Skill under-utilization in the Indian IT sector understanding “benching” & project allocation

Abstract

Information Technology (IT) companies have enabled an increase in productivity by reducing costs and time. In these types of industries, taking up and succeeding in projects becomes of utmost importance. Since software development is a human activity and the field itself is rapidly evolving (Bouras & Bendak, 2014), IT companies have to take measures to mitigate the risk of non-availability of resources. Therefore, one way they adopt to deal with the aforementioned problem is to maintain a large buffer on the “bench” (Nguyen and Chua, 2014). The meaning of “bench” is the same as what is referred to conventionally- to keep someone waiting until there is a use for them. In IT companies, this typically means that benched employees are people that don’t have any projects but are part of a reserve team and may be on the company’s payroll. However, this doesn’t come without a significant cost. According to Boby (2015), medium size Indian IT companies maintain anywhere between 5% to 6% of their total strength on the bench which alone costs them close to USD 142,347 per month. While benching is something of a norm even in this industry, over-capacity can be a major and unnecessary cost. According to an article on the Quartz, benching seems to be a largely Indian phenomenon. Indians prefer secure full-time jobs over contract positions whereas in other countries people don’t hesitate to take up short-term projects. This could be due to the fact that India is a largely “collectivistic” culture (Chadda & Deb, 2013) where social cohesion and interdependence is emphasized. In these cultures, conformity is rewarded more than standing out. However, with a rapid influx of urbanization, for which IT companies have been a major catalyst, the mindset seems to be slowly changing. During COVID, benching became even more pronounced. According to HRKatha, bench size almost increased to double digits in smaller IT companies during COVID. In large IT companies there was 1 percentage point increase in benching from 7% to 8% as per industry estimates. With cancellations and constant project deferments, managing the bench became a major liability. At present however, a new trend seems to be emerging. Many technology companies are engaging in mass layoffs in attempt to cut their bench strength. This development has left employees stranded in the dark when they are put on the bench. There also seems to be a level of dissatisfaction when they are finally allocated a project, something that strips them of their autonomy and career growth. Contemporary research on this topic has been very limited in terms of understanding benching and skill under-utilization from an employee’s point-of-view. One major reason is that most IT companies are unwilling disclose their internal processes and it is also difficult to get current and ex-employees to reveal internal details and experiences about the company. Moving forward, this paper seeks to bridge the aforementioned gap by looking at benching and skill-underutilization from an employee perspective i.e., how employees view or viewed their bench period and how that had an impact on their future course of action. The phenomenon will also be analysed from a caste, religion, political, and skill point-of-view to see if any of these factors play a role.