Earlier this month, while addressing ONGC’s shareholders at its Annual General Meeting, Chairman and Managing Director Shashi Shanker said a strategic restructuring of the group by 2025 was on the anvil. This was to make the organisation future-ready, he said.
Like any other corporate house, the PSU energy behemoth is looking at opportunities for optimising its capital and operational expenditures. The pandemic has prompted it to look at not only its businesses but working conditions as well.
“The Covid-19 crisis has clearly highlighted the need for centralisation of services and decision-making wherever possible for a more agile and future-ready organisation,” the CMD said. So what is the organisation doing?
Shared service model
At the heart of the new structure is a shared service model.
As the CMD explained, “One ambitious project is creating an ‘Integrated Shared Service Centre’ that will facilitate standard services, seamless data flow, improved processes, centralised information and pooling of resources to deliver efficient services to end users with optimised resources.” Simply put, a more centralised way of working.
But is the organisation waking up too late?
According to Alka Mittal, Director (Human Resource) at ONGC, the restructuring thought process had started a couple of years back. A reputed consulting group was roped in and brainstormed, along with an internal team. Recommendations made by this group were discussed in-depth at various levels in the organisation. ONGC was preparing itself to become a diversified energy company by 2040, with the idea that 45 per cent of its young workforce would still be part of the organisation two decades later.
But the Covid pandemic has accelerated the process, with work from home being put to force and the organisation using its digital and technological strength to the maximum. Mittal asserts that the organisational and human performance was not impacted during the lockdown, with field personnel performing extended duties both at offshore and on-land field locations, and targets met.
The big crew change
Over the last three years, around 2,000 people have retired annually from ONGC while around 1,000 were recruited every year. “We refer to this as the big crew change,” says Mittal. The average age is now 42.8 years.
Today, for the same service being offered in different set-ups of the organisation, there will be no new team but an integrated team at the central or sectoral level. Mittal is also quick to point out that this doesn’t mean less recruitment or layoffs, but work force induction would be for a different job profile.
For example, the tendering process — one of the most sensitive areas of ONGC — is going to be completely faceless. The organisation is also working towards sectoral rationalisation — movement of field personnel within the region.
According RS Sharma, former Chairman and Managing Director, ONGC, “shared services concept is now a new normal across all corporates globally. Back offices are nothing but shared services of large MNCs. It definitely brings efficiency. But the organisations have to put in proper checks and balances and ensure timely responses.”
Under the current set-up, local bosses can monitor everything and there is a personal intervention. However, this won’t be so once “shared services” are brought in.
It will be a centralised, technology-driven system where, for example, all HR issues or procurement issues will be handled by one set of people.
ONGC has the software, what needs to be ensured is efficiency, says Sharma. Yes, it also means reduced manpower, and uniformity in interpretation of rules, Sharma adds.
Stuck in binaries
Aashish Chandorkar, a public policy commentator, feels that the discussion on India’s Central Public Sector Enterprises (CPSEs) is stuck in binaries. “What we need to accept is that not all CPSEs need to be run by the government as well as the fact that some areas do need a public sector footprint. Upstream oil and gas firm like ONGC is one such example. That said, I would say a public sector firm should also be run efficiently and like a business. It is hence a positive step that ONGC is setting up a shared services centre to bring in operational efficiencies across various business lines,” he said.
It is a fairly standard industry practice to look at synergies between component businesses and subsidiaries in the areas of supply chain operations, procurement, accounts payables and receivables, human resources and legal operations, he said.
Even global firms like BP are doing this right now — they announced a shared services centre in Pune in June 2020.
It is in India's best interests to run the key CPSEs as competitive businesses, creating the right strategic focus and financial capacity to achieve the national goals for which they are being operated.