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    HR for SME's - Husys Consulting
    Article Published in ET - Emerging India - 10th December 2007Refer Gundlapally Ramalinga Reddy (Commonly known as GR)A VERY PERSONNEL TOUCH If you can't afford an HR department for your smallbusiness, help is at hand. A new breed of HR firmswill set up one and run it for you Vikas Kumar THESE da [...]


    Article Published in ET - Emerging India - 10th December 2007
    Refer Gundlapally Ramalinga Reddy (Commonly known as GR)


    A VERY PERSONNEL
    TOUCH



    If you can't afford an HR department for your small
    business, help is at hand. A new breed of HR firms
    will set up one and run it for you


    Vikas Kumar




    THESE days, 37-year-old Gundlapally Ramalinga Reddy
    is a man on a mission. He has developed a HR services
    model, which he hopes will unleash a revolution of
    sorts in the world of small businesses. He's got a
    fancy name for it—Human Resources Function Outsourcing
    (HRFO), and yes, he's even patented it. If you are a
    small business owner who can't afford an HR
    department, Reddy's firm, Husys, will build it and run
    it for you—end-to-end.
    Here's how it works. Husys assigns an HR manager
    who will always be on location at the client's office,
    and works closely with the promoter/CEO on creating
    basic HR systems, and then gradually building a
    complete HR department offering services such as
    organisational objectives design, role definition,
    setting internal policies and employee frameworks,
    performance management systems, training, and employee
    counselling.
    Reddy's company is joined by many other Indian HR
    services firms that have taken the conventional HR
    outsourcing model forward, and applied it to companies
    that seem to need it the most—small businesses.
    Padma Kiran Rao, 41, who founded Tvarita Consulting
    in 2004, sensed this opportunity after a long career
    working with large corporates like Deloitte, ilabs and
    Cognizant. According to Rao, small companies face a
    classic chicken-or-egg situation when it comes to HR.
    Since they cannot attract senior HR talent, they have
    to settle for less-experienced professionals who are
    at best able to provide administrative support. "They
    don't have the objectivity and stature to tell a CEO
    the right thing," she says. And because of weak HR
    practices, these companies in turn find it tough to
    attract talent. Ergo, small HR firms, which guide them
    on such people management issues, are just what the
    doctor ordered.
    What makes this new breed of HR services firms
    successful is that they understand the needs of small
    businesses—from the economics to the approach taken,
    the game here is very different. First, keeping costs
    down is key. So if the thumb rule is one HR resource
    for every 150-180 employees in a large company, Husys
    for instance, works on a 1:300 ratio. "With what we
    charge for one module from a large organisation, we
    manage for a year in a small business," says Reddy.
    Billing rates could range from Rs 25-30,000 a month to
    50-60,000 a month depending on the size and
    requirements of the company.
    The operational models also vary in their approach.
    Some like Tvarita deploy their senior team to do most
    of the strategic work, and less experienced colleagues
    to assist them in operations. Arjun Shekhar, 42, who
    founded Vyaktitva, a Delhi-based HR consulting firm,
    works on a similar philosophy. "We come from a
    perspective of not just HR but business," he says.
    Agrees Pranav Kapuria, one of Shekhar's clients, who's
    also the deputy MD of Delhi-based auto components
    manufacturer and exporter Hitech Gears: "Very few
    consultants get their hands dirty and try to
    understand the cultural issues of an organisation.
    Arjun is one of them." Hitech Gears, founded by
    Pranav's father Deep Kapuria began as a Hero Honda
    ancillary in 1986 and now has 1,200 employees.
    Meanwhile, others like Husys hire freshers from
    tier-II business schools and train them for 3-4 months
    on the sensitivities of dealing with promoter CEOs.
    "Our managers sometimes need to educate the CEO too.
    So we train them to do not HR but business support
    first."
    Nonetheless, working with small business owners can
    often be frustrating and challenging. Many are
    uncomfortable with grading systems being brought and
    roles being defined. So it boils down to coaching and
    counselling the CEO most of the time. "You are like an
    agony aunt for the CEO," says Shekhar. "That's why we
    have senior people like myself doing the work, and not
    just marketing our services to clients. 70% of our
    team comes with more than 17 years of experience
    across functions in industry."
    At Tvarita, the senior team brings in a pan
    industry experience in HR and Finance, and is involved
    with most of the key strategic HR work. Gautam Ghosh,
    35, an HR professional with career spanning
    organisations such as ITC Hotels, Dell and Satyam, had
    been running his independent management consulting
    business and a popular blog before joining Tvarita
    recently as a senior consultant. Ghosh says this role
    is unlike any other he's done in the past: "I hadn't
    made policy for an organisation until now," he says.
    "And that's what makes it more rewarding and
    challenging."
    But the success or otherwise of an HR change
    initiative ultimately depends on the owner/promoter's
    readiness for change. And the problems start at the
    top, says Rao: "Their organisations have a strong
    influence of their personalities, which takes time to
    overcome." For Kapuria, who entered the family
    business in 2001 after an MBA from Cardiff University
    in the UK and a Masters degree in lean manufacturing
    from the University of Michigan in the US, installing
    best HR practices came naturally. "People disregard
    legacy but we understood which parts of our legacy
    were positive. That has helped us in preparing for our
    next phase of growth," says Kapuria
    Finally it's all about delivering measurable
    results, as any client will tell you. Pydah
    Venkateswara Rao, 66, runs Vasavi Prosoft, a medical
    transcription company, out of Hyderabad, Vizag and
    Guntur in Andhra Pradesh, and is one of Husys'
    clients. Launched in 2000, the company services
    clients in the US healthcare industry—chiefly doctors
    and clinics—and has 175 people on its rolls. "When we
    touched the 70 employees mark, we realised we need
    sound HR to go forward," says Rao, adding that the
    exercise with Husys has paid off, "Our attrition rate
    is 17% against the industry average of 25%, and
    accuracy, which is a crucial parameter for our
    business, is much better now."
    Says Tvarita's Rao, "You can't act as consultants;
    you have to operationalise your recommendations—that's
    part of the deal. Small business owners are cynical
    about consultants who walk away after giving advice."
    She adds that a significant part of Tvarita's fees is
    structured as a bonus component based on successful
    implementation. "We have to connect to the business
    ROI in some sense. For these companies, every moment
    and every penny counts."
    That makes servicing a small business, a less
    attractive proposition for small HR firms. Take Husys,
    where a bulk of the revenues comes from outsourcing of
    HR services by large corporates. A good balance is
    therefore necessary, says Reddy: "80% of our time goes
    into managing operations for small clients, but only
    20% of our revenues come from them. So we have to do a
    mix of both large and small companies." This year
    Reddy aims to do Rs 70 lakh in turnover, and 1.5 crore
    the next. With two new accounts coming up in the UAE
    and expansion into other cities like Pune, Mumbai and
    Delhi on the cards, he plans to hire another 50 people
    next year.
    So while small companies are a hot learning ground,
    Vyaktitva's Shekhar says it's the assignments for blue
    chip companies like Pepsico, Genpact, Daksh and Hero
    Honda, Bharti that rake in the big bucks. It's,
    however, the fit with small businesses that makes
    small HR firms a perfect partner in progress, says
    Ghosh, "As small organisations ourselves, we
    completely understand their pains and issues."

    PEOPLE FIRST

    Small businesses often can't afford a full-fledged HR
    department. That makes it difficult for them to
    attract talent A host of small HR firms are now
    addressing this opportunity From keeping costs down to
    managing cultural sensitivities, they understand small
    businesses well


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