HR Trends in Indian IT Industry

8/3/2019 HR Trends in Indian IT Industry

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CHAPTER - 1

HRD MANAGEMENT IN IT

INDUSTRY

1.0 INTRODUCTION

1.0.1 Success of every business enterprise depends on its human resource.Money, material and machines are inert factors; but man with his ability to feel,think, conscience and plan is the most valuable resource. At the same timehuman elements are most difficult to be inspired, controlled and motivated. The

upcoming competition in India, will demand high motivational level of itsemployees.

1.0.2 Growth of an enterprise is vital for the economic development of thecountry. This is possible only by maintaining the enthusiasm and motivation ofthe employees, which is vital for carrying out the operations in most efficientmanner. The most successful companies, all over the world have designed their

business policies to achieve higher productivity by using potentiality andstrength of people.

1.0.3 The basic aim of human policies is the genuine concern for the people.Proper design of human policies is based on the higher responsibilities,personal and positive approach in the total perspective of organisationalinterest. The world's best companies have established their strength with their

people. The employees identify themselves with the company they are workingfor. This also help in building up their spirit, morale and espirit-de-cops which

becomes strength of the company. The culture of excellence thus nurturedcontribute to growth with stability and continuous improvement in productivity.

1.0.4 Finding the right man for the job and developing him into a valuable

resource is an indispensable requirement of every organisation. Humanresources are capable of enlargement i.e. capable of providing an output that isgreater than the sum of the inputs. Proper recruitment helps the line managersto work most effectively in accomplishing the primary objective of theenterprise. In order to harness the human energies in the service ororganisational goals, every manager is expected to pay proper attention torecruitment, selection, training, development activities in an organisation.


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Proper promotional avenues must also be created so as to motivate employeesto peak performance. Thus, personnel functions such as manpower planningrecruitment, selection and training, when carried out properly, would enable theorganisation to hire and retain the services of the best brains in the market.

1.0.5 The human resource management is very crucial in respect of informationtechnology services than other manufacturing or marketing enterprises. The ITservices are technical in nature and at every stage the human touch is involved.Hence it is well motivated and devoted manpower which is very much essentialfor the success of IT industry.

1.1 ROLE OF HR MANAGERS

1.1.1. And Some industry commentators call the Human Resources function thelast bastion of bureaucracy. Traditionally, the role of the Human Resource

professional in many organizations has been to serve as the systematizing,policing arm of executive management. In this role, the HR professional servedexecutive agendas well, but was frequently viewed as a road block by much ofthe rest of the organization. While some need for this role occasionally remainsyou would no want every manager putting his own spin on a sexual harassment

policy, as an examplemuch of the HR role is transforming itself. The role ofthe HR manager must parallel the needs of his changing organization.Successful organizations are becoming more adaptable, resilient, quick tochange direction, and customer-centered. Within this environment, the HR

professional, who is considered necessary by line managers, is a strategicpartner, an employee sponsor or advocate, and a change mentor.

1.1.2 Strategic Partner:-In todays organizations, to guarantee their viability andability to contribute, HR managers need to think of themselves as strategic

partners. In this role, the HR person contributes to the development of and theaccomplishment of the organization-wide business plan and objectives. The HR

business objectives are established to support the attainment of the overall planand objectives. The tactical HR representative is deeply knowledgeable aboutthe design of work systems in which people succeed and contribute. Thisstrategic partnership impacts HR services such as the design of work positions,hiring; reward, recognition, and strategic pay; performance development andappraisal systems; career and succession planning; and employee development.

1.1.3 Employee Advocate:-As an employee sponsor or advocate, the HRmanager plays an integral role in organizational success via his knowledgeabout and advocacy of people. This advocacy includes expertise in how tocreate a work environment in which people will choose to be motivated,


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contributing, and happy. Fostering effective methods of goal setting,communication, and empowerment through responsibility build employeeownership of the enterprise. The HR professional helps establish theorganizational culture and climate in which people have the competency,concern, and commitment to serve customers well. In this role, the HR manager

provides employee development opportunities, employee assistance programs,gain sharing and profit-sharing strategies, organization developmentinterventions, due process approaches to problem solving, and regularlyscheduled communication opportunities.

1.1.5 Change Champion:-The constant evaluation of the effectiveness of theorganization results in the need for the HR professional to frequently championchange. Both knowledge about and the ability to execute successful changestrategies make the HR professional exceptionally valued. Knowing how tolink change to the strategic needs of the organization will minimize employeedissatisfaction and resistance to change. The HR professional contributes to theorganization by constantly assessing the effectiveness of the HR function. Healso sponsors change in other departments and in work practices. To promotethe overall success of his organization, he champions the identification of theorganizational mission, vision, values, goals, and action plans. Finally, he helpsdetermine the measures that will tell his organization how well it is succeedingin all of this.

1.2 LEADERSHIP AND EMPLOYEE INVOLVEMENT.

1.2.1 The main role of leadership was seen as creating a participatoryprocess for employee involvement, to build collective wisdom. Control hasgiven way to collaboration and the old paradigm of promoting competition andmotivating through incentives shifted to creating co-operation and onenessamongst people. This is a marked shift to build effective teams. Researchshows that six out of every 10 employees like to work in teams. 87 per cent ofall Fortune 500 companies use parallel teams and about 100 per cent of allcompanies use project teams.

1.2.2 Story telling and appreciative enquiry are emerging as a newdimension in positive motivation. Finding out what's wrong seems to be thetrend. In Walt Disney, telling success stories is one of the important methodsused to remind people of greatness and goodness of the organisation. Leadersin Disney concentrate on quality, values and involvement. Speaking in the

plenary sessions, Tom Peters said, " We have transitioned from an asset-basedeconomy to a talent-based economy. The new definition of lay-off is untalented


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go talented stay. Leaders must realise that talent is equal to brand". His newtheory is EVP which means "Employee Value Proposition".

1.2.3 Rosabeth Moss Kanter said, " Human beings are good raw material,they become assets when you train them to increase their knowledge and

skills". She added that only a few organisations really train people to makethem a success. Seconding this, Mr Peters pointed out how most organisationsare not serious about developing people. They spend on an average 26.3 hours

per person per year on training. A surgeon, a pilot or an athlete on the otherhand spends 10-15 times more on training.

1.2.4 He also stated that the HRD department should be renamed TDFD(Talent Development Fanatic Department) and wealth for this new regime willflow from innovation, not organisation. Quoting Gary Hamel he said, onlythose employees will succeed who are "certified radical". Only those

companies will succeed who create a cause, not a business. Leaders accordingto him are living individuals, whom people can smell, feel and touch. Their

passion for work must be infectious.

1.2.5 Another aspect of leadership if the decision to introduce fun in thework place. Research shows that this reduces absenteeism and builds stronger,deeper and longer lasting relationships. It appears out of every 100 Fortunecompanies in the last decade, 69 are dead and only 31 are alive. In a ForbesMagazine study of around 100 companies from '17 to '87, only 39 companieswere found to survive. Management of Change:-Research proves that manychange models don't consider the human experience during change. Theoverriding concern seems to be to downsize. It was found that most change

processes go through four fundamental stages.

People try to resist or deny change

They adapt, participate in the change They attempt to add value The culmination or formation of a new status-quo

1.2.6 A number of presentations revealed that leaders who initiate change mustdo so with one foot in the future and the other planted in past values. Forgettingtradition must can devalue existing strengths. The success of a change processdepends on the skill of the facilitator to create a participatory process to enlistthe support of people and address the issue of grief.

1.2.7 E-Learning :- Organisations like Ford Motor, Hewlett Packard, Intel andIBM are using e-learning to increase the knowledge of their people. Companies


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like Fordstar even manage time differences between countries while conductingvirtual class rooms, chats, demos, presentations to communicate new concepts,

product details, core values, issues of governance and corporate communities.

1.2.8 CEO's are talking to their people about new ideas and enlisting their

support through forums and message boards. This is changing the way peoplebehave and work. The advantages of e-learning are many: It is self-paced,flexible, less expensive, modular and has a huge reach.

1.2.9 Universities like Cornell, MIT, Stanford, etc, have started emphasizing e-learning to attract a worldwide audience. Web-centric universities are

becoming the order of the day. William Taylor, editor and managing partner ofthe Fast Pace magazine, said, "There is no going back from back fromdotcoms". He was of the opinion that there is a merger taking place betweencomputers and human beings.

