The H R Case Study

5 P’s
Philosophy|Policies|Programs|Practices|Processes
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CASE
“For, By and Of the Employee”

It is Thursday, 24th Jan 2008.It is 4:15 PM on the clock. R

Krishnan, Vice President -Human Resource of New Day
Software Solutions (NDSS), is deep in thought in his office on
the 4th floor of NDSS House, the corporate office of the
company in Bangalore. He has just returned from a week
long business trip to the US and is now
probing over the matter related to relocating the NDSS
engineers to the new subsidiary NDSS Germany which was
known as Deutsche Technologies before acquisition. At 5:00
PM, he has a conference call with his German counterpart,
Mr.Ralz Bernhard, Chief Operations Officer- NDSS Germany,
on the issues related to Manpower requirement and
allocation. He has the profiles of the engineers of NDSS who
are most likely to be sent to Germany. He has done his
homework, but he is still unsure about the adequacy of the
information in hand. At 4:30 PM, his secretary, Ms.Reena
Sharma hands over the report sent by Ralz describing the
job profiles of
engineers at NDSS Germany.At Home New Day Software
Solutions is an IT Company, which provides IT solutions
across the communications value chain and hence aids
clients to accelerate product development life cycle. New
Day offers a unique combination of research and
development consultancy, wireless software products and
software services, and works with Network
OEMs,Semiconductor Vendors, Terminal Device OEMs and
Operators across the world. New Day's customer profile
includes Global Fortune 500 and Tier 1 companies in these
segments. Established in 1999, New day employs over 4,500
people. It operates from state-of-the-art research and
development centers in Bangalore, Mumbai, Hyderabad &
Chennai in India, Frankfurt (Germany) and Stockholm
(Sweden). New day is also present in Shanghai (China),
Ottawa (Canada), Nice (France), Guildford (UK) and Boston,
Dallas, New York & Santa
Clara (USA).New day is SEI CMM Level 5 certified and its
solutions are ISO 9001:2000, ISO 27001 and TL 9000
certified. New Day’s proprietary quality management system
strengthens its business offerings and ensures client
satisfaction. New Day’s commitment to environment is
highlighted by its ISO 14001 certification. Hence
excellence in service and its global presence makes NDSS
the preferred company by its clients. The innovative spirit of
NDSS can be seen in its people policies. It has the concept of
“For By and Of the Employee” which is unique and well
known as the best in the industry. The HR policies make
NDSS the most preferred company to
work for. NDSS was ranked the best company to work for in
India for the year 2007 in a survey carried out by a leading
HR consultancy.
German Subsidiary Established in 1995, NDSS Germany is a
global company which works on wireless technology. The
core business areas are hardware, software and mechanical
design and testing related to these areas. The company
improves the competitiveness of its customers among their
rivals by accelerating their R&D and testing processes to
achieve high quality products. Currently NDSS Germany
employs 400 people. Being such a small company there is no
separate HR department.The Interview CEO of NDSS
Germany Lars Lau had a press interview at 10:30 AM on
Thursday,
28th January 2008, pertaining to the company’s acquisition
by an Indian firm. Excerpts from the interview are as follows:
Interviewer: Why Deutsche Technologies was keen on
getting acquired?
CEO: “I would like to give you a brief background of the
company to answer this question. We were directing the
senior management of the company on how the company
should run. But the operations team was too busy to look at
anything else other than their work. Between 2001 and
2002, NDSS Germany lost some acquisition opportunities to
German competitors. Moreover plenty of design work
was moving from Germany to China and India. We did not
want to face direct price competition. Our aim was to
globalize, but with reasonable risk and that was the only way
for growth and security of our business.”Interviewer: Switch,
the leading mobile handset maker contributes as much as
85per cent of Deutsche Technologies annual revenues. What
was its reaction to the acquisition?
CEO: “Interestingly, Switch had already asked us to enter
India, China or the US. It clearly said, “To be our good
partner in R&D you have to establish yourselves in one of
those places.”
Interviewer: Why didn’t you start your own company in
India?
CEO: To start something in India you have two alternatives:
Organic Growth or Acquisition. Both of them require a lot of
money and this might also prove risky for business at home.
To please Switch, our main customer, we decided to be
acquired.
Interviewer: Why NDSS?
CEO: My team and I were really impressed with the low
employee strength of NDSS
as compared to other bidders. Moreover it shared Deutsche
Technologies’ values.
We thought if we choose other bidders offering a higher
price and who were also bigger in size, we would lose control
on what we were doing. NDSS and Deutsche Technologies
together complement each other. We had hardware design
skills that NDSS did not boast of and we were also interested
in NDSS’s semiconductor clients.
Interviewer: European and Asian countries have many
cultural differences. Wasn’t this an area of concern during
the integration process?
CEO: There are many differences as such. One point of
difference that emerged was
the attrition rate in Germany which is less than 2 per cent.
People stick to their jobs
in Software industry for 10 to 20 years, which is not the case
in India. As far as salaries are concerned, in Germany, unions
negotiate amongst themselves and the salary hike is then
based upon the agreed contract which is reviewed once in 3
to 4 years. In India there is a salary increment of 15 percent
annually across the board.
From the functioning point of view, bureaucracy is rampant
in India. We, at Germany, have learnt to be effective, and
not have buffers in our system. We now learn that in India
you have buffers in terms of employees and other resources.
These are a few
important issues that came to my mind. The Situation
The acquisition process started in June 2007. Financial
integration is over and technical integration is in progress.
Both the parties intend to close the entire process of
integration, including Human Resource integration by March
2008.

Questions
Ralz and Krishnan are on call at 5 PM IST. Help them to solve
the issues faced by the company.
1. What additional information is required for case to be
complete and to solve the issues?
2. Based on the assumptions and additional information that
you provide for question 1 and also taking into consideration
the policy and cultural differences of both the firms and
suggest the best way to deal with the situation from an HR
perspective.