Optimal Strategies for a Knowledge Workers Acquisition Problem with Expanding and Volatile Demand: Train Internally or Recruit Externally?

The aim of this paper is to consider the process of supplying trained workers with knowledge and skills for upcoming business opportunities, and of training apprentices prepared to meet future demands in an IT service firm. As the demand for new workers has fluctuations, a firm should employ a buffer workforce such as apprentices or interns. However, as a result of rapid development of a business, the buffer‟s capacity may be exceeded, thus requiring the company to recruit skilled workers from outside the firm. It is thus important for a firm to map out a strategy for manpower planning so as to fulfill the demands of new business and minimize operation costs related to training apprentices and recruiting experienced workers. This paper first analyzes the demand and supply of workers for IT service in a knowledge-intensive field. It then presents optimal human resource planning via the familiar method of stochastic process - queueing analysis.