The Relevance of Poaching in the Channel Business

Though the severity of poaching menace has certainly gone down in recent years, the IT channel business still has a relevance of the poaching challenge

Human resource is the most important element of any organization. The success and failure of any organization is largely depended on its work force. Every employer wants to employ highly skilled and qualified employees to scale up his organization. However, in an attempt to tap skilled manpower, sometimes organizations indulge in unethical talent hunt. Such practices are widely termed as ‘Poaching’. Like other industry verticals, the IT channel business is also facing the challenge of poaching. Thought the severity of poaching menace has certainly gone down in recent years, but the problem has yet to get eradicated from its roots.

Poaching V/S Headhunt

Many times poaching is mistaken with headhunt or talent hunt. There is a huge difference between poaching and head hunting. Poaching is a misdirected effort by companies to source trained employees from competitors and Industry peers. While head hunting is a more refined and structured approach for companies to scout around for employees with clearly mentioned norms of leaving or joining. It is often done through online portals or recruitment companies. Poaching is largely intended to snatch the talented manpower from the organization by offering higher remuneration, designation and incentives. It is specifically targeted with intent to pick up existing certified or experienced employee of a company. Sometimes, poaching is also a business strategy to pick up account that the poached employee is servicing. The illegal recruitment methods not only pose serious threat to small organizations, but also question the integrity of the recruitment process.

Poaching and Channel business

Poaching was very relevant during the period of 2000-2010 when IT industry was at its most prosperous phase. Today, the issue has regularized to some extend but it is still prevailing in the industry. IT channel is the industry with a lot of job jumping and channel partners feels more heat of job switching of employees. Similarly, many large companies are poaching skilled resources from IT SMEs leading to a high attrition rate.

Small organizations always have a lot of stress on their budget. Therefore, instead of hiring skilled workforce SIs and channel partners prefer to hire freshers and provide them intensive training about the domain they are engaged in. They also incurred expenditure in their certifications in order to enhance their expertise. The entire effort of training them goes waste when they get poached by the larger companies. Sometimes, employees part ways from SIs after gaining experience and join big brands who offer them higher remuneration, designation and better working conditions.

Most of the poaching is of the technical staff. The service industry has huge demand for manpower, specially trained people. Therefore, people with the requisite knowledge, skill and expertise are in huge demand. Many service-oriented companies hugely indulge in poaching as they are in constant requirement of technical staff. Due to their technical knowledge, huge companies don’t hesitate to invest in them. Besides the technical staff, even those who are in sales are poached. With increasing competition, it is becoming even more difficult to find and retain skilled resources. And after SIs invest time in training people, they move to the organized sector as the pay scales there are much higher.

 “Now a day, poaching has become a regular practice. No one wants to invest in time to train people. Similarly, today no one wants to invest time in development. Especially, a competition in SI space they want the skill and probably readymade customers. So it is becoming difficult for any SI to hide skill and do the business. Rather whole our time goes in retaining the skill for a longer duration”, says, Jiten Mehta, Director, Magnamious Systems.

Consequences of Poaching

Poaching is one issue that affects organizations of all nature and stature. But small and medium scale enterprises suffer the flames of poaching more. It causes huge disturbance in the business of small and medium scale organizations. The company that loses out on skilled manpower suffers a great deal due to this trend. The vacuum created by the exit of a talented employee becomes hard to fill. At the same time, the employer can never be sure that the replacement employee will not be poached in the future.

In a neck to neck competition, big companies, distributors, MNCs and even local competitors keep an eye on skilled employees of small organisations as they want trained professionals. Remuneration is the biggest tool which they use to lure the snatch the employees. However, in the current scenario, vice employees do consider other factors, along such as brand, working conditions, company’s policies along with the remuneration.

“Poaching can often cripple a SI and even create an environment of instability such as during project deployments. Years of efforts in training literally go down the drain and often, poaching can lead to other employees following the trend if not controlled and checked”, says Chetan Shah, Managing Director of Xpress Computers.

Will Law curb Poaching Menace?

The demand has been raised time to time to have a specific laws and regulations to stop unethical recruitments and safeguard the interest of small organizations. However, the channel partners are divided on the issue. One group of channel partners emphasises on the laws and rules to stop poaching. Whereas, other group opines that such laws and regulations will not help in barring the employees to join other firms.

Though most of the SIs are in the favour of proper rules and regulations, it seems difficult to stop poaching in current business scenario. “Law that can work is maturity within the community and work in unity and collaborate rather than poaching,” says Mehta.

“No law should prevent a human from elevating. What is needed is sensitising, of making workforce responsible to resign in a pre-determined manner and sensitising HR at the company he is to join to allow the company at least a minimum time as per terms of employment”, says Kshitij Kotak, Chief Innovator at Gre@cells BLACKBOX Data Safe.

B.Ananda Rao, CEO of Par Data Systems says that instead of having rules and regulations, employers should acknowledge the deserving employees and be ready to lose the incompetent ones.

“Do retain the deserving who are good contributors and be prepared to lose those who are either too demanding or poor contributors, since you are prone to lose them even if someone is not trying to poach them. It always helps to be cautious at the stage of hiring to ensure that he is committed to work for a defined period and he is encouraged at work place”, Rao says.