1.3 INNOVATIVE PRACTICES IN HR

1.3.1 The Innovative Practices in Human Resources study uncovered 12practices that are reducing HR costs and improving service quality toemployees. Key findings from this research included the need for HR managersto streamline processes, lower overhead costs, and enable their departments toadvance from transactional organizations to strategic partners in the business.

1.3.2 Practices and technologies include:

Internet and intranet employee services Strategic human resources

Centralized HR departments and call centers 360-degree performance appraisals HRIS systems Employee self-service Voice response systems (VRUs) Resume scanning and Internet recruitment Kiosks Automated time and attendance systems Team policies and development Outsourcing Business process reengineering (BPR)


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1.4 LINKING PAY TO PERFORMANCE

1.4.1 Most Human Resource professionals are familiar with the concept ofstrategy. There is much more concentration and focus today on the strategicoutcomes of human resource activity than ever before. The area of

compensation is no exception.

1.4.2 Pay for performance systems are becoming more and more popular assenior managers reach beyond the use of compensation systems to deliver pay.There is far more interest in more closely linking the reward mechanisms to theachievement of corporate objectives. Motivation for superior performance isthe goal.

1,4.3 In experience, most organizations will profess to a "pay-for-performance"philosophy as a keystone of their compensation system. Such a system requires

solid grounding in a clear and documented link between performance andsalary increases. Unfortunately, the link between individual performance and

pay is frequently nonexistent - "merit" pay is a hollow concept in this regard.

1.4.4 A merit system demands that managers be willing to make distinctions inmerit increases based on performance. However, several factors get in the wayof this happening. First, the annual salary change is usually a small percentage.Giving the better performer 2% more than the cost of living has littlemotivation or recognition attached to it. Similarly giving the poor performers2% less than the cost of living increase is not that much of a penalty. So many

managers don't make that distinction - it is too much hassle. So everybody getsthe same increase.

1.4.5 Second, most performance appraisal systems are after-the-fact appraisals.In other words, at appraisal time, which is usually toward the end of the year,managers are required to evaluate the performance of their staff. It meanssitting down and trying to reconstruct what each staff member did, capturing itin a non-threatening way, communicating the evaluation without a fuss andfinally, making a merit increase recommendation. Sound like a familiar

pattern? It is a process that repeats itself year after year.

1.4.6 The end result is usually a lot of avoidance behavior. Managers avoid theappraisal process like the plague. Although employees profess to want to"know where they stand" they often take issue with the appraisal. Besides, theydon't listen to the evaluation, they wait until the penny literally "drops". "Whatis my rating and how much do I get?" is a constant theme in merit systemswhere salary decisions are tied so closely with the appraisal process.


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1.4.7 You might well ask is there any way out of this mess? The answer isfortunately yes. Organizations that are the best and want to separate themselvesfrom the rest, are turning away from the merit system and toward an annualincentive system, particularly for middle and upper management positions butincreasingly for teams and individuals lower down in the organization as well.

1.4.8 They are adopting a system of annual incentive bonuses linked directly tothe achievement of corporate and individual objectives in three specific areas.The areas are corporate revenues and gains, cost containment and behavioralchanges. The first two areas are quantitative and the third area, which is gainingin importance, is qualitative in nature, and has a great deal to do with buildingmanagerial and individual competence.

1.4.9 Why Is This Transition Occurring? :-Well, there are many challengesfacing businesses today and these challenges are driving them to find better

ways of linking pay and performance to the achievement of corporate results..

1.5 CHANGING JOB DESIGN IN IT COMMUNITY

1.5.1 The California State University (CSU) system is being challenged to meetincreasing demands for educational and administrative services through theinnovative use of technology and human resource systems. Even thoughfunding levels for higher education have been cut in recent years,

public/taxpayer expectations and the demands for quality education, access,service, and accountability have grown. Technology initiatives within the CSU

have resulted in significant advances and improved technical capabilities andefficiency. Human resource and organizational systems are also needed tocapitalize on and thrive in this rapidly changing work environment.

1.5.2 In 1991, the CSU began a study to look at alternative work and job designapproaches to meet these challenges. The study focused on the informationtechnology community and how work processes and activities could be betterorganized to remove artificial barriers and improve organizationaleffectiveness, a process often associated with the term "reengineering."Secondly, the study focused on developing a job design approach that couldadapt to changing skill requirements and that would promote the continuousacquisition of skills for knowledge-based employees in information technology.The goal of improved organizational effectiveness and an orientation towardsreengineering and skills guided the development of the proposed job designapproach.


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1.5.3 This article begins by identifying several trends that led to the study, thendescribes the overall project within the context of an organizationaleffectiveness equation. A new job design approach that was proposed as aresult of the study is presented, including a new classification structure andcompetency dimensions and measures for defining and evaluating positions.Finally, other supporting systems are described for an integrated humanresources approach. The development phase of the project has been completed,and the CSU anticipates entering into negotiations with its employeerepresentatives in the near future.

1.5.4 Three trends have had a direct impact on the development of a strategicjob design approach for the information technology community at the CSU: (a)diversification and convergence of technology, increased demand foreducational access and (b) changes in instructional delivery methods; andchanging work place demands and priorities.

1.5.5 The technology demands within higher education lead to a complex anddynamic computing environment. Academic and administrative computingstrategies tend to be at cross-purposes in terms of defining systemsrequirements. This has resulted in widely diverse systems and technologywithin and across the CSU's twenty campuses. Increasingly, however, campussystems are becoming more integrated, as data are shared across multiple

platforms on a network "highway" that is linked to external informationsources. Networking and desktop computing have removed traditional

boundaries for information access, research, and decision-support purposes.Data, voice, and video technologies continue to be combined in moreinteractive and user-friendly formats.

1.5.6 In terms of educational trends, many institutions offer distance learningusing various transmission media and are incorporating instructionaltechnology into curriculum development. Students expect guaranteed access totechnology and to research databases, and this access has become an issue ofsocial responsibility.[1] Library and computing functions are becomingincreasingly interdependent in "an infrastructure of scholarly communication"

within higher education.[2] Workplace trends, as presented in SustainingExcellence in the 21st Century: A Vision and Strategies for College andUniversity Administration, well represent the outlook for the CSU. Two keyissues are identified:

(1) Economics. There is increasing pressure to constrain administrative costswithin the "labor intensive cost structure" that exists in higher education.


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Reductions in staff are occurring at the same time as transaction volume andservice expectations are growing.

(2) Decentralization of responsibility. With fewer people and greater access toinformation, organizations are moving responsibility for decision-making

downward to the point of service. Work organization is shifting away from jobspecialization and a task/procedure orientation, to more generalized jobresponsibilities focused on outcome and greater participation on cross-functional teams

(3) Another central workplace trend is the "earning and learning" environmentdescribed by the U.S. Department of Labor in its Secretary's Commission onAchieving Necessary Skills (SCANS) report. To quote Thomas P. Foley,Secretary of the Pennsylvania Department of Labor and Industry:"We'vechanged from the idea of "one skill, one job" to the reality of a range of skills

that have to apply to a number of different kinds of professions. More to thepoint, workers must possess a skill that they continually upgrade just to keeppace in the professions they choose."

(4) The influx of new technology and applications has created a demand forcontinual learning and adaptation. Due to the CSU's relatively stableworkforce, maintaining skills to keep pace with changing technology wasidentified as a critical goal. Knowledge requirements are expanding toencompass a greater breadth of technologies and subject expertise, as well asincluding process-oriented capabilities such as communication and negotiationskills.

1.5.7 The implications of these technological , educational, and workplacetrends point directly to the need to reengineer organizational structures, workdesign, and processes. Based on these trends and overall organizational goals,two key objectives were established for a new job design approach for theCSU: flexibility and skill development. Fundamentally, each campus needs theflexibility to achieve its goals by distributing work assignments in a way thatoptimizes its available skill mix and promotes individual skill development andinitiative.

