Utilization figure facts?
By Techgirl

Every IT and BPO company tries to track what its employees do while at work. An employees performance is pegged against the Key Performance Indicators worked out by the tech firm. In theory, this is how our IT-ITES firms measure an employee’s work against what is expected from her.

Calculating employee utilization is also a grey area.  CIOL has just published an article titled ‘Is industry utilizing employees? Or exploiting?’ where it describes employee utilization as "a method that attempts to maximize the efficiency of a company's employees".

This CIOL report gave the employee utilization rates of the different Indian tech firms, and showed that by extending working hours this utilization rate had increased by as much as five percent

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During the recent quarterly announcement, Wipro reported an increase in the utilization to 73.2 per cent in Q3 FY 09. HCL reported its employee utilization level moving up to 76.4 per cent in Q3 and that of Infosys came around 68.8 per cent in Q3. TCS reported the highest utilization rate of 81.1 per cent (excluding trainees) and 77.2 cent (including trainees).

Some of the IT companies reported to have increased their work timings from fifteen minutes to half an hour are TCS, HCL and Accenture.

When contacted these IT companies refused to respond, while others like Wipro and Infosys refrained from making comments saying that these timings had been around since long time.
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In my view, one of the reasons that many Indian firms did not respond to CIOL was that no one is really sure how accurate their utilization rates are.  It is as much an art as a science.

Since I started reporting on the Indian tech industry, I have realized that there are no standard and even credible methodologies to work out many such figures.  Each company seems to have its own way of working out ‘employee utilization’ figures.

In 2010, Glassdoor which gets anonymous feedback from tech employees, published the views of an IBM India Project Manager based in Kolkata. While this IBM employee praised the company for brand name and enough projects, he described how it had a utilization target of 98 percent.

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This is not a company for performers. Career movement in IBM India is tagged to people management chain - which may not be one's project chain. This creates preferential evaluation of an employee as People Manager always prefer reportees of his own project. IBM is also removing all facilities that they used to provide couple of years back - like medical insurance premium. IBM has established lot of processes - but most of them have big gaps into it. It has a utilization target of 98% - which you can't achieve. The same is used as an explanation weapon to prove your bad yearly rating. Computation logic for utilization calculation is also weird. It considers mandatory holidays (like Independence Day, May Day, Gandhi Jayanti) as WORKING day while calculating one's utilization.

(Courtesy Glassdoor.com)
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How can TCS and Wipro match IBM India if they have such lower utilization rates?  Well, it seems that utilization rates as calculated in India may not have any real bearing to productivity and profits.

Even though Cognizant is listed as an American firm, it is for all practical purposes an Indian tech major.  And Cognizant has given the other tech majors a run for their money since it started operations.  Cognizant told Businessweek in 2007 that is utilization rate was 61 percent which was to be increased to 63 percent.  Despite a much lower utilization rate, Cognizant has successfully competed with other majors like TCS, Infosys and Wipro.

There are lies, damned lies and statistics.  Also, employee utilization rates.

Techgoss note:  Techgirl is a senior Tech journalist who reports on the IT, KPO and KPO Sectors for a leading media house.  In her spare time, she dabbles in satire in her blog
http://techgirltalk.blogspot.com