What Employees have to Say

Being a democratic country, every citizen of India has a right to choose his or her profession. Today, employees look for organizations which not only give them fast growth, but also offer attractive salary packages and incentives. MNCs are always ready to hire skilled employees with higher salaries. Similarly, poaching is a relative subject. An employee is a free human resource to select his employer, whether he approaches them or they approach him. There are few habitual employees who keep on switching their jobs, without contributing significantly anywhere, there are few who are good learners and sincere contributors who switch jobs when they feel they are not adequately rewarded and the rest switch when their demands are far beyond their deserving.

“I was working in one organisation which was in the security domain. After gaining sufficient experience, I decided to move to big company. Fortunately, I got an opportunity to work with one big security solution provider company and I just grabbed it. I do not think that I did anything wrong. As any ambitious job seeker I picked up best opportunity and moved ahead”, says a technician working with an MNC security firm on the condition of anonymity.

Many SIs believe in the growth and development of their workforce and do not believe in holding them forcibly by exercising laws. “We hire fresh engineers who have not made a cut at campus placement by IT or consulting giants after thorough tests and assessment of attitude. They can learn technology, but you can’t teach anyone attitude and character. These engineers spend 2 to 3 years with us before they are picked up by a vendor or corporate. They stay with us for a minimum of 1 year – without binding contract periods – because they love the excitement of innovation, and CV weight that working on development of cloud server operating system BLACKBOX DATA SAFE confers upon them”, says Kotak.

Role of Associations

Associations could play a very critical role not only to curb the illegal talent hunt, but to regulate the recruitment process in their respective domain. Considering the consequences of poaching and its long term effects on the organizations, many associations have set strict regulations on hiring within the community.

 “ASIRT has made specific norms to ensure ethical hiring practises and has made a big impact on our industry in this regard. ASIRT EVOLVE management series events have created the platform to sensitise members of fraternity on damages to entire industry from poaching. ASIRT member companies demand relieving letter of previous employer before candidate actually joins. In many instances, We educate partners to follow ethical norms when hiring. Also we preach good employer norms for our members. ASIRT also calls HR heads, coaches to speak on this topic. ”, says Kotak, who is also a chairman of Association of System Integrators and Retailers in Technology.

Similarly, Infotech Software Dealers Association (ISODA), focuses more on networking among its partners and business collaboration rather than poaching. “As an association, we keep spreading these messages for collaboration and networking and make sure we do not poach”, says Jiten Mehta, secretary of ISODA adding, “Ultimately, it is an individual person who has to follow this and show some maturity”.

Solution to Poaching Challenge

Poaching is a fact of business life and there is no escape from the phenomenon. However, SIs can retain their skilled manpower by implementing proper HR policies which will facilitate overall growth of the employees giving them maximum work satisfaction. The organizations have to create a learning environment and ensure that all employees are on the same page as far as a company. More importantly, employers should ensure healthy discussion where employees can put their opinions suggestions without any hesitance. Such practices create confidence among the employees about the company and also build long term employee loyalty.

“Over past few years as we have become more focused on the Cloud and Mobility, it has meant that there is so much more to learn. So an employee does not leave us unless the offer is extremely generous. This is because a learning environment is extremely stimulating and people want to learn and be part of new technologies”, says Suresh Ramani, CEO, Techgyan.

B.Ananda Rao, says that motivation and paying employees their deserving dues are two methods by which SIs could retain their skilled staff. “It is always better to encourage the deserving employee by listening to his expectations & assurances to keep contributing for the growth of the company. Unfortunately, the managements start negotiating for better perks/positions only after they submit resignations, typically in deserving cases. This could be averted, Rao says.

Chetan Shah, emphasises on performance incentives which acts as a major booster for employees and encourage them to give higher productivity. “We have a pretty healthy remuneration – coupled with added perks & incentives. Also we give a lot of importance to trainings & employee skills development. Hence employees often get incentivised when staying with company for long time”, says Shah.

Similarly, at Fortune Grecells, core employees are treated like partners in progress, like entrepreneurs who have little financial risk of failure of project, but are rewarded, respected with firm and thorough knowledge of business plans and vision.

“Fortune Grecells Private Limited pays its established talent pool 20% to 50% over and above fair remuneration as per industry norms. There are 3 components of employee remuneration, a fixed remuneration that is equivalent to industry norms, a variable pay based on profit distribution and an ex-gratia that is 20 to 50% of annual pay, for working an entire financial year, distributed after 6 months of end of financial year, typically coinciding with festival season of Dasshera to Diwali. This ensures employees want to continue at least for 18 months by which they already are counting accumulated ex-gratia of 6 months they have already served in current financial year and are tempted to stay back”, says Kotak.

In today’s business scenario, SIs are becoming more smart and professional. Many large scale SIs are on par to the corporate companies in taking care of their employees. Unlike MNCs, small enterprises do not follow the “hire and fire” policy and treat their employees in more humanitarian ways than Corporate. Small enterprises have also started offering their employees, salary packages as per the industry standards, service-based incentives with PF, ESI and other benefits like incentives. Therefore, employees have now also started looking at small enterprises with better career prospects.