1.6 OBJECTIVES OF STUDY

1.6.1 Following were the objectives of the study:-


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1. To enlist emerging HR trends in Indian IT Industry

2. To review literature and research done in this area.

3. To find out lacking areas regarding the HRD in IT sector.

4. To measure the perceptions of IT sector employees in respect of applicationof HRD in their organisation.

5. To suggest the measures to fill the gaps and improve motivation level ofemployees and HR management in IT industry.

1.7 RESEARCH METHODOLOGY

1.7.1 The study was exploratory in nature. All published and unpublishedavailable on the subject matter was consulted. Interview and discussions wereheld with the various executive/ Managers/ staff employed in IT sector. TheHRD functions/ activities being undertaken in different IT organisations werealso studied. Primary and secondary data available with these organisations wasalso used for this project study.

1.7.2 In order to measure the employees perceptions of emerging HR trends indifferent IT organisation, the survey was undertaken. The survey was based on

structured questionnaire. The questionnaire was mainly based on objective typeclose-ended question, but few open ended questions were also included.

1.7.3 Firstly, the pilot survey on ten randomly selected respondents wasundertaken. Then the questionnaire was modified accordingly, if desired.

1.7.4 The final questionnaire was administered in person to the extent possibleand through mail if needed. The 100 respondents were selected among theexecutives and staff working in various IT organizations. The convenientrandom sampling technique was used for the selection of the respondents.

1.7.5 Finally, the results of the survey has been presented in Tabular form,analyzed and interpreted to meet the required needs of this project study and

presented in Report form.


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CHAPTER -2

HR TRENDS IN IT INDUSTRY

2.0 HR IT SCENARIO

2.0.1 The web is altering the HRD landscape beyond recognition. The

key to corporate success in the fast changing information era is

thinking on your knees.

2.0.2 What is this thinking on your knees? Normally as the HR

person you know what the situation is and operate from there. A

repositioning is required in your decision process with questions

like why, how and when and not just what. At this point you

operate on your knee i.e. with far more dynamism and with a lot

more effectiveness than thinking on your feet.

2.0.3 The employees are like gypsies, on the move all the time. They

camp at some location, enhance their skills, responsibility levels

and move on. This is particularly true of the professional from

Software Industry. Opportunities are plenty and the next job

opening is only a mouse click away. The question is not about

what else you can do to retain an employee but it is about making

him productive, while he is with you. The value addition will then

happen for both the employee as well as the employer resulting in

a win-win situation. This means that the new strategy calls for the

recognition that no employee is expected to be permanently with

you. Normal tenure in any organisation is likely to be between

two to three years.

2.1 INNOVATION IS THE KEY


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2.1.1 Information technology and Internet have changed several

equations. Reaching out to the world market place is no more the

challenge in achieving corporate victories. Out thinking the

competition at electronic speed is the key to winning corporate

battles. The corporate success is sum total of entrepreneurship

practiced by your staff.

2.1.2 The key to employee longevity :-Todays most successful

organisations recognize that to fuel growth and sustain a

competitive advantage, they must make recruiting, hiring and

retaining top talent, as the organisations major thrust area.

Competent people deliver the rest dont matter. Successful

business organisations have no choice but to promote the

performers and let non-performers go.

2.1.2 Organisations recognize that that their ability to gather, manage,

analyse, distribute information and transform themselves into a

learning organisation will provide continuity and ensure for them

their leadership role. Systematic organizational learning should be

central corporate philosophy. Learning, must be obviously

followed by changes, which may not necessarily be welcomed by

veterans in the organisation. But change is the only Constant for

guaranteed success.

2.1.3 Points to note: The following points are important and must be

properly understood.

People have a great deal of informational knowledge to contribute

to the organisation.

People are responsible


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People desire opportunities to effect change, not just being expected to

change.

Organisations need to create awareness amongst their employees about

their vision and then empower them to act on that vision.

Establishing a sense of urgency well ahead of the problem surfacing.

Form inter-functional core group. Encourage the group to work together as

a team.

Plan and create short-term win targets reward employees and recognise

achievers.

Consolidate improvements through a knowledge base driven system and

institutionalise proven new methodologies.

2.1.5 New Paradigms In HR

Business plans must consider HR issues, focus and adapt.

Corporate goals must factor in individual career growth and personal

growth must be tied to corporate growth and vice versa

2.1.6 Job responsibilities must facilitate personal development and learning

should be institutionalized with well-established knowledge bases.

Capturing experience and making it available corporate wide should be a

permanent feature of an organizations.

2.2 WAR FOR TALENT

2.2.1 The worlds most popular people resource base seems to be

falling short of numbers to meet its own demands. With added

pressures of migration and attrition, can Indias IT industry

achieve its software and services revenue target of $87 billion by

2008?


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2.2.2 Country: India. Population: 1 billion-plus. If that sounds like too

many people, think again. Plug in English-speaking and low

labor costs, and suddenly we can envision $50-billion software

exports target by the end of this decade. Not impossible, if weconsider the scarcity of IT manpower across the world. Take a

look at the US, already with a 10- million-strong IT workforce,

which needs to fill 1.6 million newjobs in the next one year.

2.2.3 Japan is no different and estimates close to a million new jobs.

Germany is looking for 20,000 IT specialists and Italy is seeking

15,000 additional manpower. Their choice destinationIndia.

2.2.4 Ironically, the country which has been such a popular people

resource for the IT industry the world over, is struggling with

numbers to meet its own demand. To meet the overall software

and services (domestic and export) target of $87 billion by 2008,

according to the Nasscom-McKinsey report, the country will

require a minimum of 2.2 million knowledge workers for its

domestic needs. This implies that the present strength, which

stands at 12,00,000 (December 2004), has to increase about twice,

not just in quantity but in quality as well.

2.2.5 According to industry estimates, majority of the demand for

manpower will be in the area of IT-enabled services. While

Nasscom puts the requirement at 11,00,000, MIT says IT-enabled

services and e-business will need 12,70,000 workers by 2007.

Experts insist that since this sector does not require very highlyskilled manpower, we can easily meet this demand. "IT-enabled

services is a wonderful opportunity for India and for such services

you dont need highly skilled professionals. You just need smart

graduates who can speak English, all you need to do is train them.


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For instance, in a call center, they need to be trained on accents

and customer services,"

2.3 4 Rs of HR in IT

Table 2.1

Recruiting

Signing bonus

Finders Fee

Alumni

connections

Non-techs

Students

Interns

Retaining

Retention bonus

Project pay

Reduct FTE/same pay

Telecommuting

Externs

Job sharing

Recognition programs

Retraining

Job rotation

Team assignments

Skill inventories

Competency

development

Certification

Restructuring

Broad job descriptions

Flexible compensation

programs

Flexible jobs

Positive problem-

solving spirit

2.3.1 OBSTACLES

Denial (This is and long term)

Misalignment (Ramping up/Ramping down)

Timing

Treating everyone the same

Navigating the bureaucracy

Demographics

2.3.2 WHAT OTHERS ARE DOING

Pooling recruitment efforts

Increasing freedom at the dept level

(on-the-spot hiring, broadbanding, etc.)

Recruiting/retaining students

Identifying tech skills in all jobs/people(Skill Inventories/assessment)


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Sharing staff

2.3.3 RETENTION FACTORS

1. Quality of boss

2. Direction of department

3. Exposure to new technologies

4. Confidence in the company

5. Job security

6. Challenging work

7. Location

8. Access to capital resources

9. Caliber of co-workers

10. Empowerment11. Department leadership

12. Ability to influence department success

2.3.4 TAKING THE LEAD

See ourselves as problem-solvers

Develop critical skills and competencies in ourselves, then others

Build compensation around results not tasks; competencies, not seniority

Involve everyone. Constantly align and balance resources to meetchanging needs

2.3.5 SEARCH FOR TOMORROW

Attract, retain and reward the bestperformers (Encourage all to be thebest)

Increase flexibility Reduce fixed costs Reduce administrative effort (Simplify, simplify, simplify) Utilize the full range of individual talents

2.3.6 THE CRISIS

Shortage of IT workers

2.3.6 COMPETITION


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Compensation stock options, profit sharing, incentives

Alternatives outsourcing

2.3.7 ATTRACTING

Recruiting sign on bonuses

Relocation incentives

Recruiters

Reduced cycle time for hiring

Campus/ job fairs / referrals/ internet

2.3.8 RETAINING

Work environment

Communication forums

Telecommuting

Flexible staffing

Exciting projects

2.3.9 PRACTICES

Focus on value

Financial and human value

Commitment to core strategy

Linkage between culture an system


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Multi dimension communication

Stakeholders partnerships

Mutual support and collaboration ( teamwork)

Risk and innovativeness

Passion

2.3.10 DEVELOPING

Internship programs

Training programs

Career development programs

2.3.11 LONG TERM SOLUTIONS

Education, government, industry partnerships

Curricula: technical skills and career skills ( teamwork and

communication)

2.3.12 KEY SUCCESS FACTORS

Understand people

What they want

Long term perspective

Innovative

Co ordinated approach

Career development I

2.4 OUT SOURCING


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2.4.1 In the last few years, more and more companies around the world

are looking towards India for outsourcing their software

requirements. The changing business environment is demanding

new applications. In particular, the spread of client-servercomputing in decentralised organisations involves the

development of applications specific to a user's business.

