Project ReportOn

EMERGING HR TRENDS IN INDIAN IT SECTOR

Submitted in partial fulfillment of the requirement

for the award of the Degree of

Master of Business Administration

To

Maharishi Dayanand University, Rohtak

University Institute of Technology

and Management

Sec 40, Gurgaon

(2012-14)

DECLARATION

I Rashmi hereby declares that the project work entitled

“EMERGING HR TRENDS IN INDIAN IT INDUSTRY ” done under the

guidance of Dr.Vijay Rathi faculty of GITM for the award of

the degree of Master of Business Administration & and is

submitted to MAHARISHI DAYANAND UNIVERSITY, Rohtak and this

work has not been submitted elsewhere.

Submitted by

Rashmi

n

ACKNOWLEDGEMENT

This project is outcome of an effort, time and skills. I would

like to take this opportunity to thank all those who have

helped me towards completion of this project formulation.

I am grateful to the God Almighty to provide me strength and

health to complete this project work. I am also thankful for

the inspiration and unconditional support of my parents. Along

with above all, I would like to express my sincere gratitude

to Prof. (Dr.) R.K. Yadav, Director GITM, Prof. Sujata

Chaturvedi, HOD- Management, my project mentor Ms. Shweta

Sharma faculty of GITM. Without their valuable advices &

Supervision this project would not has been completed so

successfully. I would also like to thank my seniors who were

ready with a positive comment all the time, whether it was an

off-hand comment to encourage us or a constructive piece of

criticism. Last but not the least; I would like to thanks

other faculty members of GITM for extending a helping hand at

every juncture of need.

PREFACE

In order to correlate theoretical aspect of management studies

with practical aspect of real business world, the students of

management are required to do project work on a particular

sector and to study the various players.

Infect the project can be treated as telescope through which

we, tomorrow’s manager ‘s can peep into the world and can

observe the activities of Real business world before crossing

the “Door” that leads us the wonder world of real business

management.

Understanding and managing people in the organisation is quite

challenging job for managers in the present context because

complexities involved in every sector, so my efforts in this

project to know about HR trends in Indian IT sector like HR

manager behavior towards its employee ,employee retention in

this sector, employee payable in Indian IT sector etc.

Since my area of interest is Human Resource. This project is

the outcome of detailed study of Emerging HR trends in Indian

IT Industry.

SUMMARY

The era of skill-based workers has arrived but if India wants

to truly move to 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, it has become

imperative that human resources become one of the most

essential ingredients of success. The growth of IT companies

worldwide depends on its people and the intellectual capital

it possesses.

‘Knowledge workers’ has become a buzzword in today’s 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 software market, India needs to increase

its mass of knowledge workers. The establishment of Indian

Institutes of Information Technology is definitely a step

ahead in the right direction, but what the industry needs is

experts in niche areas, in other words, persons with domain

expertise. In the era of cutting-edge technologies, it is this

skilled workforce that will make all the difference.

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 525 companies constituting 35% of

the IT industry employ an average of 58 persons each, 750

companies constituting 50% of the industry employ an average

of 275 persons each, and 150 companies constituting 10% of the

industry employ an average of 726 persons each. At least 40

companies have more than 1,000 employees, while some very big

companies like TCS, Wipro, HCL and Infosys have staffs above

5,000 each. Despite having abundant English-speaking skilled

workforce, an acute shortage of skilled workforce will affect

the country’s software exports in the long run, if remedial

actions are not taken immediately.

Geometrical growth of Information Technology in the world as

well as India has created lot of revenues for government and

number of avenues for employees. The introduction of computers

has changed the way of life everywhere, including work places

and our homes.

The life has become quite fast and speed of provisioning of

different services has also increased. But all this activities

are being managed by number of well qualified professionals.

They may be from computer hardware developers, software

engineers or marketing managers. As the things are running

fast, so they have to be managed fast.

This fastness of services and higher level of

education/training standards are not easy to manage by the

organizations concerned. As we already know that Human

Resource Management of the organization deals with the

individuals putting their hard work to meet the organizations

goals. Managing people is the toughest element of any

organization than land, machinery or finances. Every human

being has its own degree of preferences, likings and attitude.

