Quick wins: cutting corporate waste

You know how ugly it is out there. The cost of products we buy every day is jumping. It's only been a few weeks since the Consumer Price Index made the news for days on end as TV channels and newspapers tracked its steady climb. Globally, banks are being bailed out and markets forecast doom as consumers snapped their wallets shut.

CEOs expect the economy to grow at a skimpy 1.3 percent this year, according to a survey of 110 chief executives conducted by the Business Roundtable. That's the slowest growth rate predicted by the CEO community since the post-9/11 and post-bubble year of 2002.

"Companies have to do something now," says Erik Dorr, senior IT research director at the Hackett Group, a technology management consulting firm. But "it's better to think it through than make cuts in a reactionary way." We scouted for examples from across the world and India of tactical projects that you can execute in a few months and reap rewards quickly.

You have to be smart to keep your job. One way to display your smarts is to seek and destroy all money-sucking waste at your company. Here's how:

Curb Attrition

Savings: Rs 70,000 (US$1,358) per recruit

They call it the 'honeymoon period.' But it wasn't sweet for Intelenet Global Services, whose new recruits joined the company only to leave it in the first 90 days (their training period).

For all the training and money the company invested, it got back sleepless nights. Intelenet Global Services is a business process outsourcing company, which recruits a minimum of 500 employees every month and spends between Rs 50,000 and Rs 70,000 to nurture a new hire before he or she is inducted into the business.

With a significant attrition rate during this incubation period, a lot of this money was being wasted. "If we spent in the range of Rs 50,000 to Rs 70,000 on one person and there's 20 percent attrition, you can estimate the direct monetary losses, forget about the loss of manpower for as many days in future," says Deshpande.

But in the BPO industry, attrition comes with the territory. "If we are not hiring people with the right skill set, it causes attrition. Any discomfort in the mind of a new employee can result in attrition. If a person is hired for one capability and he is put into an alien process, it's quite possible that he will leave," explains Rajendra Deshpande, CTO, Intelenet Global.

With so much being spent on a new recruit, it became crucial for the organization to keep an eye on a new recruit's lifecycle during the pre-hire and orientation phases to understand why they were leaving. Intelenet couldn't know because there was no real-time data available to gauge that.

As each department and business unit managed its own data separately, it resulted in numerous isolated excel sheets. A lack of a centralized data warehouse was beginning to worry the company and its COO, Prabhu Srinivasan, turned to Deshpande. "He looked very bugged with this issue and demanded for a single spreadsheet instead of disjointed islands of information," says Deshpande.

The company desperately needed a system to keep track of its employees' lifecycle and curb attrition. And it needed it fast. Deshpande and his team came up with the 'Incubation Tracker': an in-house system developed using .Net technology that could not only help check attrition but also lead employees to a productive stay in the company.

"The biggest risk that we faced during the execution of the project was the ability to deliver the project as per business timelines. The management wanted to deploy the solution as a top priority and had an ambitious timeline of three months to roll it out across the organization," says Deshpande. But Deshpande delivered. It was all done in three months. The internal team at Intelenet started work on the project on July'07 and the system was up by October'07.. "

But instead of calling it a tool to curb attrition, Deshpande has named it 'Retention Matrix'. The system provides insight on parameters such as right hire quality (finding the right people for specific processes depending on their experience), training yield percentage and trainer yield percentage, among others, that are crucial to control attrition and improve retention. The tool is hosted on a common domain and can be accessed by authorized users. It now gives a single window of information to the executives responsible for hiring at Intelenet. Now, the company can analyze the qualifications and readiness of a set of people to be deployed into any process.

"The manual process had a tinge of individualism, which resulted in natural flaws. We lost on standardization and were not able to see the same picture across the organization. At the end, it was a disjointed image," he says. This affected new recruits in the HR department as it took a lot more time for them to understand the process of gathering data from different locations.

But, with the centralized system they can see a single datasheet about any person. All the information now generated by the Incubation Tracker is available to the hiring executives at the click of a button. "Today, this system is designed to enable the simultaneous login of 4,000 users and can capture close to 25,000 records. And it can be scaled to include more users and locations," says Deshpande.

The project cost the company between Rs 7-8 lakh and brought in great benefits. There's a 85 percent improvement in the turnaround time for MIS requests: if, for example, a manager wanted to know the number of classes a trainee attended or missed, the system can automatically provide an answer.

"The system has resulted in increased productivity for trainers too. By entering training scores against a candidate's history, it is possible to identify issues with training batches, performance and alter training to employee requirements," says Deshpande.

These tweaks have resulted in a 10-15 percent drop in attrition and it is continuing to drop further. "The Incubation Tracker has significantly increased cost consciousness and guided our efforts to arrest attrition across sites and improve our hiring quality," says Srinivasan, COO of the company.

"There's an absolute end-to-end view for the business from the day a prospective employee registers till the time he or she is allocated to a business unit. And that information is available at the click of a button to take proactive measures to check attrition. What you don't manage, manages you," concludes Deshpande.

Move Out of the Office

Savings: 50 percent of infrastructure costs

A penny saved is a penny earned. It's an idea that Bangalore-based Consilium Software, a unified communications software and solutions provider, has embraced as their motto. With true start-up daring, the company that got off its feet in November 2007, decided to use its clean slate to break away from the Opex-heavy model other companies follow. Nothing was radical enough if it cut costs: not even telecommuting.