2.4.2 Outsourcing is becoming a strategy for forward thinking IS

managers. It is no longer just a means for reducing costs, but a

tool for adding value to business. It enables organisations to

concentrate on their core business, carry out business re-

engineering and provide information that is valid, timely and

adequate to assist decision making at the management level and

quality and cost control at the middle and lower levels.

2.4.3 As a result, outsourcing has gradually grown beyond the

traditional idea of "having a third party running the data centre". It

has come to mean, "any use of an outside contractor to replace or

extend in-house resources".

2.4.4 Outsourcing is closely linked with corporate strategy, since it

must support the organisation's major initiative in using IS. It

should enhance and add value to the business. A rule of thumb to

start and gain experience is, "if IS is low cost and of high value

addition, keep it within the organisation, i.e. in-source. If IS is

high cost and of low value addition, consider outsourcing".

2.4.5 In the past few years, whenever organisations around the world

have outsourced to India, the Indian software companies have

substantially helped to cut costs in software development projects

or MIS environments, while maintaining high quality. Moreover,


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all these cost and quality advantages are coupled with the use of

state-of-the-art technologies.

2.4.6 In 2004-05 more than US$ 2500 million worth of software

development work was outsourced to India (The total software

exports from India during the year was US$ 4085 million). This

was 56% higher than outsourcing orders in 2003-04. It is

estimated that the quantum of outsourcing may jump to US$ 5

billion and reach as high as US$ 10 billion by 2010 A.D.

CHAPTER - 3

HR PROBLEMS OF INDIAN IT PROFESSIONALS

3.0 OVERVIEW OF PROBLEMS

3.0.1 The IT revolution is sweeping the world, particularly the

western world in for nearly a decade now, creating enormous

employment opportunities in this area. India joined the

bandwagon well in time and smoothly though it is yet to entrench

itself strongly in terms of corporate identity and significant share

of global revenues in IT.

3.0.2 Our main contribution seems to be in the less glamorous areas

of value addition, maintenance, Y2K, quality assurance and

customisation of existing packages. The sudden eruption ofopportunities in this area left no time for development of human

resources in a planned manner and also software solutions which

tended to be more ad hoc than being assured of quality.


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3.0.3 With the enormous opportunities for employment,

entrepreneurship with low capital investment and low gestation

period for turning profitable, higher returns per employee and

large return on investment/EPS, sustained encouragement fromgovernment, a very large number of organisations - large,

medium, small - have been established. Correspondingly a large

number of training establishments and cyber cafes have come up,

most of which are in the cities and towns to cash in on the

enthusiasm of the urban middle class.

3.0.4 A number of higher level courses have also been started mainly

through private organisations besides the existing government

(State/Central), university and autonomous institutions. There are

about 500 private engineering colleges besides IITs, RECs,

universities, colleges offering courses such as MCA, M.Sc., M.E.,

and M.Tech. In view of the apparent demand that appears to be

exaggerated, most of the programmes (barring a few by

government institutions and IITs) are very expensive, almost

beyond the reach of a middle-class student. Yet candidates andtheir parents strain themselves financially to pursue the courses

hoping to get an attractive job (financially) which remains a

mirage by and large. The problems are further compounded by a

lack of proper teaching faculty in most colleges and franchises.

3.0.5 Except in well-established institutions, job-placements are poor.

Even those trained in reputed institutions find their jobs

monotonous, leading to depression. Jobs offered by the software

industry have demonstrated the above factors as they are able to

carry out the projects with persons of any background and levels

of attainment, but with a few months training either prior to

employment or a short training during probation.


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3.0.6 Despite these deficiencies, students prefer software jobs mainly

with an eye on the pay-package and urban locations. The

employee- retention period even in good companies has been

shrinking and is found to be three to six months. The companiesalso try to devise methods to make their employees almost captive

with surety bonds, bank guarantees, employee's stock option

(ESOP) and housing facilities, among others. The employees, for

their part, resort to innovative methods to wriggle out of their

contracts. There does not appear to be any respectable ethics even

among companies as well as the employees in this type of free for

all market. To go abroad and become rich has become the motive

of most of the employees even if the job does not offer any

intellectual satisfaction. The manufacturing and hard-core

engineering sector has also shrunk in terms of job opportunities

and attractiveness.

3.0.7 Even those software professionals, who are offered good

financial packages, spend their earnings on expensive lifestyles,

vehicles, and credit card syndrome and find themselvesdisenchanted on all fronts including the intellectual front. It

should also be a cause for concern to project beyond the present

software boom as to what happens to all these if the opportunities

decline. The scenario appears to be quite fluid with a predominant

western bias in all the activities concerning software profession

with scores of Indian boys getting lured and sucked into the

vortices created by the opportunities in this area

3.1 MAIN PROBLEM AREAS


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3.1.1 The significant problem areas which may be contributing to the

present scenario and can be addressed can be identified as given

in the succeeding paragraphs.

3.1.2 Recruitment process :-Without going into the deficiencies of

the present practices, the following suggestions are made to

improve the process in terms of efficiency, availability of

manpower and equity to all the aspirants irrespective of the fact

where they got educated. The various steps of the proposed

approach are as follows:

i. Aptitude tests could be conducted by reputed institutes like IITs/private organizations/HR agencies for prospective professionals

preferably ``on-line'' like GRE, GMAT etc. or physically at

regular intervals and scores are given. If it is no on-line, the

periodicity can be a month or two and the validity can be for an

year or so which can also be fixed based on general agreement.

ii. Based on scores and preferences of the candidates (career

counselling), companies can ask for a video clip for subsequent

interview if required. Interviews can also be conducted

simultaneously either physically or over the phone or by video

conference and selections completed.

iii. Once selected and the candidate joins the organizations, all

member organizations should adopt a code of conduct such that

the candidates stays at least for a period of one year.

iv. Small companies can form some kind of a cooperative society

wherein software professionals' services can be tapped and steer

clear and manpower shortage (less than critical mass levels).


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v. The selection can be conditional that he acquires certified skills

in the required areas either through training in house or through

approved training agencies and establishments. This will also

avoid the unnecessary expenses for (which are high) thecandidates, who are presently spending lot of money with a hope

of employment. This will also ensure that there is a focus on

proper training and optimal deployment of time, effort and

finances.

vi. The selection process can thus be continuous and commensurate

with the requirements thus avoiding idle inventory.

vii. There can be general norms of pay packages depending on the

reputation of the companies (classifying them as A, B, C, D by

any reputed management institute like IIM etc.) with the ratio of

maximum pay within reasonable and realistic limits.

3.1.2 Post employment care:- The companies/organizations should

take adequate interest in the career development of the employee

by suitable HRD approaches which should include the following:

i. Opportunities for creative work in the first phase particularly for

those who are bright, and have an aptitude and come with a good

pedigree say from IITs.

ii. Opportunities to lessen the monotony and improve interpersonal

relationship and mixing and group activities.

iii. Periodic rotation of the rolls and jobs if possible.

iv. Opportunities for retraining and upgrading the skills.

v. Conducting effective career development programs regularly.


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vi. Incentives like ESOP, lucrative assignments and challenging

projects, opportunities of higher education.

vii. Make the employee more versatile with wider perspective and

flexible for easy deployment in areas needing strengthening.

viii. Encouraging simplicity and excellence.

3.1.3 Advantages:- The suggested processes in 4 and 5 above can be

expected to have the following significant advantages:

i. Cost effective and efficient process.

ii. Proper deployment of skills optimally.

iii. Idle employment can be minimized.

iv. Retention can be improved.

v. Particularly useful for small firms which can also operate in the

cooperative society mode.

vi. The candidate's skills are moulded to suit the needs of the job

and need not waste time, money and efforts.

vii. Equitable opportunities to all aspirants irrespective of location,

pedigree and background.

viii. Reduces the mushrooms of training shops with inadequate

faculty.

ix. This may also give the manufacturing and core engineering

sector jobs reasonable chance to attract willing and bright

candidates.