So, an HR manager has to take care of all these things in mind

while dealing with the number of people working in the

organization.

Different type of employees/workers recruited for different

level of working has to be managed in different styles. The

hundreds years of organizational, management experience has

been converted into a standard personnel management and

industry and service organizations are following these HR

techniques for their organizational management.

Due to availability of written down procedures and rules by

the learned managers, it was felt that HR managing was not so

typical. But, emerging HR trends of Information Technology

industry can not be managed properly by the old traditional HR

techniques. As it is commonly known that man learns by

experience. 50 years of introduction of computers has provided

us the areas to be additionally addressed by the HR managers

in IT sector. Indian IT industry is not an exception.

Moreover, due to existence of old conservative .and protective

labour laws it is not possible to meet the ever-growing

international competition in the IT services.

Hence, the IT industry has been devising newer Personnel

Management/ HR techniques, which specifically meet the needs

of IT industry. The main reason for this is high standards of

education and professional training required for this

industry. Secondly, there is an excessive job demand for

developed countries in this sector and high wage standards.

So, HR managers mainly in developing countries like India find

it very difficult to retain and recruit their manpower. An HR

manager worldwide has devised handsome compensation methods

like Profit Sharing, Employee Stock Option Schemes ESOP etc.

Though over the period few schemes has flopped like ESOP due

to heavy fall in company share prices.

TABLE OF CONTENT

TOPIC PAGE NO.

DECLARATION

ACKNOWLEDGEMENT

PREFACE

SUMMARY

I

II

III

IV-V

Chapter -1 INTRODUCTION 1-30

Chapter -2 REVIEW OF LITERATURE 31-33

Chapter -3 OBJECTIVE,SCOPE,SIGNIFICANCE OF STUDY & RESEARCH PROBLEB STATEMENT

34-37

Chapter -4 RESERCH DESIGN AND METHODOGOLY 38

Chapter -5 DATA ANALYSIS AND INTERPRETATION 39-51

Chapter - 6 FINDINGS AND CONCLUSION 52-53

Chapter -7 SUGGESTIONS AND LIMITATIONS 54-55

APPENDICES AND ANNXEURE 56-60

BIBLIOGRAPHY 61-62

CHAPTER-1

INTRODUCTION

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 time, human elements

are most difficult to be inspired, controlled and motivated.

The upcoming competition in India will demand high

motivational level of its employees.

Growth of an enterprise is vital for the economic development

of the country. This is possible only by maintaining the

enthusiasm and motivation of the employees, which is vital for

carrying out the operations in most efficient manner. The most

successful companies, all over the world have designed their

business policies to achieve higher productivity by using

potentiality and strength of people.

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 organizational interest. The world's best

companies have established their strength with their people.

The employees identify themselves with the company they are

working for. This also helps in building up their spirit,

morale and espirit-de-cops that becomes strength of the

company.

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

valuable resource is an indispensable requirement of every

organization. Human resources are capable of enlargement i.e.

capable of providing an output that is greater than the sum of

the inputs. Proper recruitment helps the line managers to work

most effectively in accomplishing the primary objective of the

enterprise. In order to harness the human energies in the

service or organizational goals, every manager is expected to

pay proper attention to recruitment, selection, training,

development activities in an organization. Thus, personnel

functions such as manpower planning recruitment, selection and

training, when carried out properly, would enable the

organization to hire and retain the services of the best

brains in the market.

The human resource management is very crucial in respect of

information technology services than other manufacturing or

marketing enterprises. The IT services 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

essential for the success of IT industry.

ROLE OF HR MANAGERS

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 served executive agendas well, but was frequently

viewed as a road block by much of the rest of the

organization. While some need for this role occasionally

remains you would no want every manager putting his own spin

on a sexual harassment policy, as an example—much of the HR

role is transforming itself. The role of the HR manager must

parallel the needs of his changing organization.

