Talent Neuron Insights

Several countries today are witnessing an ‘ageing workforce phenomenon’ with a significant percentage of workers approaching their retirement ages. Many industrialized nations, having built their economies upon a workforce fuelled baby booms, are now finding a significant percentage of their workers approaching the retirement age. In addition, countries are facing either a flat or declining birth rate, which will impact the number of people entering the workforce in the future. This challenge of a rapidly aging workforce is especially acute across countries such as US, Japan and China.

Across OECD (Organisation for Economic Co-operation and Development) member countries, the number of workers in the age group of 45-59 years is expected to rise from about 24 percent in 1995 to 32 percent by 2030; whereas the number of workers aged 60 years and above are expected to increase to about 9 percent compared to 5 percent in 1995.

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China has established itself as a key location for business functions operations as it offers various advantages such as reduced costs, tax incentives, availability of talent and huge domestic market potential.

This has attracted major companies such as Genpact, WNS Global, IBM, Accenture, Aegis and Automatic Data Processing to set up centers in the country. The Chinese Contact Center market was valued at USD 116 million in 2010 and is expected to reach USD 255 million by 2017. This growth will be primarily driven by expanding activities in existing centers and setting up new centers in the country. Currently, the market is dominated by small to mid-sized contact centers employing 50 to 200 professionals. Chinese companies provide multi regional support to neighboring countries in languages such as Japanese, Taiwanese and Korean.

Due to increasing cost of operations, better talent availability and lack of office space MNCs are moving their operations from established locations to Tier II cities.

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Talent Neuron research indicates that thirteen senior executives have moved out of Electronic Arts (EA) and its subsidiaries in the last one year. Recently Mr. Jeff Brown, head of Communications left EA to take up the role of VP Communications at GoPro. Mr. Brown who has been associated with EA for 14 years held the role of SVP Communications/Public Affairs..

Earlier in January, Mr. Alexander Ward and Ms. Fiona Sperry, the co-founders of Criterion Games moved out of the company to set up...

The global home automation market was valued at USD 3.6 billion in 2012 and is expected to reach USD 16.4 billion by 2019, growing at a CAGR of 24.6 percent annually. Google’s acquisition of Nest Labs, a Palo Alto based connected device company, for USD 3.2 billion indicates the company’s plans to enter the home automation market. Nest makes thermostats and smoke alarms, which collects user behavior data to generate tailored response. These devices and can be controlled remotely through the customer’s iOS and Android devices.

Google has previously entered the home automation segment with limited success. In 2011, the company announced the Android at Home project, which intended to control all household appliances through Android devices. Google also launched Android-connected LED light bulbs.

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ost the economic downturn, New York City has successfully transformed itself into a technology hub. Since 2009, the Information Technology sector has witnessed an overall growth

of 11 percent. The city is home to more than 700 software companies including major tech companies such as Google, Yahoo!, Twitter, Facebook, IBM and eBay. In 2012, New York accounted for the second highest number of tech jobs in US (8,900), second only to Silicon Valley (9,800).

Mr. Bill de Blasio’s appointment as Mayor is expected to further boost the job growth in the region in spite of concerns over his support for tech industry. The democrat leader’s primary focus is to bridge the economic divide in the region.  However his policies offer plenty of reasons to Tech companies on remaining optimistic. Some of the key initiatives that are expected to impact tech industries have been described below:

Facilitate Job Growth

Approximately 15.8 percent of New York’s population is estimated to be either unemployed or working part time.  The unemployment rate among students with a college degree or higher in New York is about 6 percent. In order to address this, Mr. Blasio plans to reduce existing tax incentives for companies and link incentives to the number of jobs created in the region. New York currently disperses around USD 3 billion on tax cuts; hence the government is expected to take measures which ensure companies create jobs and offer living wages along with benefits.

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Post 1997, Bulgaria has witnessed significant economic progress due to the legislative reforms undertaken by successive democratic governments and this has been endorsed by the country’s accession into the European Union in 2007. The Bulgarian economy is recovering slowly from the global economic crisis with an estimated GDP growth of 0.6 to 1.2 percent in 2013 and expected to grow at 1.8 percent in 2014. The services and industrial sector contribute to about 65 percent and 30 percent of the GDP. Currently, over 55 percent of the total labor force in the country is employed in the services sector.

The Bulgarian ICT market in 2013 was valued at about USD 1063 million and is expected to grow at a CAGR of 6 percent till 2015. However, the hardware segment (sale of computer hardware and peripherals) constituted over 70 percent of the overall ICT market.

Note: Hardware refers to sale of computers and peripherals. Market size in million USD

Source: Invest Bulgaria Agency

Incentives: The Bulgarian government provides several incentives for companies investing in Bulgaria, such as:

The Encouragement of Investment Act (EIA) provides equal treatment of local and foreign investors in Bulgaria. Foreign investors in Bulgaria can obtain the same assistance, privileges and opportunities as granted by law to local investors.