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x. The process is ideally suited for candidates to plan their careers

with adequate preparation in core areas.

xi. The process also enables a realistic assessments of needs and

demands regularly and meeting them even at short notices.

xii. The aptitude tests can become richer and more representative

over a few years and as the question bank becomes larger and

random on-line questioning can be introduced which is more

objective like GRE, GMAT

3.2 LONG TERM PERSPECTIVE

3.2.1 These tests can be conducted at the end of 10+2 level or B.Sc.

level also and train the candidate with or without stipend in

courses where he could get admission for his degree. This will

help in decreasing the pressure on engineering education as

otherwise the skills acquired by the candidate at a great cost in

branches other than computer sciences are wasted and lost for

good if employed by the software industry.

3.2.2 It may be a good idea to have a National Test for Software

Talent similar to science talent test which can be sponsored by

NASSCOM and such other interested groups

3.2.3 The idea of forming a cooperative society by small firms may

prove to be beneficial as the facilities and manpower can be

shared optimally. While otherwise they may face the problems oflack of adequate manpower (below the critical mass level)

because of less attractive pay and perks they are able to offer.


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3.2.4 Renowned organizations like IITs, IIMs and MNCs, and can play a

catalytic roll in streamlining the processes for an efficient HRD in this

vital area of software manpower which is a national resource.

CHAPTER - 4

IT SECTOR COMPENSATION METHODS

4.0 EMPLOYEE STOCK OWNWERSHIP PLAN

4.0.1 Employee Stock Ownership Plan(ESOP): is a defined contribution

employee benefit plan that allows employees to become owners of stock

in the company they work for.

4.0.2 How does ESOP work?

1. The ESOP operates through a trust, setup by the company, that accepts

tax deductible contributions from the company to purchase company stock

2. The contributions made by the company are distributed to individual

employee accounts within the trust.

3. The amount of stock each individual receives may vary according to pre-

established formulas based on salary, service, or position.

4. The employees may cash out after vesting in the program or when they

leave the company. The amount they may cash out may depend on the

vesting requirements.


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4.1 STOCK OPTIONS

4.1.1 Stock Options: The right to purchase stock at a given price at some

time in the future. Stock Options come in two types:

1. Incentive stock options (ISOs) in which the employee is able to defer

taxation until the shares bought with the option are sold. The company

does not receive a tax deduction for this type of option.

2. Nonqualified stock options (NSOs) in which the employee must pay

income tax on the 'spread' between the value of the stock and the amount

paid for the option. The company may receive a tax deduction on the

'spread'.

4.1.2 How do Stock options work? An option is created that specifies

that the owner of the option may 'exercise' the 'right' to purchase a

companys stock at a certain price (the 'grant' price) by a certain

(expiration) date in the future. Usually the price of the option (the

'grant' price) is set to the market price of the stock at the time the

option was sold. If the underlying stock increases in value, theoption becomes more valuable. If the underlying stock decreases

below the 'grant' price or stays the same in value as the 'grant'

price, then the option becomes worthless.

4.2 MERIT PAY

4.2.1 Merit Pay is an incentive plan implemented on an institutional wide basis to

give all employees an equal opportunity for consideration, regardless of

funding source. The merit increase program is implemented when funds

are designated for that purpose by the institution's administration,

dependent upon the availability of funds and other constraints. .


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4.2.2 Advantages OF Merit Pay :-

Allows the employer to differentiate pay given to high performers.

Allows a differentiation between individual and company performance.

Allows the employer to satisfactorily reward an employee for

accomplishing a task that might not be repeated (such as implementation

of new systems).

4.3 GAIN SHARING

4.3.1 Gainsharing is a technique that compensates workers based on

improvements in the company's productivity.

4.3.2 How does Gainsharing work? A Company shares productivity

gains with the workforce. Workers voluntarily participate in

management to accept responsibility for major reforms. This type

of pay is based on factors directly under a workers control (i.e.,

productivity or costs). Gains are measured and distributions are

made frequently through a predetermined formula. Because thispay is only implemented when gains are achieved, gainsharing

plans do not adversely affect company costs.

4.3.2 What are the 'Gains' that are measured?

Increases in production with equal or less effort.

Equal levels of production with less effort.

4.3.3 What are examples of Gainsharing formulas?

Calculate gain in hours: The actual hours worked minus the expected

hours (for the given level of output) equals the gain in hours.


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4.4 PROFIT SHARING

4.4.1 Profit Sharing is an incentive based compensation program to award

employees a percentage of the company's profits.

4.4.2 How does Profit sharing work? The company contributes a

portion of its pre-tax profits to a pool that will be distributed

among eligible employees. The amount distributed to each

employee may be weighted by the employee's base salary so that

employees with higher base salaries receive a slightly higher

amount of the shared pool of profits. Generally this is done on an

annual basis

4.4.3 How to Choose an Employee Stock Plan for Your

Company:-Many companies we encounter have a pretty good idea

of what kind of employee ownership plan they want to use, usually

based on specific needs and goals. However, sometimes they

might be better served by another kind of stock plan. And yet

others say they'd like to have an employee ownership plan, but

they're not sure what it might be. This article will start you down

the path to choosing and implementing the plan or plans best

suited to your company.

4.5 ASSESSMENT OF PLANS FOR BROAD-BASED

EMPLOYEE OWNERSHIP

4.5.1 Let us begin by quickly reviewing the main possibilities for

broad-based employee ownership. A "broad-based" plan is one in

which most or all employees can participate.

4.5.2 An employee stock ownership plan (ESOP) is a type of

tax-qualified employee benefit plan in which most or all of the


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assets are invested in stock of the employer. Like profit sharing

and 401(k) plans, which are governed by many of the same laws,

an ESOP generally must include at least all full-time employees

meeting certain age and service requirements. Employees do notactually buy shares in an ESOP. Instead, the company contributes

its own shares to the plan, contributes cash to buy its own stock

(often from an existing owner), or, most commonly, has the plan

borrow money to buy stock, with the company repaying the loan.

All of these uses have significant tax benefits for the company, the

employees, and the sellers. Employees gradually vest in their

accounts and receive their benefits when they leave the company

(although there may be distributions prior to that). Over 8 million

employees in over 11,000 companies, mostly closely held,

participate in ESOPs.

4.5.3 A stock option plan grants employees the right to buy

company stock at a specified price during a specified period once

the option has vested. So if an employee gets an option on 100

shares at $10 and the stock price goes up to $20, the employee can"exercise" the option and buy those 100 shares at $10 each, sell

them on the market for $20 each, and pocket the difference. But if

the stock price never rises above the option price, the employee

will simply not exercise the option. Stock options can be given to

as few or as few employees as you wish. Perhaps 7 to 10 million

or more employees in thousands of companies, both public and

private, presently hold stock options.

4.5.4 An employee stock purchase plan (ESPP) is a little like a

stock option plan. It gives employees the chance to buy stock,

usually through payroll deductions over a 3- to 27-month

"offering period." The price is usually discounted up to 15% from


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the market price. Frequently, employees can choose to buy stock

at a discount from the lower of the price either at the beginning or

the end of the ESPP offering period, which can increase the

discount still further. As with a stock option, after acquiring thestock the employee can sell it for a quick profit or hold onto it for

awhile. Unlike stock options, the discounted price built into most

ESPPs means that employees can profit even if the stock price has

gone down since the grant date. Companies usually set up ESPPs

as tax-qualified "Section 423" plans, which means that almost all

full-time employees with 2 years or more of service must be

allowed to participate (although in practice, many choose not to).

Many millions of employees, almost always in public companies,

are in ESPPs.

4.5.5 Section 401(k) plan is a retirement plan that, unlike an

ESOP, is designed to provide the employee with a diversified

portfolio of investments. Like an ESOP, however, a 401(k) plan is

a tax-qualified plan that generally must include all full-time

employees meeting age and service requirements. The employeescan choose among several or more choices for investments, and

the company may make a matching contribution. Perhaps several

million employees in a few thousand companies participate in

plans with a heavy company stock component; company stock

may be an investment choice for the employees and/or the means

by which the company makes matching contributions. 401(k)

plans may be combined with ESOPs (these are called "KSOPs"),

where the company match is an ESOP contribution.


