the project is moved to live production. There is only need for 100 manpower in production support.
Will they fire their employees if the project is over, withdrawn, or gets moved to some other vendor? I would like to know how they are handling this situation.
1) All four of your examples are consulting companies, not IT companies. Yes, they provide IT services, but it's not the same thing as an actual IT shop (i.e. Microsoft, Google, or Cisco).
2) The real answer to your question lies in my first point. Being a service-based company means they are structured completely different from what your'e thinking. It'd be far too great an explanation to go through in a post like this, but the REALLY simplified version is that consulting firms are elastic in their staff, and tend to have very few "employees". In the case of Accenture and CSC, probably less than 30% of the people branded as "Accenture" are actually on the payroll.
Its all planned , before the project goes live , a planning team would have already booked those resources for another project based upon the need. Yeah but some of them may move to some other vendor if the planning team doesnt see the need of resources based upon projects in flight or in pipeline.
Bigger they grow, bigger their business development teams are. So, well before a big project ends, they start adding juniors and start drawing seniors to other projects. There is a planned transition even for a period of a year+ in such big projects.
Before give a point of view (not a real answer because the question is really open) I will give some more information about what means a project as big as you mention.
First point: The cost of a such project:
If you said that 1000 Man power are workingper year,it's approximatively 1000*220=220.000 man days per year. If the project is approximatively 660.000 man days at about 600 € per days it's a total cost of 396.000.000 €, how big it is!!!
The jobs diversity:
For that kind of project, you necessary have many différents activities to manage. Different kind of project manager (functional, planning management, cost management, QA, development, infrastrucure, ...) many differents kind of developpers (EAI, .Net, Java, SQL, ...) designers, Operations, Architects, Security ,...
So, many expertise are needed to succeed.
And finaly to reply, If thinking that consultant companies like you mentionned have many différents employees on many different field of expertise.
They are able to work with 1.000 of small to Big companies.
They share the global service market and there is work (hopefully) for everybody in IT. There force is to have a great knowledge diversification and they are able to inovate as well as to only execute.
Sorry for my English,
Large consulting firms often serve as Partners/System Integrators for large software development firms. This way, the software firms can focus on their products and the consulting firms can spend time with the customers.
Often, a consulting firm will facilitate a business transformation, which may involve several software implementation/integration/confirmation projects, some business process re-engineering, strategic management consulting and custom software development.
The consulting firms often hire contractors for remote engagements. At the end of the project, some of those contractors will become employees of the consulting firm and others will go on to continue as contractors elsewhere.
Hi Sampath, its not about a project, companies have their own way of handling such situations. For example as you said if 1000 manpower required for a project, not all 1000 are employees of the these companies, they just work through them. So once the project is over its not a big deal for them to move on only the support is provided by their employees. Also, they do have a potential of finding plenty of new projects in same technology and domain, so that they keep engaging those people in case of they being their direct employees.!!!
Your example is quite a common situation that is resolved with project management. The IT consulting firms have their own tenured PMs which, dependent on when they are engaged and at what level, will provide a roadmap to the projects deliverables, inherent risks, resources required, anticipated timelines for the completion of the project, it's resources (internal and external) as well as budgeting from start to finish. These organizations thrive because of their experience, their depth in allocating their own resources (1099's or from a bench of available employees) to a project, and ultimately bringing a more cost effective project to completion with foreseen budgeting and time to completion having been addressed in a granular fashion. Time is money, and knowing that a roadmap can be set forth to complete a project and deliver as efficiently as possible will ensure a company large enough to need these firms will not compromise it's own internal operations in completing such an endeavor. Ie. Training internal people to handle their daily roles as well as rolling out new infrastructure, software, processes, procedures, what have you. Thats why these firms are leveraged and why they are profitable in a world of consistently changing technologies.
Hi Sampath, these companies have a robust forecast mechanism where in they not only look at short term (quarterly demand) but have a midterm (1 year) and long term (5 year) demand calibration. They constantly look to improve the service & have a eye on topline influence on revenue & bottomline. Like in manufacturing JIT (just in time) concept hasn't matured in services industry so they will have to rely on both experienced professionals & small bench to cater to ever growing demand of cost reduction & quality improvement. As the industry matures there maybe lot of mergers & acquisitions in future...
There are too many questions being asked. What I understand is that your question is "How large organizations are able retain people on bench (without billable assignment) "? I suppose this question should be answered by a Peoples Manager or Top HR of organization separately. The profitability and revenue structure part should be answered by business heads.
However based on my experience in industry so far the organizations that you have listed or any medium size company for that matter, firing employees is not a policy or preferred action. This is because of the following reasons
a) The market conditions is good and most of organizations still have continuous growth. They need new and experienced people in large numbers.
b) The cost, efforts and time required to hire each employee is very high. More over their is no guarantee that you would be able to get the right talent in required numbers in time.
c) Most of the client to Services or Consulting companies would prefer those have ready manpower to support before signing the contract. For this reason most organization keep a Bench strength ready for deployment on new projects or provide replacement for existing staff leaving.
d) The large IT companies in India are Cash rich and can sustain people on bench for good period, for them this is risk they take against not having people when they have project to work.
e) The earning per employee or profitability is still high for staff working in India thanks to the ever falling value of Indian rupee. This gives them leverage to put additional people (Buffer staff) into each project and still maintain profitability.
f) With new technologies coming into market you might not always be able to find people with right skills, its better to train existing good performing employees and use their experiences. ( known devil is better than unknown )
So over all as long as you are open to learn and taken on challenges and able to be part of team you don't have to worry about jobs their is enough work around.
Of course over last 2 decade slowing the scenario is slowly shifting and can notice large competition and stagnation of growth in middle management levels. That is were people are venturing out and becoming entrepreneurs.
Wishing you the very best.
It all depends - they can fire the rest of the team or move them to other projects/assignments; in all cases, firing is not the first option, because in general allocating manpower takes careful planning.
Worked there -> by outsourcing to Eas-t-Europe (salaries similar to India, but knowledge/language proficiency similar to West-Europe)