Click to play videoNew Delhi: For IT companies time is money. A 30-minute increase in working hours could net them a 2 per hcent hike in profitability.
For the software professionals at HCL Technologies the day has just gotten longer. The company has increased the daily working hours for employees by half an hour - a move tat will have a direct impact on the company's profitability.
That's because 70 per cent of HCL's business is based on time and material billing. In other words the pricing is linked to man hours. And so 30 minutes more will result in nine billable hours as against the earlier eight and half hours. Brokerage house CLSA estimates that even if half of HCL's clients accept the higher per day billing the company will realise a price hike of more than 2 per cent and that will improve margins by about 140 bps.
HCL Tech President Vineet Nayar says, “We would be able to provide shorter time frame of development cycles which is important. Customer satisfaction is a gain. Using this and providing more flexibility to employees a gain and in the end obviously the company gains by the profitability increase."
HCL Tech isn't the first tech company to extend employee hours. In fact Wipro did so in 2005. Almost all the big boys in the IT space now have nine-hour days. Interestingly putting in more hours this quarter makes added sense simply because this quarter has two extra holidays, which directly impacts profitability by up to 3 per cent.
"This quarter there is an impact on the holidays. But as we move forward I think there will be lesser and lesser impact because of things like holidays, " Nayar adds.
So will employees buy the managements argument? Managers seem to think so. HCL will give employees the flexibility to decide on how they log nine hours in a 14-hour cycle.
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