Talent Neuron Weekly Update: May-14th – 2012

May 14th, 2012

Introduction:

Talent Neuron, our global locations and talent product is gaining momentum with every passing week.  We reached a very critical milestone this week.  In our journey thus far, we have only analyzed external talent pool, compensation trends and other data as it relates to ecosystem trends.  Now our Talent Neuron has revolutionary capabilities to analyze client specific employees’ data.  In Talent Neuron, this module is called Workforce Planning (WFP).

Our clients will be able to view their internal employee talent footprint and analyze it in ways that have not been possible before.  Our clients can conduct dashboard simulations about critical parameters such as compensation growth, diversity trends, and tenure trends in addition to understanding the market trends in those locations side by side.  This ability to analyze both client data and benchmark it with external data will provide our clients with deep insights.  Please reach out to your respective account managers if you are interested in functionalizing this module.  We will be showcasing this module in our June quarterly event in Santa Clara, CA.

Here is a summary of updates for the week ending May 14th-2012.  Please login to our tool to take advantage of the new capabilities, features and refreshed data (www.talentneuron.com).

Quarterly Event:

Location: Hilton Santa Clara, Santa Clara, CA

Date:        June-14th, 2012 (9:00 AM to 11:00 AM)

Agenda

  • Keynote by Zinnov client on innovative talent acquisition frameworks
  • Panel Discussion: Talent Retention Challenges in high technology industry
  • Highlights of new features in Talent Neuron TM
  • Lunch

Attendees will get a copy of emerging tier2 cities in China and India report, for more information & registration please click here

New Features:

We have implemented the following new features in the tool.

  • Detailed footnotes and popup help section for all the pages.  Our clients have been requesting for this feature so that they can better explain the research process internally in their organizations.

Monitor:

Our Monitor feature serves as a powerful ground level data gathering mechanism across different parameters such as Captives, Vendors, Cost, Risk, Talent and Vendor.  We have deployed a large team of professionals and implemented an advanced web crawling mechanism to bring our clients the most relevant information from various cities.  We have updated the monitor information for the following cities this week:

  • San Jose- Costa Rica
  • Krakow
  • Brussels
  • St. Petersburg

Content:

New Articles:  We have added the following articles:

  • Summary analysis:  Evolution of Tier2 locations in China
  • Detailed Location Analysis of Xi’an (Emerging Tier 2 location in China)
  • Emerging China Tier2 cities:  Analysis of Suzhou and Chengdu

Tier2 cities report includes analysis of trends in these cities for technology companies, details on installed talent pool, fresh talent, cost and other qualitative factors around why Tier2 locations in China are getting popular.

Fresh Talent:

We have added the fresh talent pool for the following cities.

  • Beijing
  • Bucharest
  • Kiev
  • Metro Manila
  • Casablanca

Additional Features and Content (Work in Progress from Talent Neuron Lab):

  • Detailed WFP Reporter:  This will provide unprecedented ability to analyze client workforce characteristics.  More details to follow.
  • We are working on publishing new videos and articles in our content module

Did you know?

Our Scenarios – Universities section provides the most comprehensive information about fresh talent pool. This section has information around number of graduates by discipline (Engineering, Science, and Business), by university and also provides details of the companies that have research partnerships with various universities.  Please check this feature by logging into Talent Neuron.

Thank you for the opportunity to serve you. Please login to our tool to take advantage of the new capabilities, features and refreshed data. www.talentneuron.com

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Talent Neuron Weekly Update: May-07th-2012

May 7th, 2012

Introduction:

Talent Neuron, our global locations and talent product is gaining momentum with every passing week.  Our data collection and generation is growing at a rapid pace and new features are getting implemented on a weekly basis.  We have profiled and validated an installed talent pool size of over 7.3 million professionals through a systemic research process across several domains. In addition, our platform has studied over 4.5 million virtual talent professionals.  Our talent diversity research was quoted by Gigaom (one of the most credible and insightful voice in the technology industry) this week. (http://gigaom.com/collaboration/women-dominate-offline-independent-work-too/)

Here is a summary of updates for the week ending May 4th-2012.  Please login to our tool to take advantage of the new capabilities, features and refreshed data (www.talentneuron.com).

