MNCs to tighten HR policies for R&D

KOLKATA: Stung by operating cost escalation for their captive R&D centres in India, MNCs plan to restructure their human resource functions and policies. This includes measures to improve productivity of engineers, hire more junior talent, adopt stringent performance appraisal and reduce travel of executives, a recent study pointed out. The measures have been triggered after cost of Indian research units rose more than 10% over the last one year, the study notes.

The main reason for this has been attributed to salary escalation, dollar appreciation and travel-related costs. The study was conducted by Bangalore-based research & consultancy firm Zinnov. The study pointed out payroll cost contributes the highest to the total cost of research operations in a majority of the companies (around 55-80%).

This was followed by the facility cost (15-25%), travel cost (2-12%), and communication cost (2-12%). ���To reduce facility costs, companies are planning to sub-lease their vacant space and taking up space outside central business districts,��� Zinnov CEO Pari Natarajan told ET.

Around 88% of the companies said they intend to improve productivity of existing teams and 63% asserted they will hire more of junior executives. A modest 38% of the firms also intend to introduce stringent performance appraisals with an aim to reduce salary escalation.

The average annual cost per employee (which includes payroll, infrastructure, communications and travel among others) for large captive centres in India range between $42,000 to $64,000. ���For companies who have set up research facilities in India for cost saving, the rise in operating cost has become a cause of concern. As a result, there is a focus on fresher since the salary of a fresh graduate is 50-60% less than someone with three years experience,��� said Mr Natarajan.

Little wonder then that there is some stability in the talent market with nearly 67% of companies out of the total R&D captive base in India seeing a fall in the attrition rate over the last six months. ���The focus on reducing talent cost and fresher has led to this trend which is an encouraging sign,��� Mr Natarajan added.