When outsourcing your IT staff for banking, financial services, and insurance (BFSI) institutions, you must justify your company budget. Many businesses see outsourcing as a high expense. As such, you must regularly check if the services of IT staff augmentation for BFSI are worth your investment.
Hiring outsourced IT staff is rewarding when you manage them properly. They can significantly affect your operations and generate a return on your investment. Measure the actual value of your outsourced IT staff by following the tips in this guide and find out if IT staff augmentation is the best option for you.
IT Staff Augmentation for BFSI Companies: 6 Tips for Measuring Your ROI
Return on investment (ROI) is your rate of profitability from an investment. You can calculate it by dividing your net income (money gained – money spent) by the original capital cost of the investment, then multiply it by 100. Here are some other tips to help you get a more accurate reading on the ROI of your IT staff.
1. Revisit your company’s goals
Before measuring IT staff augmentation for BFSI ROI, you must revisit the company’s goals and KPIs set. Were you able to accomplish them? More importantly, what did the outsourced IT staff contribute to the results? This will help gauge the team’s overall impact on your bottom line.
2. Have a clear idea of their role
To determine the benefits of your investment, you need to know the duties of your outsourced IT staff. Revisit their job descriptions and the KPIs you’ve set for them. Evaluate the value of hiring them by asking yourself these questions: Were they able to do their assigned tasks? Were they able to support your current IT department? Have they freed up a lot of backlogged work?
3. Determine your metrics
Identify the metrics that you’re going to measure them against. This should have been given as KPIs when the team started working for you. The metrics may gauge the increase in sales, decrease in costs, or reduction in product defects or downtime. Work with your team to discover the factors that may have affected your metrics, like missed deadlines during a specific season or absenteeism spike.
4. Identify how you will track data
Set benchmarks throughout a project to determine everyone’s progress and if your efforts generate revenue. With an Enterprise Resource Planning (ERP) platform, you’ll be able to collect all the important data automatically. This will allow you to easily provide insights into the data that you need to measure the ROI of your IT staff augmentation for BFSI.
5. Factor in indirect returns
Your IT staff augmentation for BFSI does more than troubleshooting network issues and installing new software. They improve employee productivity, security, and customer experience, which are vital in company operations.
It may be hard to measure their indirect returns, but you can start by reporting what you can, such as the percentage of jobs that the employees finished on time and scores from project satisfaction surveys.
6. Consider all the costs
It costs a lot to hire new staff, whether in-house or outsourced. You must consider training and salary costs and the number of hours it takes to interview, hire, and train. As a general rule, the lower your turnover rates are, the better employee ROI you get.
3 Important Human Capital Metrics You Need to Measure the ROI of IT Staff Augmentation Projects for BFSI Companies
Measuring human capital is advantageous in hiring, training, and promoting your employees. With the metrics below, you can quantify employee performance and determine if they add value to your business.
1. Human Capital ROI
The human capital ROI measures the employee’s value to your expenses. For every dollar you invest, the human capital ROI will tell you the rate of return on your employee pay and benefits.
The formula is as follows:
(Revenue – Operating cost – Labor cost) / Employee Compensation = Human capital ROI
For example, your business brought in $100,000 in November. Your operating expenses were $25,000. You paid your employees $10,000 in wages and $5,000 in benefits, totaling $15,000 in compensation costs.
The computation will be:
($100,000 – $25,000 – $15,000) / $15,000 = 4
You had a return of $4 for every dollar you invested. Remember that your labor costs include total payroll and benefits costs for all your employees.
2. Training Investment
This metric helps you determine how much money you invested in each employee for training.
Here’s the formula:
Total training investment / Headcount = Training investment value
For example, you sent five employees on a training program worth $20,000. Follow the formula to find out your training investment value:
$20,000 / 5 = $4,000
For every staff, you invested $4,000 into training.
3. Turnover Rates
Employee turnover is when a company loses employees who need to be replaced over a certain period. By knowing the rate at which your employees leave, you can re-strategize your operations or management to encourage employee retention.
The turnover rate formula is:
(Number of separations / Average number of employees) x 100 = Turnover rate
For example, five employees left the company from June to December, and your average number of employees was 20.
(5 / 20) x 100 = 25%
A quarter of your employees left during this period, which indicates the same number of new hires you have to take in for replacement.
Improving IT Staff Augmentation Project for BFSI Companies
You shouldn’t just look at your cost per hire, as impact per hire is equally important. ROI metrics and calculations let you know how you can improve the quality of the hire to help you generate more revenue.
Get quality hires from the get-go with Yondu. We offer IT staff augmentation for BFSI companies. Our experts are highly skilled, well-trained, and certified.