Quarterly Event:

Location: Hilton Santa Clara, Santa Clara, CA

Date:        June-14th, 2012 (9:00 AM to 11:00 AM)

Agenda

  • Keynote by Zinnov client on innovative talent acquisition frameworks
  • Panel Discussion: Talent Retention Challenges in high technology industry
  • Highlights of new features in Talent Neuron TM
  • Lunch

Attendees will get a copy of emerging tier2 cities in China and India report

New Features:

We have implemented the following new features in the Visual Intelligence section of the tool. We will be scaling this capability across other areas in the tool.

  • Ability to download data into MS Excel ™.
  • Ability to print screen charts (Users can use this feature to print to PDF)

Monitor:

Our Monitor feature serves as a powerful ground level data gathering mechanism across different parameters such as Captives, Vendors, Cost, Risk, Talent and Vendor.  We have deployed a large team of professionals and implemented an advanced web crawling mechanism to bring our clients the most relevant information from various cities.  We have updated the monitor information for the following cities:

  • Singapore
  • Bratislava
  • Metro Manila
  • Cambridge
  • Helsinki

Content:

New Articles:  We have added the following articles:

  • Multi Location Strategy in India – Why or Why not?
  • Emerging Tier2 Cities in India
  • Bangalore Talent and Ecosystem Landscape – Zinnov developed this report for a federal agency in India
  • Impact of ageing population in China

New Videos: We have added the following videos:

  • Globalization Leverage Ratio in Technology Industry
  • Emergence of Tier 2 cities in China
  • Gender diversity in the technology industry in China
  • Talent & suitability characteristics of Chengdu, Suzhou and Xi’an
  • Productivity assessment framework

Fresh Talent:

We have added the fresh talent pool for the following cities.

  • San Jose
  • Casablanca
  • Shanghai

Service Providers Center of Excellence (SPCoE) Pilot:

Talent Neuron will soon have the ability to analyze the service provider capabilities including talent at skill level, billing rate ranges, key clients, industry vertical expertise etc. Please contact us if you would like us to implement this module for you.  Our SPCoE helps Business, Engineering, Shared Services, IT and Procurement leaders have a deeper understanding of existing and potential services providers.

Additional Features and Content (Work in Progress from Talent Neuron Lab):

  • Detailed foot notes and legends will be added in Talent Neuron to explain the methodology behind the research including the details of our research process
  • We are working on publishing new videos and articles in our content module

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Results from Organization Pyramid Structure Survey

March 14th, 2012

Detailed Transcript:
In the past few years, we have been researching on the key parameters that impact the productivity in a product company. Based on multiple surveys on cost of deliveries, innovation, quality, time to market etc., we found that the experience level of the resources has a significant impact on the productivity of the team or the organizations.
As domain expertise and comprehensive skills play a critical role in generating the value for the product companies, experience becomes an easily measurable factor. Organizations that employ experienced resources have a significant advantage.

Last quarter, we studied 125 large and medium organizations that have operations in US, Western Europe, China and/or India to understand their employee experience pyramid. We collected the data through surveys, LinkedIn profiles and job postings. Our analysis showed that in typical product organizations in US have top heavy pyramids. Most employees in their US center have over 6 years of experience in the industry.

Another interesting factor was, more than 28% of their employees have over 15 years of industry experience. This segment is critical as most successful architects, product managers, principal engineers tend to have over 12 years of industry experience.

Similar analysis on the centers in India and China reveal a contrasting landscape where vast majority of the resources are in the bottom of the pyramid from the experience perspective. For example, in India, over 81% of the resources have less than 6 years of industry experience. This has a significant impact on the productivity of the team or a center as these resources in many cases have limited or no domain knowledge. Resources with limited experience also require significant amount of mentoring and management oversight which increases the cost and timelines to deliver.
Also, there is a severe supply crunch at the senior technical talent levels. In most cities, less than 5% of the talent has over 10 years of industry experience. Also, most of the talent at this level tends to be expats. This makes the acquisition process extremely difficult for companies looking for experienced architects, principal engineers, product owners and other senior roles.

The findings from the analysis are not surprising as most emerging centers across China, India, Eastern Europe and Latin America have evolved in the past decade. However, companies planning to deliver high end product development activities from their centers’ in the emerging countries should evaluate these ground level realities and develop the suitable plans.
Companies rushing to provide complete ownership to their global centers should understand that the availability of senior talent is limited and there is a huge completion to attract this mid and senior technical talent.

For more information on this report or other global talent, cost and peer group benchmarking details, visit www.zinnov.com.

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THE EMERGENCE OF TIER 2 CITIES IN THE US

March 14th, 2012

Detailed Transcript:
In the past few years, we have seen the emergence of new Tier 2 and Tier 3 cities in US as suitable locations of choice for technology companies.