Strategic Partner:-In today’s organizations, to guarantee

their viability and ability to contribute, HR managers need to

think of themselves as strategic partners. In this role, the

HR person contributes to the development of and the

accomplishment of the organization-wide business plan and

objectives. The HR business objectives are established to

support the attainment of the overall plan and objectives.

This strategic partnership impacts HR services such as the

design of work positions, hiring; reward, recognition, and

strategic pay; performance development and appraisal systems;

career and succession planning; and employee development.

Employee Advocate:-As an employee sponsor or advocate, the HR

manager plays an integral role in organizational success via

his knowledge about and advocacy of people. In this role, the

HR manager provides employee development opportunities,

employee assistance programs, gain sharing and profit-sharing

strategies, organization development interventions, due

process approaches to problem solving, and regularly scheduled

communication opportunities.

LEADERSHIP AND EMPLOYEE INVOLVEMENT.

 The main role of leadership was seen as creating a

participatory process for employee involvement, to build

collective wisdom this is a marked shift to build effective

teams. Research shows that six out of every 10 employees like

to work in teams. 87 per cent of all Fortune 500 companies use

parallel teams and about 100 per cent of all companies use

project teams.

Storytelling and appreciative enquiry are emerging as a new

dimension in positive motivation. Finding out what is wrong

seems to be the trend. In Walt Disney, telling success stories

is one of the important methods used to remind people of

greatness and goodness of the organization. Leaders in Disney

concentrate on quality, values and involvement. Speaking in

the plenary sessions, Tom Peters said, “We have transitioned

from an asset-based economy to a talent-based economy. The new

definition of lay-off is untalented go talented stay. Leaders

must realize that talent is equal to brand". His new theory is

EVP which means "Employee Value Proposition".

E-Learning: - Organizations’ like Ford Motor, Hewlett Packard,

Intel and IBM are using e-learning to increase the knowledge

of their people. Companies like Fordstar even manage time

differences between countries while conducting virtual class

rooms, chats, demos, presentations to communicate new

concepts, product details, core values, issues of governance

and corporate communities.

INNOVATIVE PRACTICES IN HR

The Innovative Practices in Human Resources study uncovered 12

practices that are reducing HR costs and improving service

quality to employees. Key findings from this research included

the need for HR managers to streamline processes, lower

overhead costs, and enable their departments to advance from

transactional organizations to strategic partners in the

business.

 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)

LINKING PAY TO PERFORMANCE

Most Human Resource professionals are familiar with the

concept of strategy. There is much more concentration and

focus today on the strategic outcomes of human resource

activity than ever before. The area of compensation is no

exception.

Pay for performance systems are becoming more and more popular

as senior managers reach beyond the use of compensation

systems to deliver pay.

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 and salary increases.

First, the annual salary change is usually a small

percentage. Giving the better performer 2% more than the cost

of living has little motivation or recognition attached to it.

Similarly giving the poor performers 2% less than the cost of

living increase is not that much of a penalty.

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.

The result is usually a lot of avoidance behavior. Managers

avoid the appraisal process like the plague. Although

employees profess to want to "know where they stand”, they

often take issue with the appraisal. Besides, they do not

listen to the evaluation, they wait until the penny literally

"drops". "What is my rating and how much do I get?" is a

constant theme in merit systems where salary decisions are

tied so closely with the appraisal process.

Why Is This Transition Occurring? :-Well, there are many

challenges facing businesses today and these challenges are

driving them to find better ways of linking pay and

performance to the achievement of corporate results.

CHANGING JOB DESIGN IN IT COMMUNITY

The California State University (CSU) system is being

challenged to meet increasing demands for educational and

administrative services through the innovative use of

technology and human resource systems. Even though funding

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 and

efficiency. Human resource and organizational systems are also

needed to capitalize on and thrive in this rapidly changing

work environment.

In 1991, the CSU began a study to look at alternative work

and job design approaches to meet these challenges.

The studies focused on the information technology community

and how work processes and activities could be better

organized to remove artificial barriers and improve

organizational effectiveness, a process often associated with

the term "reengineering." Secondly, the study focused on

developing a job design approach that could adapt to changing

skill requirements and that would promote the continuous

acquisition of skills for knowledge-based employees in

information technology. The goal of improved organizational

effectiveness and an orientation towards reengineering and

skills guided the development of the proposed job design

approach.