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4.6 EMPLOYEE OWNERSHIP : COMPANIES PAY LESS FOR

WORKERS' COMPENSATION COSTS

4.6.1 A study has found that employee ownership companies have

lower workers' compensation insurance rates than comparable

non-employee ownership firms. Leslie Hakala authored the study.

She began the project as an NCEO research intern and completed

it for a thesis requirement at Harvard University. The study was

unable to ascribe a specific causal relationship between employee

ownership and lower workers' compensation costs, but it did find

that these costs declined as employee ownership plans matured.


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4..6.2 Background:- In 1989, the last year for which we have data,

U.S. employers spent over $48 billion on workers' compensation

costs. These costs grew at 16.9% per year in the mid-1980s. Cost

increases were partly attributable to increased benefits mandated

by state workers' compensation insurance reforms. At the same

time, as employer provided health care coverage has declined,

more employees sought to cover health problems under workers'

compensation. Many people believe there has been increased

fraud as well.

4.6.3 Workers' compensation programs vary from state to state, but

in most programs, insurers attempt to provide employers with an

incentive to limit safety problems by developing an experience rating.

The ratings compare an individual firm's experience with other firms

of its type. If the rating is better than average, insurance premiums

will be lower; if it is worse, they will go up.


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4.6.4 In this study, we looked only at California firms. In California,

employers are assigned a "manual rate," an insurance rate

expressed as a percentage of every $100 of payroll. Rates are

assigned to all companies based on their industry classification.

These rates are then adjusted for companies with a premium above

a certain level according to their actual experience. This means

smaller and less risky firms are not assigned an experience

modification rating. The experience modification rate is set for each

year based on three years of past experience, excluding the most

recent year (because data are generally not yet available). The

experience modification rate is determined by looking at actual

experience modified by a size weighting factor. For larger firms, the

adjustment may be very small; for smaller firms, actual experience is

given a lower weight because a single incident can skew results

dramatically. This weighted experience rating now becomes the

"experience modification" figure.

4.6.4 Theoretically, the average experience modification factor for any

business classification should be 100%. A company with a good record

would have a rating under 100%; a bad record would rate higher. These

numbers are then multiplied by the manual rate to set the premium. In

practice, the average rating is somewhat under 100.

4.7 IT COMPANIES WRITE NEW ESOP STORY

4.7.1 Will I ever get to exercise my stock options? It's the one question

haunting IT industry professionals sitting on piles of employee stock

options. All those who happily grabbed at ESOP's issued by their

companies last year, have now been left holding pieces of paper that are, in


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some cases, worth a fraction of the price at which employees brought into

them. Except for a few who have benefitted from older schemes like

Infosys 1994 scheme, the great ESOPs dream is turning out to be a

nightmare. Last year, if you were given ESOPs in an IT company, yourfriends, neighbours and everyone else went up like a blimp, companies

issued ESOPs in cartloads. And employees brought into them, even at the

higher prices that the grants came from.

4.7.2 According to a study carried out by Nasscom , there were more than

10,000 IT staff last year holding around 18 million ESOPs valued at

roughly Rs 12,000 crore($3 billion) at February '00 prices. But all this was

merely on paper.

4.7.3 A year later, the situation's something like this. Employees who were

given ESOPs at the prices prevailing during the IT boom, had to sit back

and watch their share prices hit the roof while they waited out the lock-in

period. Now, they can exercise their options that is sell them, and pocket

the difference between the exercise price at the time of the grant, and the

current market price. It's resulted in a situation where employees have been

left holding NIIT options which they would have to exercise at a price of

Rs 1,593 or Silverline options, which they would have to exercise at a price

of $25. At VisualSoft, for instance, all employees who were granted

options have returned them to the company. Consequently, the company

has terminated the ESOP scheme.

4.7.4 Theoretically, an employee who exercised his option now, would have

to buy at the exercise price, sell at the current market price, and pay out the

difference.

4.8 ESOPs HARDLY BENEFICIAL -


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4.8.1 At the height of the IT euphoria in the markets, those employees saw

their company's scrips scaling new heights, they could not benefit as the

ESOP's had 1-2 year lock-in periods, and could not be sold. The lock-in

period, also known as the vesting period in industry jargon, in the periodduring which the employee cannot convert his or her option into shares. To

make matters worse, some companies has specified that the option had to

be exercised, that is converted into shares, within a specified time frame

after the lockin period expired. For instance, this was one year in the case

of Silverline, and 10 in the case of Aptech.

Table 4.1

ESOP IN INDIAN CONTEXT

Recent ESOPs

No of

Shares

(Lakh)

Plan Exercise Plans

(Rs)

Vesting

Period

(Yrs)

Current Price

(Rs)

NIIT 18.1 Aug '04 1,593 1 162

Silverline 10.0 Nov '04 425 1.5-3.5 41

Patni 5.5 Dec '04 245* 1 54

HCL Infosys 30.2 Aug '04 289 NA 72

SSI 1.5 Sep '04 555 3 164

Wipro 3.5 Oct '04 2,397 1-2 1,485

Infosys 19.6 Oct '04 6,249 5 3,532

VisualSoft 0.2 Aug '04 NA 1 116

Polaris 8.5 Aug '04 480 5 120

4.9 EMPLOYEE STOCK PURCHASE PLANS (ESPPS)

4.9.1 Employee stock purchase plans (ESPPs) include both tax-

qualified "423 plans," which about 2,400 companies offer, and


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nonqualified plans, which about 1,500 companies offer. Our

estimates are based on data from ShareData'sEquity

Compensation Trends in America (1991), Hewitt Associates' On

Employee Stock Ownership(1996), Hewitt Associates' Survey Findings: Employee Stock Purchase Plans(1998), and the

National Association for Stock Plan Professionals' Stock Plan

Design and Administration Survey(1998), especially the more

recent studies. To estimate the number of employees covered

under the plans, we took the total number of companies offering

plans, multiplied those numbers by the average number of

employees in the companies (13,207 for 423 plans and 17,790 for

nonqualified plans), and multiplied that number by the average

percentage of participation in the plans (34% for 423 plans and

17% for nonqualified ESPPs). Almost all companies with ESPPs

are public.

4.9.2 Multiple Plans: Many companies offer multiple e plans,

and many employees participate in more than one plan. For

example, many ESPP participants are also in 401(k), stock option,

or other equity compensation plans. Hence, the total number of

participants in all these plans is definitely notthe total of the

numbers in the "Number of participants" column.

4.10 ESOPS AND CORPORATE GROWTH

4.10.1. A 2000 study by Joseph Blasi and Douglas Kruse at

Rutgers Univerity found that ESOP companies grow 2.3% to

2.4% faster than would have been expected without an ESOP forsales, employment, and sales per employee. The study looked at

all ESOP plans set up between 1988 and 1994 for which data was

available. A 1987 NCEO study of 45 ESOP and 225 non-ESOP

companies found that companies that combine employee


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ownership with a participative management style grow 8% to 11%

per year faster than they would otherwise have been expected to

grow based on how they had performed before these plans.

4.10.2 Subsequent studies by the General Accounting Office and

by academics in Washington State and New York found the same

relationship. A 1999 study for Hewitt Associates by Hamid

Mehran of Northwestern University found that the returns on

assets for 382 publicly traded ESOP companies was 2.7% per year

greater than what a model of their predicted performance would

have been.

4.10.3 Studies on participative management alone find a small

positive impact on performance, but not nearly enough to explain

the synergy between ownership and participation these other

studies have found.

CHAPTER 5

SURVEY ANALYSIS

5.0 SURVEY BACKGROUND

5.0.1 HR management gets best out of its employees to meet the organisation's

goals. And employees are the best judge of the HR policies of any

organisations. IT sector is fastly growing industry in India and HR

requirements of Indian IT Industry are quit different from traditional

industrial sectors.., A major characteristic of modern socio-economic

development has been the increasingly dominant role of service sector


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.and IT belongs to service sector. So, its HR needs must also be properly

identified..

5.0.2 Indian IT sector is contributing a large in employment and foreign

exchange. A developing country like India can ill afford continued

conflict ridden; rigid and litigation oriented Industrial Relations. What

employees perceive about the emerging HR trends of the IT organisations

has been measured.

