Virtusa Corporation Is A Global Information Technology Services Commerce Essay

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Virtusa Corporation is a global information technology services provider founded in 1995 in Sri Lanka with 8 members and thereafter originally incorporated in Massachusetts, USA in November 1996 in as Technology Providers, Inc. And subsequently changed the name to "Virtusa Corporation" in April 2002, Headquartered in Westborough, MA, USA and global footprint with offices in USA, Europe, Asia and Middle East and having its Advanced Technology Centers in USA, United Kingdom, India, Sri Lanka and Hungary.

They provide a broad range of IT services mainly IT consulting, technology implementation and application outsourcing using enhanced global delivery model, innovative platforming approach and industry expertise. .

These services are provided in an cost effective manner using an onsite to offshore delivery mix together with foster innovation and continual improvement enabling its clients to enhance their business performances, optimize IT costs by using IT assets more effectively, accelerate time-to-market, increase productivity and end customer satisfaction. And currently provides services to companies in North America, Europe, the Middle East, India and Sri Lanka, to which in the industries of Banking and Financial Services, Insurance, Communication, Healthcare, Life Sciences, Media, Information, and Entertainment.

Today over 5650 world class professionals are engaged in Vitusa to provide services to its 89 active clients worldwide and have been able to earn a revenue of USD 277.8M for the fiscal year ended 31.03.2012 although they had a downward shift in year 2008 and 2009 due to the economic recession that occurred in USA and UK economies.

Virtusa had been able to maintain strategic alliances and partnership with leading technology providers and product companies and being able to win numerous awards and certifications since its inception in1995, by designing over 1000 products for leading independent software vendors and product class of solutions for Global 2000 clients and today they are a ISO 27001 certified company.

DESIGN / STRUCTURE OF VIRTUSA

Virtusa had been using a Matrix structure since its inception headed by a CEO/Chairman followed by a Senior Vice President, Vice President, President, Senior Director, Director, Senior Manager and so on through areas of Technology and Management competencies.

Also Virtusa consist of all leadership styles which can be identified as Authoritarian (One way communication, a top down approach), Paternalistic (Both top down and bottom up approaches are practiced) and participative where continual interaction and exchange of information between all the levels can be seen. Among all, most commonly used style would be Participative model.

Departmentalization at Virtusa can be identified as product base and geographical base.

Product base includes of teams, consist of both management and technical people created in favor of different projects undertaken.

Geographic base would include of top management that has been appointed in respect of each geographical region. As an example Managing Director - Asian Operations.

CULTURE OF VIRTUSA…….

Being a learning organization since its inception the culture of virtusa has been open, enthusiastic, informal, friendly, sharing culture among its members, where it appreciates a team and performance oriented, innovative, young blood and industry expertise to work on it, so Virtusans have able to share their knowledge, experiences and resources to help each other in career goals both personally and professionally.

The ultimate philosophy behind Virtusa has been "WORK HARD & PLAY HARD" as it had been able to identify the importance of work life balance between personal needs and interests. This has facilitates its employees to socialize, build relationships and collaborate in informal manner. As an example Dressed on business casual, Do folks together on Friday happy hours, Friendly get-togethers, Sports Festivals (Cricket, Gym, Swimming, Badminton, Table Tennis and etc) ,Hobby Clubs, Photography and Art, Salsa Dancing, Annual Celebrations, Movie Nights, Team Outings, Talent shows and Motor Rally's.

Finally an ownership culture as well which encourage its employees to think about all aspects of the company rather than meeting short term business objectives and this has evidenced by its high employee retention rate and demand for job opportunities as well as end customer satisfaction.

VIRTUSA WITH CHANGE…..2008 & 2009…

Until year 2008 Virtusa was running fine with its majority of income generating from clients in USA and UK where others were immaterial as shown below,

Therefore due to the economic recession that took place in US and UK economies were able to have a direct negative impact towards the income and profitability of Virtusa as these clients start to reduce/postpone their IT spending creating a lower demand for the services offered by Virtusa resulting an erosion in the client base and target market while dropping the pricing for the services offered by Virtusa as well. This resulted in reduction of its income level as shown below,

According to the above chart the drop in income level from 2008 to 2009 was 32% and comparative increase in the operating expenses were 9.2% putting Virtusa into an income liquidation. This negative fluctuation emergence the need of a CHANGE to Vitusa.

IMPLEMENTATION OF CHANGE….

Change that took place in Virtusa is of a Transformational/Fundamental change rather than an Incremental change coz it was a major, significant change being introduced relatively quickly. This mainly happens when the forces of external pressures have threatened the continued existence of the company/business.