This article begins by identifying several trends that led to

the study, and then describes the overall project within the

context of an organizational effectiveness equation. A new job

design approach that was proposed as a result of the study is

presented, including a new classification structure and

competency dimensions and measures for defining and evaluating

positions. Finally, other supporting systems are described for

an integrated human resources approach. The development phase

of the project has been completed, and the CSU anticipates

entering into negotiations with its employee representatives

in the near future.

Three trends have had a direct impact on the development of a

strategic job design approach for the information technology

community at the CSU: (a) diversification and convergence of

technology, increased demand for educational access and (b)

changes in instructional delivery methods; and changing work

place demands and priorities.

The technology demands within higher education lead to a

complex and dynamic computing environment. Academic and

administrative computing strategies tend to be at cross-

purposes in terms of defining systems requirements.

This has resulted in widely diverse systems and technology

within and across the CSU's twenty campuses. Increasingly,

however, campus systems are becoming more integrated, as data

are shared across multiple platforms on a network "highway"

that is linked to external information sources. 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

more interactive and user-friendly formats.

In terms of educational trends, many institutions offer

distance learning using various transmission media and are

incorporating instructional technology into curriculum

development. Students expect guaranteed access to technology

and to research databases, and this access has become an issue

of social responsibility.

[1] Library and computing functions are becoming increasingly

interdependent in "an infrastructure of scholarly

communication" within higher education.[2] Workplace trends,

as presented in Sustaining Excellence in the 21st Century: A

Vision and Strategies for College and University

Administration, well represent the outlook for the CSU. Two

key issues are identified:

(1) Economics. There is increasing pressure to constrain

administrative costs within the "labor intensive cost

structure" that exists in higher education. Reductions in

staff are occurring at the same time as transaction volume and

service expectations are growing.

(2) Decentralization of responsibility. With fewer people and

greater access to information, organizations are moving

responsibility for decision-making downward to the point of

service. Work organization is shifting away from job

specialization and a task/procedure orientation, to more

generalized job responsibilities focused on outcome and

greater participation on cross-functional teams

(3) Another central workplace trend is the "earning and

learning" environment described by the U.S. Department of

Labor in its Secretary's Commission on Achieving Necessary

Skills (SCANS) report. To quote Thomas P. Foley, Secretary of

the Pennsylvania Department of Labor and Industry:"We've

changed 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 the point, workers

must possess a skill that they continually upgrade just to

keep pace in the professions they choose."

(4) The influx of new technology and applications has created

a demand for continual learning and adaptation. Due to the

CSU's relatively stable workforce, maintaining skills to keep

pace with changing technology was identified as a critical

goal. Knowledge requirements are expanding to encompass a

greater breadth of technologies and subject expertise, as well

as including process-oriented capabilities such as

communication and negotiation skills.

The implications of these technological, educational, and

workplace trends point directly to the need to reengineer

organizational structures, work design, and processes. Based

on these trends and overall organizational goals, two key

objectives were established for a new job design approach for

the CSU: flexibility and skill development. Fundamentally,

each campus needs the flexibility to achieve its goals by

distributing work assignments in a way that optimizes its

available skill mix and promotes individual skill development

and initiative.

HR TRENDS IN   IT INDUSTRY

HR IT SCENARIO

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’.

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.

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 organization is likely to be

between two to three years.

INNOVATION IS THE KEY

 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.

The  key  to  employee  longevity :-Today’s most successful

organizations recognize that to fuel growth and sustain a

competitive advantage, they must make recruiting, hiring and

retaining top talent, as the organization’s major thrust area.

Competent people deliver the rest do not matter. Successful

business organizations have no choice but to promote the

performers and let non-performers go.

 Organizations’ recognize that that their ability to gather,

manage, analyze, distribute information and transform

themselves into a learning organization 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

organization. But ‘change is the only constant’ for guaranteed

success.

