Productivity difference: Myth or Reality?
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Productivity difference: Myth or Reality?

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Globalization is often based on a foundation of achieving cost savings, quality, efficiency and higher productivity. However due to various factors such as haphazard execution of globalization or......

Globalization is often based on a foundation of achieving cost savings, quality, efficiency and higher productivity. However due to various factors such as haphazard execution of globalization or focusing only on cost arbitrage as a key driver for globalization etc., the results of globalization can be sub-optimal. The impact on productivity is the most critical. Lower productivity has a huge bearing on the total cost of globalization and also the organizational goals in the long run.

Zinnov conducted a survey of some leading MNC R&D organizations on workforce productivity in their global centers. The key objective of the survey was to assess if there is perceived difference in workforce productivity between centers in developed locations i.e. US/UK and those in other global locations.

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  • 1. Productivity difference: Myth or Reality? Zinnov LLCZinnov LLC CONFIDENTIALThis report is solely for the use of Zinnov and Zinnov Clients.No part of it may be circulated, quoted, or reproduced for distribution without prior written permission
  • 2. Scope The report aims to provide the results of a survey on Workforce Productivity at global centers The key objective of the survey was to assess if there is perceived difference in workforce productivity between centers in developed locations i.e. US/UK and those in other global locations. The results captured in this report include  Perspective of Headquarters on productivity of global centers when compared to those in US/UK  Perspective of the Global centers on their productivity when compared to other centers in US/UK  Key factors to be considered for productivity measurement across  Development teams  Sustenance/maintenance teams  QA teams  Common reasons for perceived difference in productivity at global centers  Key factors that have positive impact on the productivity of the global team 1
  • 3. Stakeholders at the HQ perceive that there is significant productivity gap with ~75% of them responding that global centers operate at lower productivity compared to centers in US/UK Perspective of Headquarters on productivity 25% 35% 100 %of the HQ productivity 70% of the HQ productivity 50% of the HQ productivity 40%Note: All percentages represented in the graph are the percentage of responses received for the optionSource: Zinnov Surveys, Zinnov HR Council, Zinnov R&D Council, Zinnov Analysis 2
  • 4. Though, majority of global centers acknowledge that the productivity difference exists, there are a significant number of outliers who perceive that global centers have higher productivity Perspective of the Global centers on productivity 20% Greater than 100% of the HQ productivity 100% of the HQ productivity 60% 20% 70% of the HQ productivityNote: All percentages represented in the graph are the percentage of responses received for the optionSource: Zinnov Surveys, Zinnov HR Council, Zinnov R&D Council, Zinnov Analysis 3
  • 5. To measure productivity, factors relevant to the workforce category i.e. development, sustenance or QA must be considered (1/3) Key factors to be considered for productivity measurement of Development teams Actual vs. estimated effort 85% Number of bugs released to QA 45% Time spent on actual development per day (excluding 35% meetings, emails, and other interceptions) Number of bugs per milestone 25% Number of patent applications/new ideas 20% Others 5%Note: All percentages represented in the graph are the percentage of responses received for the optionSource: Zinnov Surveys, Zinnov HR Council, Zinnov R&D Council, Zinnov Analysis 4
  • 6. To measure productivity, factors relevant to the workforce category i.e. development, sustenance or QA must be considered (2/3) Key factors to be considered for productivity measurement of Sustenance/Maintenance teams Time taken between defect identification and fix 55% Actual vs. estimated effort 55% Rework on bugs/defects 45% Number of bugs/defects injected per fix 35% Others 10%Note: All percentages represented in the graph are the percentage of responses received for the optionSource: Zinnov Surveys, Zinnov HR Council, Zinnov R&D Council, Zinnov Analysis 5
  • 7. To measure productivity, factors relevant to the workforce category i.e. development, sustenance or QA must be considered (3/3) Key factors to be considered for productivity measurement of Quality assurance teams Number of bugs released to the customer 60% Time taken for a single regression cycle 60% % of high priority bugs 50% % of test automation 40% Others 5%Note: All percentages represented in the graph are the percentage of responses received for the optionSource: Zinnov Surveys, Zinnov HR Council, Zinnov R&D Council, Zinnov Analysis 6
  • 8. Productivity assessment of global centers reveals that lack of ownership and domain expertise coupled with dependence on HQ for decision making are key reasons for lower productivity Common reasons for lesser productivity at global centers 70% Lack of project ownershipHigh Impact 60% Dependence on the US/UK teams for decisions 60% Lack of domain expertise among engineers 56% Lack of access to end customer High level of requirement for communication 50% between teamsMedium/Low Impact 30% High attrition level at the global center 15% Engineer capability not the same as the US engineers 10% OthersNote: All percentages represented in the graph are the percentage of responses received for the optionSource: Zinnov Surveys, Zinnov HR Council, Zinnov R&D Council, Zinnov Analysis 7
  • 9. However, the productivity gap can be addressed by transferring more ownership to global teams and taking steps to increase depth of technical & functional leadership at global centers Key factors that have positive impact on the productivity of the team 85% Complete ownership of the project in global centerHigh Impact 55% Average duration of the team in a particular project 50% Higher average years of experience of the team Better planning for knowledge transfer between the 50% teams 35% Higher number of travel between the teamsMedium/Low Impact 25% Specific technology skill sets 20% Higher number of expats in the team 20% Strong HR leadership at global center 5% OthersNote: All percentages represented in the graph are the percentage of responses received for the optionSource: Zinnov Surveys, Zinnov HR Council, Zinnov R&D Council, Zinnov Analysis 8
  • 10. Additional Information  Zinnov has conducted multiple surveys and studies on Workforce Productivity including various models, challenges, best practices etc.  To get more information on workforce productivity, visit  Zinnov ‘s Global Location & Talent Pool Portal. Sign up today for a free trial account http://zinnov.com/US/demo_signup.php  Or, email us at info@zinnov.com 9
  • 11. Zinnov LLC 4701 Patrick Henry Dr. Building 7 Santa Clara Thank You CA – 95054 Phone: +1-408-716-8432 21, Waterway Ave, Suite 300 The Woodlands TX – 77380 Phone: +1-281-362-2773 69 "Prathiba Complex", 4th A Cross, Koramangala Ind. Layout 5th Block, Koramangala Bangalore – 560095 Phone: +91-80-41127925/6 11, First Floor, info@zinnov.com Paras Downtown Center, Golf Course Road, Sector 53, www.zinnov.com Gurgaon – 122002 Phone: +91-124-4378212 @ZinnovThis proposal is solely for the use of Zinnov Client, prospect and personnel. No Part of it may be quoted, circulated or reproduced for distribution outside 10the client organization without prior written approval from Zinnov. Zinnov LLC ( Confidential) 10