A two year VAT exemption on imports of equipment for investment projects over Euro 5 million and creating at least 50 jobs.

Companies undertaking manufacturing activities in areas of high unemployment are provided zero percent tax rate.

Provides the right to purchase state or municipal real estate property located near the investment site, without tender procedures.

Government provides financial support for training of professionals hired by investors in relation to certified investments, provided the financing is implemented in accordance with the requirements of the EIA.

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Increased competition and rising pressure to cut costs are forcing companies to offshore key engineering activities to low cost locations such as China, Mexico, India and Eastern Europe. Previously, companies only offshored less complex, labor intensive and lower value added functions. However, current trends indicate a changing perception of offshoring to achieve operational excellence. Now activities such as designing, prototype building, value analysis and testing are also offshored to emerging locations.

Talent Neuron study determines emerging engineering hubs in Central and Eastern Europe such as Macedonia, Moldova, Bulgaria, Ukraine and Czech Republic offer greater competitive advantage and are becoming the next frontiers in offshoring. Skopje (Macedonia), Ostrava (Czech Republic), Sofia (Bulgaria), Plovdiv (Bulgaria), Chisinau (Moldova), Kharkiv (Ukraine) and Lviv (Ukraine) are the emerging engineering hubs.

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Image courtesy of [Evgeni Dinev] / FreeDigitalPhotos.net

Talent Neuron’s research indicates that top executives have left Acer amid financial losses and dipping PC sales. Three senior executives in Acer have left recently – CTO, Arif Maskatia; Walter Deppeler, Head of commercial-business global operations; and Dave Chen, General Manager China Smartphone operations. CEO and Chairman J.T. Wang and President Jim Wong also resigned in November 2013 after the company posted a net loss of over $440 million in the third quarter. Mr. Deppeler’s position has been assumed by the operation’s associate vice president, Evis Lin.

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Typically, corporate culture is often dismissed as a soft concept in senior management levels. But this stance is misleading as the ability to inculcate specific values into employees is among the most crucial work executives need to do. Culture reflects a company’s soul and investing in it is the wisest decision any corporation can make.

However, what most companies don’t realize is that corporate culture can grow whether or not one plans it. The longer a company ignores its culture, the higher the chances of cancerous office politics, which block growth and the free flow of information. An unhealthy culture inhibits innovation and can take the shape of a pervasive, insidious force that drains employee productivity. On the other hand, an effective corporate culture will actually show better operating profits.

How does this happen?

Satisfied employees are more likely to stay in a company, leading to fewer new hires, which in turn results in lower wage costs for talent. With lower recruiting and training costs, the company benefits from fewer lost sales and higher sales per employee. Further, higher employee continuity directly leads to better customer relationships and thus lower marketing costs.

However, the creation of a creative and open corporate culture is easier said than done. First off, companies need to pick the right kind of talent who are suited to both the job and the culture. Open communication from HR or peers is necessary for employees to develop realistic expectations and trust that the company will consider their best interests. Companies need clear-cut policies and practices as well as financial incentives, referral schemes and reward strategies to keep employees engaged, satisfied and productive.

Over time, it may be necessary for companies to review the values they are espousing to stay in touch with the times or align the culture with the new economy. Although this may sound like a lot of work, developing a common corporate culture is the basis for creating a company with the capabilities to not only set high goals, but to meet them as well. It will keep employees happy and boost the company’s bottom-line as well.

In Q3 2013, Yahoo! acquired eight companies including Qwiki, Lexity, Rockmelt, and Xobni for about USD 163 million most of which were in the mobile domain. Yahoo! has recently acqui-hired Bread, a startup that helps social media influencers and publishers monetize their online content by designing interstitial ads. The team of six engineers from Bread will join Yahoo’s advertising team and focus on developing next generation solutions for social and mobile publishers and advertisers.

Yahoo! is focused on increasing its breadth of offerings and drive revenues in the mobile space. To bring newer and innovative mobile applications faster to the market, company has added top engineering talent through ‘acqui-hiring’. Post the appointment of Ms. Marissa Mayer as the CEO, Yahoo! has acquired 22 companies. Majority of its acquisitions have been for high-end engineering. These acquisitions have helped Yahoo! to accelerate its capabilities in mobile advertising, conference calling services and its photo sharing service – Flickr.

Most of the acquired startups have been shut down and their technology has been integrated with Yahoo!’s mobile products. Talent Neuron research reveals that with these acquisitions about 100 entrepreneurs and innovators have joined the company’s mobile engineering teams in Sunnyvale and New York in the last 12 months.