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 organization.

People are responsible

People desire opportunities to effect change, not just being

expected to change.          Organizations’ 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 recognize achievers.

Consolidate improvements through a knowledge base

driven system and institutionalize proven new

methodologies.

    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

         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 organization.

  WAR FOR TALENT

 The world’s 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 India’s IT industry

achieve its software and services revenue target of $87

billion by 2008?

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

we consider 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 new jobs in the next

one  year.

 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

destination—India.

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.

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 highly skilled manpower, we can easily meet this

demand. "IT-enabled services are a wonderful opportunity for

India and for such services you don’t need highly skilled

professionals. You just need smart graduates who can speak

English; all you need to do is train them. For instance, in a

call center, they need to be trained on accents and customer

services,

4 R’s of HR in IT

TABLE

Recruiti

ng

Signing

bonus

Finder’s Fee

Alumni

connections

Retaining

Retention

bonus

Project pay

Reduct

FTE/same pay

Telecommuting

Retraini

ng

Job rotation

Team

assignments

Skill

inventories

Competency

Restructur

ing

Broad job

descriptions

Flexible

compensation

programs

Flexible jobs

Non-techs

Students

Interns

Externs

Job sharing

Recognition

programs

development

Certificatio

n

Positive

problem-solving

spirit

OBSTACLES

Denial (This is  and long term)

Misalignment (Ramping up/Ramping down)

Timing

Treating everyone the same

Navigating the bureaucracy

Demographics

WHAT OTHERS ARE DOING

Pooling recruitment efforts

Increasing freedom at the dept level

(On-the-spot hiring, broad banding, etc.)

Recruiting/retaining students

Identifying tech skills in all jobs/people

(Skill Inventories/assessment)

Sharing staff

   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.           Empowerment

11.           Department leadership

12.           Ability to influence department success.

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 meet changing needs

     SEARCH FOR TOMORROW

Attract, retain and reward the best performers (Encourage

all to be the best)

Increase flexibility

Reduce fixed costs

Reduce administrative effort (Simplify, simplify,

simplify)

Utilize the full range of individual talents

    THE CRISIS

Ø         Shortage of IT workers

  COMPETITION

Ø       Compensation stock options, profit sharing,

incentives

Ø       Alternatives outsourcing

  ATTRACTING

Ø        Recruiting sign on bonuses

Ø        Relocation incentives

Ø        Recruiters

Ø        Reduced cycle time for hiring

Ø        Campus/ job fairs / referrals/ internet

RETAINING

Ø     Work environment

Ø     Communication forums

Ø     Telecommuting

Ø     Flexible staffing

Ø     Exciting projects

  PRACTICES

Ø      Focus on value

Ø      Financial and human value

Ø      Commitment to core strategy

Ø      Linkage between cultures an system

Ø      Multi dimension communication

Ø      Stakeholders partnerships

Ø      Mutual support and collaboration (teamwork)

Ø      Risk and innovativeness

Ø      Passion

    DEVELOPING

Ø      Internship programs

Ø      Training programs

Ø      Career development programs

      LONG TERM SOLUTIONS

Ø         Education, government, industry partnerships

Ø         Curricula: technical skills and career skills (teamwork and communication)

KEY SUCCESS FACTORS

Understand people

What they want

Long term perspective’

Innovative

Co ordinate approach

Career development I

OUT SOURCING

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-server

computing in decentralized organizations involves the

development of applications specific to a user's business.

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.

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".

Outsourcing is closely linked with corporate strategy, since

it must support the organization’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 low cost and of

high value addition, keep it within the organization, i.e. in-

source. If IS high cost and of low value addition, consider

outsourcing". In the past few years, whenever organizations’

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, all these cost and quality advantages

are coupled with the use of state-of-the-art technologies.

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.

HR   PROBLEMS OF INDIAN IT   PROFESSIONALS  

OVERVIEW OF PROBLEMS

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.

Our main contribution seems to be in the less glamorous areas

of value addition, maintenance, Y2K, quality assurance and

customization of existing packages. The sudden eruption of

opportunities in this area left no time for development of

human resources in a planned manner and also software

solutions which tended to

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 from

government, a very large number of organizations’ - 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.