In order to survive from the negative impact of recession Virtusa understood the need of change in both internal and external environments by implementing cost cutting strategies and moving towards motivational factors to retain and motivate its employees in order to maintain its profitability.

As a labour intensive organization its success depends on their ability to attract, develop, motivate and retain highly skilled multi task oriented team members in order utilize as requested by its clients as Virtusa's profitability depend on their ability to fulfill the client requirements in a satisfactory manner.

Prior to the recession period Virtusa spend much on Hygiene Factors as a tool of motivation which involves lot of entertainment and luxuries activities which was no longer affordable to them.

According to Fedrick Hertzberg's two factor theory Hygiene factors are associated with the job environment serves to keep employees becoming dissatisfied while Motivation factors will motivate employees towards work and following are some of the hygiene factors that were limited with the change,

Limit the free transport

Limit the food service - Removed the free buffet and limited the dinner allowance

Limited the fun allocation for entertainment events - Ex-: Dinner outs, Movie outs, Annual trips, Hobby clubs and etc

Limit the focus on luxury work environment

And as the last line of survival action in year 2009 August Virtusa laid off 300 employees in Asia of which over 60 were in Sri Lanka.

Motivational factors implemented at Virtusa can be highlighted as below,

Rewards and Appreciation - PEP: Personal Excellence Process

Growth - Role Based Training

Advancement - Vircomm

Job Responsibily and Challenge - vInnovate

Recognition - RAVE, V+

Achievement - MBO

Trying to build strong A/C relationships with its major clients, Minimizing the payback period of projects undertaken, Investing it in other investments in order to increase profitability and building relationships with Local Universities, Technical Colleges in order to recruit fresh, skilled people at a lower pay rate to bring down the operating expenses would be the cost cutting strategies adopted external environment.

This stage could be identified as the "Change" stage and thereafter the "Refreeze" stage.

MANAGEMENT PRACTICES - IMPLEMENTATION OF CHANGE

Together with the change they initiate to strengthen their existing client base through sales promotions and other relationships with top executives of such companies in order to avoid them being go to the competitors and also to improve the overall quality in order to reduce the unnecessary delay in bills while implementing programs to capture long term growth opportunities and strong client acquisitions in order to increase future income levels.

Also took steps to demonstrate the value of their platforming approach enabling its clients to continually improve their applications in response to change in business and technology needs while reducing costs.

Virtusa also engaged in aligning their strategic business units around industry groups and geographies including global services moving towards a more centralized and flatter organization to enhance end client satisfaction.

Moreover they used to streamline and consolidate its client's applications on an ongoing basis resulting in reducing their human efforts and costs.

Management also aligned the individual career aspirations with organizational objectives which provide individuals with a sense of ownership and providing foundation for professional development.

Impact on Attrition Rate………

Involuntary attrition at Virtusa was immaterial until the laid off in 2009 and it went up to 12.7% in 2009.

Increase in voluntary attrition rate from 21.3% to 22.9% (2008-2009) was due to the resistance towards change from hygiene factors to motivational factors. But through successful implementation of motivational factors Virtusa was able to reduce both the rates in year 2010 to 2.6% and 16% respectively.

CONCLUSION

After considering all the aspects it can be concluded that Virtusa has been able to overcome the negative impact from recession towards its revenue and profitability by implementing cost cutting strategies both internally and externally and moving into Motivational Factors from Hygiene factors in motivating its employees.

RECOMMENDATIONS :-

Virtusa must introduce some hygiene factors as well in order to strike a balance between both factors.

Try to build long term contractual relationships with its long standing clients while initiating to grab new opportunities so that they could be stabilize their income level.

Increase the number of Global Delivery Centers worldwide since it is a cost effective model and try to obtain Income Tax Holidays.

Virtusa must move towards a more flatter structure in order to speed up the decision making process.

More attention towards its HR policies so that they could reduce the cost on sudden recruits.

More investments on innovation using idle people so that Virtusa will be able to gain a competitive advantage over its competitors.

EXECUITIVE SUMMARY

The purpose of this report is to provide an understanding and a critical evaluation of the culture, structure and management practices that had been used in Virtusa Corporation, a global Information Technology Services provider while integrating theory.

Due to the economic recession that took place in USA and UK economies between 2008 and 2009 Virtusa was having a downward shift in its income level and profitability.

But through implementation of cost cutting strategies and changing form hygiene to motivational factors it was able to overcome the critical situation successfully and this report contains all the above aspects of change that took place within Virtusa Corporation from negative to positive status.

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