5.0.3 To measure the success and failures of emerging HR trends of Indian IT

Industry a structured questionnaire was designed for this purpose. The

questionnaire included both open ended and close ended questions. The

questionnaire used is placed at Appendix "I". The procedure adopted for

data collection was interview with the employees randomly selected

from IT organisations to the extent possible and also through mail. . The

responses given by the respondents were recorded on the questionnaire.

The views expressed by the respondents has been analysed in the

succeeding paragraphs. About 100 respondents were selected by

convenient random sampling technique.

5.1 RESPONDENTS PROFILE

5.1.1 The main features of the employees randomly selected

sex-wise, education-wise and type of functions wise has been provided

here in the succeeding paras. The 54 per cent of the respondents were

Male and 46 per cent of the respondents were Female

5.1.2 IT industry requires higher level of education standards, both non-

technical and technical. The education qualification wise distribution of

the employees who agreed for responding to our questionnaire has been

given below in Table 5.1.

Table 5.1


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RESPONDENTS PROFILE - EDUCATION-WISE

(%age)

Respondents' Qualification Percentage OfRespondents

Non-Tech Graduate and Below 11%

Non-Tech Post Graduate 23%

B.Tech/ BCA etc. 34%

M.Tech/MCA Etc. 32%

TOTAL 100%

5.1.3 In the similar fashion the job wise profile of the respondents

has also been compiled and the same is tabulated below in the Figure 5.2.

As per Figure the IT industry is dominated by the software professionals

And next computer hardware and marketing services of IT are sharing the

other half. Only13 percent are working in HR and Personnel Management

area. Hence, the HR needs of IT industry must look after the software

professionals at priority.

5.2 WHETHER HR NEEDS OF INDIAN IT INDUSTRY

ARE DIFFERENT

5.2.1 Through the Question No.2 of the questionnaire the respondents were

asked to comment whether the HR needs of Indian IT industry are different from

traditional HR Management systems. It was a direct question in Yes/NO/No

comments format and IT professionals selected for survey were asked to tick one

of the choices as mentioned. The responses have been tabulated in Table 5.3. The

majority of respondents (69%) view that HR needs of IT industry are different

from old economy sector and HR managers in IT industry has to keep this into

mind. Being highly educated employees are very sensitive in pride and

behaviour.


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TABLE-5.3

Emerging HR TRENDS OF INDIAN IT INDUSTRY

ARE DIFFERENT

(%age)

Respondents'

Observation

Percentage Of

Respondents

Yes 69%

No 23%

Can not say 08%

TOTAL 100%

5.3 EFFECT OF NEW COMPENSATION METHODS

5.3.1 The IT industry has been devising newer compensation methods like

Profit Sharing/ Stock Options etc. to increase employee welfare andretentively. Whether these new compensation techniques are

positively effecting or not was the key point in our next question. As

per Figure-5.4, 46% of the employees opined that newer

compensation methods has a positive effect in IT industry while


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19% said that it has a negative effect on employee welfare. 26%

view that it has no major effect and 9 percent has replied in CAN

NOT SAY. . In the initial stages when IT Industry was sunrise it was

mostly welcomed by the employees and when IT industry shareprices has gone down. It has a negative effect..

5.4 WHETHER IT INDUSTRY HAS POSITIVE

ATTITUDE TOWARDFS ITS EMPLOYEES

5.4.1 In has been found that in many organisations the management ignores the

employees welfare for their profit sake and does not give proper attention

towards employees career and prospects. What is the state of affairs in IT

Industry in India was quizzed from our valued learned respondents. The

respondents views are given below Table 5.5. The results are mixed one.

While 48% of the respondents' replied in negative and 43% gave a

positive reply. So, there is a profit motive operating more than employees

proper welfare management in Indian IT Industry.

TABLE - 5.5

WHETHER IT INDUSTRY HAS A POSITVE

ATTITUDE TOWARDS ITS EMPLOYEES

(%age)

Respondents'

Observation

Percentage Of

RespondentsYes 43%

No 48%

No comments 09%

TOTAL 100%


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5.5 STATE OF GRIEVANCES HANDLING IN

INDIAN IT INDUSTRY

5.5.1 The respondents responses to the status of grievances handling mechanism

was through an indirect approach. In the Question No. 5 of the

questionnaire the respondents were to comment upon the positive

hypothesis that grievance handling is done properly in the IT

organisation. The five choices provided were strongly agree, agree, no

comments, disagree and strongly disagree. The data collected is given

below in Table-5.6.

TABLE - 5.6

GRIEVANCE HANDLING IN

INDIAN IT INDUSTRY IS PROPER

(%age)

Respondents'

Observation

Percentage Of

Respondents

Strongly Agree 12%Agree 39%

No Comments 14%

Disagree 26%

Strongly Disagree 09%

TOTAL 100%

5.5.2 Only 12 respondents strongly agree to the statement and similarly a smallnumber of 9 respondents strongly disagreed with this. Only 14 percent

have nothing to comment. 39 percent agree that The grievance handling

IN Indian IT industry is done properly and remaining 26 percent disagree

with it.


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5.6 TOP MANAGEMENT AWARENESS

5.6.1 Whether top management awareness about working conditions of the

employees and state of working conditions in the organisation was

measured through next question. Table-5.7 shows the response. 65% of

the respondents view that the top management's are not aware or little

aware about the employees working conditions in the IT organisations

Only 6 percent vouched that top management is very well aware about

the nature of working conditions and 18 percent say "Much Aware".

Table 5.7

TOP MANAGEMENT AWARENESS

(%age)

Respondents'

Observation

Percentage Of

Respondents

Not at all aware 20%

Very little aware 45%

Some what aware 11%

Much aware 18%Very much aware 06%

TOTAL 100%

5.7 EMPLOYEE EMPLOYER RELATIONSHIP IN IT

INDUSTRY

5.7.1 Cordial employee employer relationship is very essential in the

upcoming highly competitive economy. The state of employee

employer relationship in Indian IT Industry was measured through

the next question. The state of employee-employer relationship is

not very encouraging.

Table 5.8


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STATE OF EMPLOYEE EMPLOYER

RELATIONSHIP IN IT INDUSTRY

(%age)

Respondents Grading Percentage Of

Respondents

Excellent 14%

Very Good 44%

Satisfactory 28%

Poor 14%

TOTAL 100%

5.7.2 58 percent of the respondents has graded it very good and above. While 42

percent consider it satisfactory and below. The employment of modern

technology requires more positive and effective relationship between

management and the employees. Indian IT Industry has very effective

employee employer relationship.

5.8 EMPLOYEES RETENTIVITY IN INDIAN ITINDUSTRY

5.8.1 The most of the employees of IT sector are highly educated and sensitive in

nature. Moreover, the opportunities outside are very attractive, Whether

Indian IT Industry is able to retain its employees was the next opinion

query from the randomly selected IT industry employees. Their opinions

in this regard are presented below in "YES/NO/NO COMMENTS" format

in the Figure 5.9.

5.8.2 61% of the employees view that Indian IT companies are unable to retain its

employees due to most attractive avenues outside. Only 23% viewed that

they are able to retain the employees.


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5.9 HOW TO INCREASE EMPLOYEES

RETENTIVITY IN INDIAN IT INDUSTRY

5.9.1 As has been observed in general and also concluded in previous paras that

the IT sector employees in India are very quickly jumping the

employment. So, what the employers has to do for retaining its

professionals was asked from the respondents. Few suggestions were

listed and one column was open ended to express their any other

suggestion. The Table 5.10 list outs all the suggestions. I

TABLE- 5.10

SUGGESTIONS FOR INCREASE RETENTIVITY

IN INDIAN IT INDUSTRY

Respondents' Suggestions Percentage Of Respondents

Increase wages to international levels 22%

Increase foreign postings 36%

Increase profit sharing 10%

More promotions 11%

Others 21%

TOTAL 100%

(%age)

5.9.2 A 22% of the respondents has suggested to increase the wages tointernational level to increase employees retentively in Indian IT industry.

36% want more foreign postings, 10% suggest increase profit sharing

and 11% suggested more promotions. 21% of the other suggestions

included lateral induction from lower the institutes and better HR

management.