In our client engagements and research surveys, we observed a critical need for the companies to optimize their operations, specially related to talent and cost. The existing talent crunch in the traditional technology hubs has made this problem more acute. Companies are scrambling to identify locations across the globe for growth and optimizing their operations.

Companies that cannot move their operations outside the United States are evaluating Tier 2 and Tier 3 cities in US to address these issues. We analyzed the talent availability, cost of operations, peer group footprint, education eco-system, market opportunities, local government support etc. to understand the suitable locations.

One of the key elements of our evaluation is the “Cost of operations”. In a typical technology environment, specially the non-manufacturing and other high capital intensive activities, Salaries of the employees is the most significant portion of the total cost. Employee salaries constitute between 60-75% of the total cost of the operations.

We further evaluated the significant differences in salaries across these cities to understand the influencers. Though supply demand, talent maturity, taxes etc. are important, Cost of Living plays a critical role in determining the salaries of the employees in the city.

We at Zinnov, have spent a lot of time to evaluate the emerging cities across US. We evaluated over 200 cities in US to short list 51 cities that had the relevant talent eco-system to address technology industry’s needs. We further shortlisted 18 cities based on the maturity of these locations.

For this analysis, we segmented them cities into 3 major clusters and compared them to the traditional talent hubs such as San Francisco Bay Area, Boston region etc. The clusters were based on the cost of living indices, provided from the publicly available government data sources.

We analyzed that there is a 40% difference in the median most of living between the low cost cluster cities and that of the traditional high cost technology hubs. Cities such as Huntsville, Wichita, Pittsburg have significantly low cost of living.

We further analyzed the key components that influence cost of living for the technology talent demography. We found that “Cost of Housing” is a critical component for this segment of the population. The data from the public sources including government and real-estate sources point to a 80% difference in the median home prices between these high and low cost clusters.
To provide a quick view into the suitability of these cities across key parameters, we evaluated these cities across Labor cost, cost of living and suitability. Suitability here encapsulates the maturity of the technology eco-system, availability of installed talent, fresh talent from the local universities, propensity to attract talent from outside the region etc.

Based on these parameters we found that there are cities across the spectrum providing a variety of choices companies to expand their operations, start new corporations or relocate.

For more information on this report or other global talent, cost and peer group benchmarking details, visit www.zinnov.com.

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EMERGENCE OF NEW TECHNOLOGY HUBS ACROSS THE GLOBE

March 14th, 2012

Detailed Transcript:
Developed countries such as United States, France, Germany, England, Japan, Korea and Israel have been the key players in the technology industry since its beginning. Regions such as Silicon Valley, Boston, Munich, Cambridge, Stockholm, Tel Aviv, Tokyo, Seoul etc. were in the forefront of the evolution of the tech sector. The government research programs, university industry partnerships, required infrastructure investments, entrepreneurial eco-system and access to venture capital and abundance of talent made these cities undisputable locations of choice for technology companies.

Many of the successful companies in the technology sector were started in these cities or very soon expanded into these cities to leverage the eco-system built by the industry. Companies, in many cases, had no option but to grow in the cities as the most critical element of their success, Talent, was available only in these regions. Countries and regions aspired to replicate the magic of these cities to attract the next generation job growth engines.

In many cases, technology segment reshaped these regions. Since 1960s, Talent across the globe migrated to these cities to be part of this new technology revolution.
Over the period of time, companies in these cities defined their characteristics. Silicon Valley came to be the capitol of the technology sector across segments; Seattle became a hub for software, Tokyo and Seoul for consumer electronics, San Diego for mobile, Tel Aviv for security etc.

These cities remained the undisputed kings till the end of the millennium.
However, post 2000 saw an emergence of new global hotspots. Companies faced with high cost of operations, lack of talent began scouting for locations across the globe and found emerging countries as well as Tier 2 cities in US to be suitable locations for expansion and in some cases relocation. Maturity of the industry, emergence of new markets, availability of infrastructure for remote teams set all ensured that concentration of talent is no longer a requirement.

Countries such as India, Eastern Europe which played a role in addressing the technology issues in the IT industry proved that quality talent at an optimal cost is available in these emerging cities. In US too, companies saw new opportunities in Tier 2 cities such as Austin, Phoenix, Boulder where the cost of living is significantly lower than the traditional technology hubs.