A number of higher level courses have also been started mainly

through private organizations’ 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 and

their 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

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.

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

companies also 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.

Even those software professionals, who are offered good

financial packages, spend their earnings on expensive

lifestyles, vehicles, and credit card syndrome and find

themselves disenchanted 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.

MAIN PROBLEM AREAS

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.

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 a year or so which can also be fixed based

on general agreement.

ii Based on scores and preferences of the candidates (career

counseling), 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).

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)

the candidates, 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.

Post employment care: - The companies/organizations shouldtake 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.

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.

Advantages:- The suggested processes in 4 and 5 above can beexpected 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.

x.            The process is ideally suited for candidates to

plan their careers with adequate preparation in core areas.

xi.           The process also enables 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

LONG   TERM     PERSPECTIVE

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. It may be a good idea to have a National Testfor Software Talent similar to science talent test which can be

sponsored by NASSCOM and such other interested groups 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 of lack of adequate

manpower (below the critical mass level) because of less attractive

pay and perks they are able to offer. 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.

IT   SECTOR   COMPENSATION METHODS

  EMPLOYEE STOCK OWNWERSHIP PLAN

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.

  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.          

STOCK OPTIONS

  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 is

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'.

How do Stock options work? An option is created that

specifies that the owner of the option may 'exercise' the

'right' to purchase a company’s 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, the option 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.

MERIT PAY

  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. .

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).

GAIN SHARING

Gain sharing is a technique that compensates workers based on

improvements in the company's productivity.

How does Gain sharing 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 worker’s

control (i.e., productivity or costs). Gains are measured and

distributions are made frequently through a predetermined

formula. Because this pay is only implemented when gains are

achieved, gain sharing plans do not adversely affect company

costs.

What are the 'Gains' that are measured?

·                     Increases in production with equal or

less effort.

·                     Equal levels of production with less

effort.

What are examples of Gain sharing formulas?

·                     Calculate gain in hours: The actual hours worked minus

the expected hours (for the given level of output) equal the gain in

hours.

PROFIT SHARING

Profit Sharing is an incentive based compensation program to

award employees a percentage of the company's profits. How doesProfit 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 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.

ASSESSMENT OF PLANS FOR BROAD-BASED EMPLOYEE

OWNERSHIP

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.

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

qualified employee benefit plan in which most or all of the

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 not actually 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.

 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.

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 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 the stock 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.

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 employees can 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.

EMPLOYEE     OWNERSHIP: COMPANIES   PAY LESS FOR WORKERS' COMPENSATION COSTS

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.

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.

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. 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.

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.

IT COMPANIES WRITE NEW ESOP STORY

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 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, your friends, neighbors 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. 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.A year later, the situations 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 are 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

Silver line options, which they would have to exercise at a

price of $25. At Visual Soft, for instance, all employees who

were granted options have returned them to the company.

Consequently, the company has terminated the ESOP scheme.

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.

ESOPs   HARDLY   BENEFICIAL -

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 period during 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 locking period

expired. For instance, this was one year in the case of Silver

line, and 10 in the case of Aptech.

Table ESOP IN INDIAN CONTEXT

Recent ESOPs

  No of

Shares  

(Lakh)

Plan Exercise

Plans

Vesting

Period

Curren

t

(Rs) (Yrs) Price

(Rs)

NIIT 18.1 Aug '04 1,593 1 162

Silver

line

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

Visual

Soft

0.2 Aug '04 NA 1 116

Polaris 8.5 Aug '04 480 5 120

 

EMPLOYEE STOCK PURCHASE PLANS (ESPPS)

  Employee stock purchase plans (ESPPs) include both tax-

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

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

estimates are based on data from Share Data’s Equity

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.

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 not the total of

the numbers in the "Number of participants" column.

ESOPS AND CORPORATE GROWTH

A 2000 study by Joseph Blasi and Douglas Kruse at Rutgers

University found that ESOP companies grow 2.3% to 2.4% faster

than would have been expected without an ESOP for sales,

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 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. 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. 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-2

REVIEW OF

LITERATURE

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 make them a success.

