Kapil: - My goodness, they are already planning to declare another list, where the shadow resources and PMOs will be kicked out.
Rajani: - PMO means Program Management Officers, who look after the revenues, invoicing, budgets and revenue projections of all the projects. That I know, but what is this shadow resource? Kapil, are you a shadow resource?
Kapil: - Yes, I am. That is why, I am scared. You are working in Satyam Computers for 18 months, and you don’t know the concept of “SHADOW RESOURCE”?
Arindam: - ha ha ha... Don’t worry, Rajani. Around 70% people working in an IT company do not know about the shadow resources. Shadow resources are those resources; that are kept hidden from the customers as well as from the company unit HR, to earn money. Who keep them as hidden files? Yes, of course, the project managers.
Rajani: - Can you please explain me in details?
Arindam: - Ya, sure, why not? When a client gives a project requirement, it is the Pre-sales team, who bids for the projects, with the billing rates for technical people. Now, once the project is won, the project leader specifies the number of resources with the onsite and offshore projections, as well as the billing rates. Suppose, in a project for 1 month, there will be 10 people required, out of which 2 people will work at onsite locations. So, accordingly, an estimated cost sheet will be prepared for the project. In accordance to that, the client will send you a purchase order (PO) for that project. Let us assume that the billing rate of an onsite associate per 8 hours in a day is 60 USD and that of offshore is 30 USD. So, for 22 days in a month, the revenues on these 10 resources are {(22602) + (22308)} = 7920 USD. For other expenses, Project leader will demand another 2080 USD. So, the real value of the PO should have been 10000 USD. But, in reality, the situation is different. You will find the value of the PO as 21000 USD. Then, where is this money of (21000-10000) = 11000 USD going?
Kapil: - ha ha ha … it is going to us, the shadow resources. We work as backup resources for our clients. See, if there are 10 resources shown to the clients, then there are actually 17 resources working in this project. All 7 resources are working as shadow resources; that are given around 500 USD per month for working in the project. Net result, the project gets completed within time, without any tension or headache, as all the resources have their own backup resources, if they fell ill, or some other things happen to them.
Rajani: - But, where is this {11000-(7*500)} = 7500 USD going?
Arindam: - These money get distributed among the Business Relationship Manager, Pre-Sales Manager, Delivery Integrator and the Project Leader! Not only have that, after every invoicing of the billable resources in the projects, the project leader get some commission from the Finance Department of that IT company, as a “Pat on Back” (POB). Out of that POB, the Project Leader shares some money to all these shadow resources.
Rajani:- Wow, that means, saap bhi maraa jaye aur lathi bhi na toote…these shadow resources will get experience in that projects, side- by-side earning extra money, and Project Leaders gets good appreciation from the clients for completing the IT projects within the scheduled time in a very efficient manner. Really, Arindam, you have observed the processes like an investigator.
Arindam: - Ya,ya, as a PMO, I was the middle man between the Project Leader and the Finance Department. So, I was able to find out the loop holes from the revenue sheets only. Anyway, there is nothing to worry about it. Every IT companies follow these tactics. Even clients are also aware of this fact. That is why; they always reduce the billing rates to such an extent that the profit margin of Project Leader decreases. It’s like playing Chess.
