Modelling demand-supply matching in a mid-size IT services firm

Abstract

The business requirements of the client is met by the employees’ expertise in developing program, application software in the particular domain. Firms have incorporated excellent training programmes in order to make their employees equipped with necessary skills for handling a particular project. But, the project demand doesn’t remain constant throughout. Hence, employees are kept as safety stock as per the bench concept. Extent of resources built (Bench Size) also serves as a Marketing tool for the service provider to signal the client about its capabilities, which in turn instils confidence. However, the firm has to incur higher fixed costs (employee’s salary) by maintaining too much of workforce in the bench. On the other hand, if the firm maintains lesser bench size, it has to resort to lateral hiring in the eleventh hour during peak periods of demand. Thus, matching demand (projects) with supply of appropriate human resources is a critical challenge for the IT firms. Fluctuating demand, attrition rate and the scarcity in finding skilled engineering professionals are the major challenges that the staffing manager has to grapple with. Maintaining optimal bench size becomes a grave concern because it helps in improving the firm’s profitability.