There is an old rule in the IT world- you should utilize 85%-90% of the workforce and the rest should be on bench to show strength for obtaining new projects and used as backups.
Is the 85% workforce resource utilization rule valid?
The biggest and the most important resource in the IT industry is the workforce of the company. Like the other industries try to maximize profit by increasing their operating profit, similarly by increasing the utilization of the workforce, the IT industry does the same. In IT, 85% utilization of manpower is considered to be the bench mark that companies try to achieve. However are these really acceptable or realistic? Companies need to look into some of the common problems of Resource management.
Resource management also known as people planning or utilization-but in essence it is a solution for planning, managing and deploying the right people skills at the right time on the right projects.
Some of the issues with RM are
- Billable work vs the Actual work of an employee- just because a resource is busy does not mean that the resource is doing billable work. There are processes which are not billable yet take a lot of time thus decreasing the billable hours.
- Switching between applications/technology- It is assumed that by cross training the resources on multiple applications/technology will reduce the dependency on a particular resource and increase utilization. However true, it is not always possible and easy, since it varies from project/application/technology. In addition do not expect a .NET guy to excel in Java frameworks, because a person can only do so much at one time. This hampers the learning and prevents the employee from mastering a particular technology. This mastery comes handy when you end up with a serious production issue or are stuck in the middle of an important project with the deadline looming on your head.
- Ramp up delays : Just because you have 10–15% of the workforce on bench does not mean that they will be trained in the same technology. Your requirement may be for WebMethods and you may end up having people with AS400 skill set or Java skill set. You cannot expect these people to become well trained in Webmethods in just a few weeks. It will take time, and this affects the way you can reach out in the market for opportunities
4. Estimation- Project estimates at times are still done using guess estimates This affects the utilization of the employee as either the resources are over utilized or under utilized. This prevents the optimal resouce utilization as in case of under estimation, the resouces are over utilized and in case of over estimation, the resources are under utilized.
5. Impact on sales- Even though industry has 10–15% on bench, the sales team hardly has sufficient information on all the available skill set. If this could be redefined, then it would help the sales team and the project managers to get a better understanding on impact resources and a better time line can be obtained for lining up the correct resources.
6. Freeloaders- Having too many people on bench is not the solution as they will not be assets, but will be an added expense.
The points above show the issues with resource management. You cannot have less people on bench as it affects your ability to market the skills of your company, at the same time having to many people on bench will affect your profitability.