Local governments of these emerging cities capitalize of the industry’s requirements and started to promote these regions aggressively. Tax incentives, infrastructure investment, commitments for talent growth etc. helped ease the concerns of the corporations. Successes of the early adopters in these emerging cities gave the much needed boost for the players looking for growth to aggressively expand into these regions.

Today we see an emergence of new wave of cities across Brazil, China, India, South East Asia, Central & Eastern Europe. Many cities such as Beijing, Bangalore, Moscow, Sao Paolo, Shanghai, Manila have become tech hubs on their own, competing with established regions. Many of these cities grew at an exponential rate in the past decade. Bangalore today has over 100,000 employees just in the product industry alone. In addition, there are another 500,000 are employed in the IT, BPO, Support and other technology related areas making it the largest employer of hi-tech resources in the world.
For more information on this report or other global talent, cost and peer group benchmarking details, visit www.zinnov.com.

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Deputed Employees Management

March 14th, 2012

Detailed Transcript:
In the current business environment, the search for quality talent and cost arbitrage has forced many corporations to setup their operations beyond their geographical boundaries. While some companies setup their own centers others have outsourced their operations to 3rd party providers who deliver services from emerging countries.

Many of these operations or delivery centers have grown considerably, where, in many cases, they host a large number of the delivery personnel. While these centers predominantly deliver the operations from remote locations, there are instances where the employees of these delivery centers have to visit the onsite locations. Sourcing talent in this way helps companies to meet critical business requirements.

These visits could be to work with the end clients, integrate complex applications, design a new product, review the requirements, support a recent implementation etc. Depending on the nature of the work, the duration of these visits vary from few days to few years. These visiting resources are often referred as Deputed Workforce.

Majority of the companies have a dedicated management team in place to organize and streamline the deputation function and usually, the team functions as part of the People Mobility Management Group. Talent from HR, Finance, Immigration and Business form the crux of this team. This team comes into action post resource identification.
The objectives of Deputation Management Team is to reduce exposure to risks, streamline processes and put better systems and structures in place to deal with inefficiencies in deputation management.

Based on our interviews with multiple large IT services companies and captive centers, we tried to understand the key roles and responsibilities of this group and their value to the deputed workforce. Human Resources Operations and Immigration form the major component of this Deputation Management Group. 50% of the group’s efforts are spent on these 2 activities.

Compensation & Benefits, Resource Management, Learning, Finance and HR system management are other significant roles of this group.
The size of Deputation Management Team is based on the frequency and volume of employees deputed on an annual basis. Large companies which handle between 10,000 — 15,000 deputations a year on an average has a team of 85 employees in this Deputation Management Team. The size of the team also changes based on the amount of automation of their Human Resources systems and processes.

Even small & mid-sized companies which oversee less than 5,000 deputations a year have a team of 20 employees in this team.

Workforce deputation enables business in meeting critical requirements in a globally competitive business landscape. However, inefficiencies in deputation management process can expose businesses to various risks. An awareness of the challenges involved and the best practices to address them can ensure that the process is structured, consistent and error free.
For more information on this report or other global talent, cost and peer group benchmarking details, visit www.zinnov.com.

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THE RISE OF CHINA TECHNOLOGY CENTERS

March 14th, 2012

Detailed Transcript:
China is gaining a significant prominence in the technology industry. The rapid growth of their markets, large talent pool, access to capital, pro-active government policies, huge infrastructure investments etc., have made China an attractive destination for technology companies to set up their operations in that country.

We at Zinnov have been following the technology captive centers in China for almost a decade. We looked at the growth of the MNC, Multi National Corporations’ technology eco-system with significant interest.

In our research, we found that the captive center landscape has gone through a dramatic shift in the past decade. From having less than 200 product captive centers, China has become home for over 1,300 centers. Since 2003, China has been attracting on an average of 100 new centers a year. This is sharp contrast to India, where the new companies setting up captive operations have slowed down significantly to 25 – 30 companies a year.
In our analysis, we also found that 400 of the top 500 Fortune companies have R&D operations in China. Reputed companies such as Microsoft, Cisco, EMC, IBM, Intel have multiple centers in China.
At Zinnov, we also closely follow the top 1,000 R&D spenders across the globe to understand their globalization pattern. This provides un-parallel intelligence on the trends in the investment patters in the emerging countries, maturity of the local technology eco-system, current investments that could fuel future opportunities for the industry etc.

In our recent analysis on these top 1,000 R&D spending companies; we observed an increase in the net new companies setting up R&D operations in China. Currently 342 of the top 1,000 R&D companies have a captive operations in China.