The work-from-home idea, however, was met with skepticism. In India, it's an approach associated with unknown companies whose back-of-auto-riskshaw advertisements egg on housewives to earn a quick buck. But Col. Arvind Saxena, group CIO at Consilium, who honed the idea in December 2007 -- a month before he signed up with the organization -- was convinced it had promise. And he's not someone given to whimsical ideas.

As the man who gave India's first-ever low-cost airlines its teeth, Saxena is comfortable with radical business ideas that are driven by IT. When he was the CIO of Air Deccan (he was part of the start-up team), he created the IT system that allowed the airline to slash the price of its tickets by 24 percent. It created a new industry and many me-too's.

But like most good managers, Consilium's bosses were apprehensive that without tight supervision, productivity among tele-workers would decline sharply. There were also fears that sucking staffers out from the office would "undermine teamwork and organizational cohesion," says Saxena.

However, the thought of saving on real estate and other expenses like security deposits, electricity and air conditioning, says Saxena, kept them from throwing the idea out.

Saxena assuaged their fears by proposing to use technology to increase communication for collaboration. He introduced the idea of daily and weekly conference call meetings to get progress reports. He also supported the idea with technology. "We have a presence-based application which tracks how many hours a telecommuter spends working online and how many hours he or she is offline. Clubbed with customer feedback, we can figure out how many productive hours a telecommuter puts in every day and how efficient their services are," says Saxena.

After much deliberation, Consilium's management realized that this compelling business proposition could reduce cost without compromising efficiency. The next question was whether everyone was eligible. They decided that the program could safely be extended to staffers whose jobs lent themselves to telecommuting, including sales, marketing and IT. Because sales and marketing, for instance, had to be available in various time zones (for clients anywhere between the US and China), working from home not only saved the company infrastructure overheads, it actually increased productivity.

"Because we commuted to office everyday, we were not available to our customers across a wide-ranging geography," says Venkat Raman, AVP Sales (APAC) and a full time telecommuter. "Sometimes, customers called us while we were in transit and wanted us to attend to an urgent need and we wouldn't be able to take their calls. But now we are available 24 hours a day."

Given the different time zones they need to service, the telecommuting model also allows for more flexibility. "Take for instance, if a task requires a salesperson to be available for a customer at a specific hour. This issue has been addressed by the tele-working model," says Raman.

With salespeople getting familiar with video conferencing, they're taking kindly to meeting their clients over the Web -- something CIOs have found hard to convince salespeople to do. Saxena says there's been a 15 percent uptick in telecommuter productivity and that teleconferencing has reduced travel by 30 percent.

But work-from-home isn't for everyone. Even among the departments that are eligible for the program, Consilium decided that only senior management -- those who were proven performers and had a high level of maturity -- was chosen.

These staffers are provided with dedicated home workstations. Each telecommuter is given a laptop, a broadband connection, a data card and a printer. Saxena says that it costs Rs 50,000 to set up a home workstation. And it costs Rs 2,000 a month to support each person, including Internet, printer and telephone bills.

Apart from this, the telecommuting initiative has also reduced Consilium's infrastructure cost substantially -- from the word go. "The company has realized a savings of around 50 percent on real estate, office overheads and travel reimbursement. And this has raised our profit margin," says Saxena. The program has also reduced the company's electricity costs by 37 percent.

Telecommuting promises business benefits in the long run, too. It creates happier customers who can now be serviced faster because they have better access to Consilium's staff. The flexible working arrangement has considerably reduced the stress from commuting. "We've reduced traveling to the office by 90 percent," says Saxena. This has resulted in happier, more in-control employees. "On an average we take on 30 to 40 percent more work every day," says Raman. "And we have also been able to strike an optimal work-life balance. This has reduced absenteeism and time off besides inducing a high level of motivation."

With that satisfaction, attrition has come down. "Our capacity to retain talent has improved. In the past nine months, there has been no case of attrition among the telecommuters," says Saxena.

Saxena believes that a telecommuting option is the second best recruitment inducement after salary. From experience, he says, it is an appealing option for many potential employees. "I have been flooded with applications. This has made recruitment simpler and more cost-effective," says Saxena.

And, as a start-up working in a business landscape characterized by aggressive competition and shrinking margins, every additional benefit helps. But start-up or not, there are lessons here for everyone.

Consolidate Cell Phone Services

Savings: 30 percent of monthly charges

BlackBerry, iPhone, cell phone, pager -- personal devices of every sort were rampant at Title Resource Group, a real estate closing company that's part of the US$6 billion (about Rs 24,000 crore) Realogy, which owns Century 21, Coldwell Banker and other franchises.

This time last year, Title Resource employees could use any cell phone they wanted for work, even personal devices that they, not the company, owned. Corporate calling plans for managers, sales reps and other employees allowed for a few hundred minutes per month.

Some employees used a personal plan, even on a company-owned device. Other employees submitted cell phone charges on monthly expense reports, says Nehal Trivedi, CIO at Title Resource.

As a result, the company didn't know exactly how much money it was spending on cell phone bills. But Trivedi had the feeling it was too much.

1 2 Page 1
Page 1 of 2
The 10 most powerful companies in enterprise networking 2022