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5.10 APPLICABILITY OF EXISTING INDIAN

LABOUR LAWS IN INDIAN IT INDUSTRY

5.10.1 "Existing Indian labour Laws/Rules are not strictly applicable to Indian

IT Industry as IT sector employees are quite different from general

factory workers and are well educated and trained. The separate Labour

to whether as a Laws/Rules should be designed for IT

Industry:. This hypothesis was presented to the respondents. They were

to respond upto which extent they agree or disagree. The employees

responses have been tabulated below in the Table 5.11. The comfortable

majority of respondents (89%) strongly agree or agree with the hypothesis

that Indian IT sector requires separate labour management system/

regulations. While only minority of 13% has given divergent views. Low

TABLE-5.11

INDIAN IT INDUSTRY REQUIRE

SEPARATE LABOUR LAWS/ RULES

(%age)

Respondents'

Observation

Percentage Of

Respondents

Strongly Agree 57 %

Agree 32 %

No Comments 02%

Disagree 07%

Strongly Disagree 02%TOTAL 100%

5.11 EFFECTIVENESS OF OLD AGITATIONAL

METHODS IN IT INDUSTRY


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5.13.1 The respondents were asked to comment upon whether Indian IT Industry

needs a trade union or management's are looking after the employees

interest in the best possible manner. The Table 5.14 shows the responses

in this regard.

Table 5.14

ROLE OF TRADE UNION IN IT INDUSTRY

(%age)

Respondents Grading Percentage Of

RespondentsNo Trade Union 21%

Single Trade Union 13%

Multi Trade Union 09%

Only welfare association 57%

Total 100%

5.13.2 The largest 57 percent of the respondents view that there should be only

welfare association in Indian IT industry. 21% need no trade union and

13% like single trade union only.. 9 percent of the respondents opted for

multi trade union.

5.14 OVERALL ASSESSMENT OF EMERGING HR

TRENDS IN INDIAN IT INDUSTRY

5.14.1 In the end respondents were asked to give their overall assessment/ grading

of emerging HR trends in Indian IT Industry. The overall assessment on

five point scales of excellent, very good, good, satisfactory and poor is

tabulated below in the Table 5.15. 65% of the respondents were in

positive grading of excellent, very good and good. While 35% gave a

assessment of satisfactory and poor


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CHAPTER - 6

SUMMARY AND CONCLUSION

6.0 OVERVIEW

6.0.1 The era of skill-based workers has arrived but if India wants to truly moveto the global arena, it has to spruce up its workforce. Small may be beautiful,

but not in the IT industry. In the knowledge era and a skill-based economy, ithas become imperative that human resources become one of the most essentialingredients of success. The growth of IT companies worldwide depends on its

people and the intellectual capital it possesses.

6.0.2 Knowledge workers has become a buzzword in todays IT scenario.And if we look at the top software exporters, they have been growing

phenomenally in workforce strength. To make it big in the global softwaremarket, India needs to increase its mass of knowledge workers. Theestablishment of Indian Institutes of Information Technology is definitely a stepahead in the right direction, but what the industry needs is experts in nicheareas, in other words, persons with domain expertise. In the era of cutting-edgetechnologies, it is this skilled workforce that will make all the difference.

6.0.3 The total human resource strength of the IT industry as a whole stands at

425,609. A company-wise break-up of this figure reveals that nearly 525companies constituting 35% of the IT industry employ an average of 58

persons each, 750 companies constituting 50% of the industry employ anaverage of 275 persons each, and 150 companies constituting 10% of theindustry employ an average of 726 persons each. At least 40 companies havemore than 1,000 employees, while some very big companies like TCS, Wipro,HCL and Infosys have staffs above 5,000 each.

6.0.4 Despite having abundant English-speaking skilled workforce, an acuteshortage of skilled workforce will affect the countrys software exports in the

long run, if remedial actions are not taken immediately.

6.0.5 Geometrical growth of Information Technology in the world as well asIndia, has created lot of revenues for government and number of avenues foremployees. The introduction of computers has changed the way of life everywhere, including work places and our homes. The life has become quite fastand speed of provisioning of different services has also increased. But all this


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activities are being managed by number of well qualified professionals. Theymay be from computer hardware developers, software engineers or marketingmanagers. As the things are running fast, so they have to be managed fast.

6.0.6 These fastness of services and higher level of education/training standards

are not easy to manage by the organisations concerned. As we already knowthat Human Resource Management of the organisation deals with theindividuals putting their hardwork to meet the organisations goals. Managing

people is the toughest element of any organisation than land, machinery orfinances. Every human beings has its own degree of preferences, likings andattitude. So, HR managers has to take care of all these things in mind while

dealing with the number of people working in the organisation.

6.0.7 Different type of employees/workers recruited for different level ofworking has to be managed in different styles. The hundreds years of

organisational management experience has been converted into a standardpersonnel management and industry and service organisations are followingthese HR techniques for their organisational management. Due to availabilityof written down procedures and rules by the learned managers, it was felt thatHR managing was not so typical.

6.0.8 But, emerging HR trends of Information Technology industry can not bemanaged properly by the old traditional HR techniques . As it is commonlyknown that man learns by experience. 50 years of introduction of computershas provided us the areas to be additionally addressed by the HR managers inIT sector. Indian IT industry is not an exception. Moreover, due to existence ofold conservative .and protective labour laws it is not possible to meet the ever-growing international competition in the IT services.

6.0.9 Hence, the IT industry has been devising newer Personnel Management/HR techniques which specifically meet the needs of IT industry. The mainreason for this is high standards of education and professional training requiredfor this industry. Secondly, there is excessive job demands for developedcountries in this sector and high wage standards. So, HR managers mainly indeveloping countries like India find it very difficult to retain and recruit theirmanpower. HR managers worldwide has devised handsome compensationmethods like Profit Sharing, Employee Stock Option Schemes ESOP etc.Though over the period few schemes has flopped like ESOP due to heavy fallin company share prices.

6.1 RESPONDENTS OBSERVATIONS


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6.1.1 As given out in Chapter 1, the employees opinion survey regarding statusof HR management in Indian IT Industry and success of emerging HR trendswas conducted through the use of a structured questionnaire. The survey wasconducted by randomly selecting 100 persons working in Indian IT Industry.The respondents observations in this respect are described in brief in thefollowing paragraphs

6.1.2 The 54% of the were Male and 46 per cent of the respondents wereFemale. It was observed that IT industry is dominated by the software

professionals (46%), computer hardware and marketing services of IT aresharing the other half.

6.1.3 The respondents were asked to comment whether the HR needs of IndianIT industry are different from traditional HR Management systems.. Themajority of respondents (69%) view that HR needs of IT industry are different

from old economy sector and HR managers in IT industry has to keep this intomind.

6.1.4 The IT industry has been devising newer compensation methods likeProfit Sharing/ Stock Options etc. to increase employee welfare and receptivity.46% of the employees opined that newer compensation methods has a positiveeffect in IT industry while 26% said that it has a negative effect on employeewelfare.

6.1.5 As per 48% of the respondents IT organisation has more concern for

profit motive than employees welfare. While 43% were not agree to thisproposition

6.1.6 51 percent of the respondents strongly agree/agree to the statement thatgrievance are handled properly in the Indian IT industry. While 33% thinkotherwise.

6.1.7 Whether top management awareness about working conditions of theemployees and state of working conditions in the IT organisations, 65% of therespondents view that the top management's are not aware or little aware about

the employees working conditions in the IT organisations . Only 4 percentvouched that top management is very well aware about the nature of workingconditions and 16 percent say "Much Aware".

6.1.8 Cordial employee employer relationship is very essential in the upcominghighly competitive economy. The state of employee employer relationship inIndian IT Industry was measured through the next question. The state of


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employee-employer relationship is very encouraging. 58 percent of therespondents has graded it very good and above. While 42 percent consider itsatisfactory and below.

6.1.9 Whether Indian IT Industry is able to retain its employees was the a query

from the randomly from IT industry employees. 61% of the employees viewthat Indian IT companies are unable to retain its employees due to mostattractive avenues outside . 22% of the respondents has suggested to increasethe wages to international level to increase employees retentivity in Indian ITindustry. 36% want more foreign postings, 10% suggest increase profit sharingand 11% suggested more promotions. 21% of the other suggestions includedlateral induction directly institutions and better HR management.

6.1.10

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HR Trends in Indian IT Industry

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