Many of these companies have a “in China for China” strategy, where their China operations predominantly focus on penetrating or serving the local market.

Given the size of the local market, market growth opportunities, availability of quality resources, cost arbitrage and the government incentives to attract the R&D companies, companies should evaluate the compelling case for setting up a R&D captive center in China.

For more information on this report or other global talent, cost and peer group benchmarking details, visit www.zinnov.com.

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KEY DRIVERS OF GLOBALIZATION

March 14th, 2012

Detailed Transcript:
Semiconductor industry is a pioneer in globalization. Since its inception in 1960s, this industry had a global outlook for operations and markets. Though the manufacturing was the initial activity in this industry to be globalized, in the past few years, we have seen an increased activity in their R&D and engineering activities globalization.

Large and small companies have global operations to grow in this highly competitive industry. We are Zinnov have been closely following these trends for the past 8+ years. Periodically we undertake the surveys to understand the key drivers for globalization. In late 2011, we undertook an exercise to understand the globalization drivers and compared the results with a similar survey from 2009.

We observed that though the importance of cost for global operations has slipped by few points, it is still the domain driver for globalization. 60% of the surveyed companies mentioned it to be the most important driver for globalization, especially for offshoring to an emerging country. All 100% of the surveyed companies rated cost as a key driver, if not most important one, for their global operations.

Access to talent has been rated as the 2nd most important driver for these companies. The existing talent crunch in the developed countries, competition across technology segment for this high end talent is also driving these companies to scout for locations with availability of talent. We have observed that the importance of this driver has remained statistically the same across the past 2 years.

Access to market has been stated as a critical factor in determining the optimal location in the merging countries. This has gained more prominence in the industry as most companies have seen their international markets grow at a significantly higher rate compared to their domestic markets.

Though it is still consider nice to have, Innovation from global locations is gaining traction as companies evaluate their global operations. Some of the companies have mentioned that they will fail as a company if their resources in these emerging locations do not participate in the innovation activities. For some companies with 30-70% of their talent outside their HQ countries, this is a critical factor.
Though the global sourcing of R&D and engineering activities began in the 1990s, it gained full steam after 2000. Our analysis of the top 10 players in the semiconductor segment shows that these companies have setup large number of centers in the new emerging cities such as Bangalore, Beijing, Shanghai, Taipei etc.

Further evaluation of the data across the cities shows that, Bangalore, India has been the biggest beneficiary of this trend. Bangalore, which had only one of this top 10 semiconductor companies till 1995 has become host to 90% of the top 10 companies. Bangalore center for these companies have between few hundreds to few thousands of employees working in their engineering and R&D activities.

Major cities in China, South Korea and Taiwan have also seen their share of success in attracting and growing the engineering centers for the leading companies in this segment. Availability of high end talent has also prompted these companies to set up new operations in high cost locations such as United Kingdom, France, Israel and Singapore.

Outside the top 10 companies, we have observed similar trends in the semiconductor industry. Many small and mid-size companies have followed these industry titans in chasing the talent or in optimizing their cost of operations.

We believe that the globalization has just started in many of these companies and the trend to grow into global locations for talent, market, cost or innovation will be the norm rather than an short term trend.
For more information on this report or other global talent, cost and peer group benchmarking details, visit www.zinnov.com.

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Professional Services – Global Trends

March 12th, 2012

Professional Services consist of custom services for deploying and seamlessly integrating a product into customer environment. Within services, Professional Services is a high growth, high margin opportunity for product companies owing to its high impact potential. Product companies have set up Global Delivery Centers and started to leverage cost and operational efficiencies. Global distributed delivery centers have evolved from a cost arbitrage focus to value delivery focus over time.

Further to read & download the article, click here: http://zinnov.com/pdfFiles/1331537797full_Professional_Services_Future_Trends.pdf

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Opinion Mining – Talent Shortage Effects in Technology Industry

February 29th, 2012

In the past two quarters, Zinnov has collected and mined large number of tweets that referred to technology talent. Our statistical analysis of these tweets resulted in the following finding.

Finding and Recruiting the right talent is emerging as a key challenge for enterprises. This holds true not just for US/Europe but also for other global geographies. From various twitter conversations, it has been evident that finding local talent across all markets is a challenge.

Further, this article highlights consequences of such observations by providing an economic scenario. To download the article, click here http://zinnov.com/pdfFiles/1330507340orv_Opinion_Mining.pdf

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