Seconding this, Mr Peters pointed out how most organisations

are 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 other hand spends 10-

15 times more on training.

Tom Peters said, “We have transitioned from an asset-based

economy to a talent-based economy. The new definition of

lay-off is untalented go talented stay. Leaders must realise

that talent is equal to brand". His new theory is EVP which

means "Employee Value Proposition".

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 of the Fast Pace

magazine, said, "There is no going back from back from

dotcoms". He was of the opinion that there is a merger

taking place between computers and human beings. 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. PramaNath

India's growth story has drastically slowed down due to the

cascading effect of the slow global economy. Organisations

are suffering, employees are confused and HR – the

profession – has been unofficially assigned the unenviable

task of retention, higher productivity, even helping

increase of sales revenue by using a synthesis of the tools

at its disposal and innovative thought leadership

 People and knowledge retention during these tough times

will propel the talent management domain in the forefront

and ensure it doesn't remain consigned to a folder in the

laptop of the talent manager after the annual talent review

ritual. From using reliable tools in hiring and assessing

employees to developing high potential talent, creating a

strong leadership bench and work on a robust succession

planning strategy, talent management will become an

empirically substantiated document for the business and HR

leaders to retain people and curb knowledge transfer outside

the organisation.  

The role of the Human Resources Department has changed

dramatically over the past 30 years and will become

increasingly more strategic in nature in the future, said a

leading light of the HR community in the recent 2006 Annual

Conference and Exposition of HR practitioners in Washington,

DC. 

Rita Craig, president of the Craig Group and a long-time

professional HR consultant, said the role of HR has changed

from a primarily administrative position to one that is more

strategic. Times certainly have change from those days when

the HR department was called the "smile and file" department

since in that era, the primary qualifications for HR were

simply a friendly disposition and an ability to file. 

She said that the emerging trends in HR call for HR

professionals to take the lead in planning for the future

and becoming strategic business partners in their

organizations. She identified several other trends in the

industry, as follows:

(1) a shrinking talent pool,

(2) An increase in outsourcing,

(3) A more intense focus on work/life balance;

(4) Changing workplace demographics,

(5) Greater need for talent management,

(6)Ethics requirements, and

(7)Globalization

 The key appears to be strategic planning. With the changing

landscape of Human Resources management in the years to

come, strategic planning will be the key for HR to meet

those needs and to succeed. The key to HR planning for the

future begins with one simple question that HR professionals

have to ask themselves, says Craig: "If we are successful in

the years to come, what will our customers and competitors

be saying about us?” With the answers to this question, HR

practitioners can formulate a clear, shared vision and a

sense of direction for the organization. As a possible

starting point in providing answers to the key question,

Craig suggested the following: Focus resources on key goals

and strategic measures, create and sustain long-term

performance, and create a living document that can change

when necessary.

In closing, Craig warned against "powerful and pervasive

barriers" that prevent HR professionals from being effective

in their roles. She pinpointed these as resistance to

change, failure to implement plans, the wounds of past

strategic planning failures, and failure to anticipate the

impact on people, process and organizational structure.

To quote Thomas P. Foley, Secretary of the Pennsylvania

Department of Labor and Industry:” We’ve changed 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 the point, workers must possess a skill

that they continually upgrade just to keep pace in the

professions they choose."

Chapter – 3

OBJECTIVE, SCOPE,

SIGNIFICANCE

OF STUDY

& RESEARCH PROBLEM STATEMENT

OBJECTIVES OF STUDY

Following were the objectives of the study:-

1. To enlist emerging HR trends in Indian IT Industry

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

3. To measure the perceptions of IT sector employees in

respect of application of HRD in their organization.

4. To suggest the measures to fill the gaps and improve

motivation level of employees and HR management in IT

industry.

5. The goal of improved organizational effectiveness and an

orientation towards reengineering and skills guided the

development of the proposed job design approach.

SCOPE OF STUDY

Following were the scope of the study:-

To know the emerging HR trends in Indian IT Industry.

