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The H R Case Study5 PsPhilosophy|Policies|Programs|Practices|Processes.CASE

For, By and Of the Employee

It is Thursday, 24th Jan 2008.It is 4:15 PM on the clock. RKrishnan, Vice President -Human Resource of New DaySoftware Solutions (NDSS), is deep in thought in his office onthe 4th floor of NDSS House, the corporate office of thecompany in Bangalore. He has just returned from a week

long business trip to the US and is nowprobing over the matter related to relocating the NDSSengineers to the new subsidiary NDSS Germany which wasknown as Deutsche Technologies before acquisition. At 5:00PM, he has a conference call with his German counterpart,Mr.Ralz Bernhard, Chief Operations Officer- NDSS Germany,on the issues related to Manpower requirement andallocation. He has the profiles of the engineers of NDSS whoare most likely to be sent to Germany. He has done hishomework, but he is still unsure about the adequacy of theinformation in hand. At 4:30 PM, his secretary, Ms.ReenaSharma hands over the report sent by Ralz describing thejob profiles ofengineers at NDSS Germany.At Home New Day SoftwareSolutions is an IT Company, which provides IT solutionsacross the communications value chain and hence aidsclients to accelerate product development life cycle. NewDay offers a unique combination of research anddevelopment consultancy, wireless software products and

software services, and works with NetworkOEMs,Semiconductor Vendors, Terminal Device OEMs andOperators across the world. New Day's customer profileincludes Global Fortune 500 and Tier 1 companies in thesesegments. Established in 1999, New day employs over 4,500people. It operates from state-of-the-art research anddevelopment centers in Bangalore, Mumbai, Hyderabad &

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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 itssolutions are ISO 9001:2000, ISO 27001 and TL 9000certified. New Days proprietary quality management systemstrengthens its business offerings and ensures clientsatisfaction. New Days commitment to environment ishighlighted by its ISO 14001 certification. Henceexcellence in service and its global presence makes NDSSthe preferred company by its clients. The innovative spirit ofNDSS can be seen in its people policies. It has the concept ofFor By and Of the Employee which is unique and well

known as the best in the industry. The HR policies makeNDSS the most preferred company towork for. NDSS was ranked the best company to work for inIndia for the year 2007 in a survey carried out by a leadingHR consultancy.German Subsidiary Established in 1995, NDSS Germany is aglobal company which works on wireless technology. Thecore business areas are hardware, software and mechanicaldesign and testing related to these areas. The company

improves the competitiveness of its customers among theirrivals by accelerating their R&D and testing processes toachieve high quality products. Currently NDSS Germanyemploys 400 people. Being such a small company there is noseparate HR department.The Interview CEO of NDSSGermany Lars Lau had a press interview at 10:30 AM onThursday,28th January 2008, pertaining to the companys acquisitionby an Indian firm. Excerpts from the interview are as follows:Interviewer: Why Deutsche Technologies was keen ongetting acquired?CEO: I would like to give you a brief background of thecompany to answer this question. We were directing thesenior management of the company on how the companyshould run. But the operations team was too busy to look atanything else other than their work. Between 2001 and

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2002, NDSS Germany lost some acquisition opportunities toGerman competitors. Moreover plenty of design workwas moving from Germany to China and India. We did notwant to face direct price competition. Our aim was to

globalize, but with reasonable risk and that was the only wayfor growth and security of our business.Interviewer: Switch,the leading mobile handset maker contributes as much as85per cent of Deutsche Technologies annual revenues. Whatwas its reaction to the acquisition?CEO: Interestingly, Switch had already asked us to enterIndia, China or the US. It clearly said, To be our goodpartner in R&D you have to establish yourselves in one ofthose places.Interviewer: Why didnt 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 ofmoney and this might also prove risky for business at home.To please Switch, our main customer, we decided to beacquired.Interviewer: Why NDSS?CEO: My team and I were really impressed with the lowemployee strength of NDSS

as compared to other bidders. Moreover it shared DeutscheTechnologies values.We thought if we choose other bidders offering a higherprice and who were also bigger in size, we would lose controlon what we were doing. NDSS and Deutsche Technologiestogether complement each other. We had hardware designskills that NDSS did not boast of and we were also interestedin NDSSs semiconductor clients.Interviewer: European and Asian countries have manycultural differences. Wasnt this an area of concern duringthe integration process?CEO: There are many differences as such. One point ofdifference that emerged wasthe attrition rate in Germany which is less than 2 per cent.People stick to their jobs

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in Software industry for 10 to 20 years, which is not the casein India. As far as salaries are concerned, in Germany, unionsnegotiate amongst themselves and the salary hike is thenbased upon the agreed contract which is reviewed once in 3

to 4 years. In India there is a salary increment of 15 percentannually across the board.From the functioning point of view, bureaucracy is rampantin India. We, at Germany, have learnt to be effective, andnot have buffers in our system. We now learn that in Indiayou have buffers in terms of employees and other resources.These are a fewimportant issues that came to my mind. The SituationThe acquisition process started in June 2007. Financialintegration is over and technical integration is in progress.

Both the parties intend to close the entire process ofintegration, including Human Resource integration by March2008.

QuestionsRalz and Krishnan are on call at 5 PM IST. Help them to solvethe 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 thatyou provide for question 1 and also taking into considerationthe policy and cultural differences of both the firms andsuggest the best way to deal with the situation from an HRperspective.