Give information about the Indian IT Industry.

To know about the HR problems of Indian IT Professionals.

Give information that what’s wrong seems to be the trend.

SIGNIFICANCE OF STUDY

Optimum Utilization of Human Resources

Healthy work environment –Due to study of HR trends in IT

Industry we find the deficiencies and helps in creating

the healthy working environment. It helps to build good

employee, relationship so that individual goals aligns

with organizational goal.

The study focused on the information technology community

and how works processes and activities could be better

organized to remove artificial barriers and improve

organizational effectiveness, a process often associated

with the term "reengineering.

The study focused on developing a job design approach

that could adapt to changing skill requirements and that

would promote the continuous acquisition of skills for

knowledge-based employees in information technology.

RESEARCH PROBLEM STATEMENT

Significant problem areas, which may be contributing to the

present scenario and can be addressed, can be identified as

given

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

Recruitment process - Aptitude tests could be conducted byreputed 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.

Chapter–4

RESEARCH DESIGN

AND

METHODOLOGY

RESEARCH METHODOLOGY

"A research is a careful investigation or inquiry especially

through search for new facts in any branch of knowledge; it is

a systematized effort to gain more knowledge"

(A)Types of research

Types of Research selected for this project is

EXPLORATARY .In exploratory research design we focused the

objective of the study, method of data collection and then

select the sample. After collection the data we analyses

and at last interoperate the final result & finds the best

solution of particular problem. In Quantitative research is

based on the measurement of quantity or amount. It is

applicable to phenomena that can be expressed in terms of

quantity

(B) Sampling methodology

Sample Size - 100 respondents.

Sample Unit-Employees were selected among the executives and

staff working in various IT organizations.

Sampling Area- India IT sector

Sampling Technique - Random Sampling technique.

(C)Method of data collection

Primary data has been used in the form of Questionnaire the survey was based on structured questionnaire. The

questionnaire was mainly based on objective type close-ended

question, but few open ended questions were also included. The

pilot survey on ten randomly selected respondents was

undertaken. Then the questionnaire was modified accordingly

Secondary data has been used from various internet sites such

as motorola.com & google.com has been used.

Chapter–5

DATA ANALYSIS

AND

INTERPRETATION

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

organisation has been measured.

To measure the success and failures of emerging HR trends of

Indian IT Industry a structured questionnaire is prepared 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 organization to

the extent possible and also through mail. .

The responses given by the respondents were

recorded on the questionnaire. The view expressed by the

respondents has been analyzed in the succeeding paragraphs.

About 100 respondents were selected by convenient random

sampling technique.

RESPONDENTS PROFILE - EDUCATION-WISE

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

Respondents'

Qualification

Percentage Of

RespondentsNon-Tech Graduate and

Below

11%

Non-Tech  Post

Graduate

23%

 B.Tech/ BCA etc. 34%M.Tech/MCA Etc. 32%TOTAL 100%

DATA ANALYSIS OF THE RESPONSES OBTAINED FROM

EMPLOYEES .

1. Whether Indian IT Industry needs a trade union or

management's?

Respondents grading with %: No trade union (21%) Single

trade union (13%) Multi trade union (09%) Only welfare

association (57%)

Interpretation –The respondents were asked to comment upon

whether Indian IT Industry needs a trade union or managements

are looking after the employee’s interest in the best possible

manner. The largest 57 percent of the respondent’s 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.

2. In your view whether excessive competition in Indian IT

sector is harming the overall long term prospects of

employees in this sector?

Respondent’s observations with % - Yes (53%)

No (35%) No comments (12%)

Interpretation: Whether excessive competition in Indian IT

sector is harming the overall long term prospects of employees

in this sector the respondent’s opinion is that 53 percent of

the respondents has replied in Yes to this question. While 35%

has a negative viewpoint & 12% Respondents no reply.

3. Whether IT industry can afford old traditional trade union

methods of agitations like Strike or Gherao etc.?

Respondent’s observations with % - Yes (67%) No

(28%) No comments (05%)

Interpretation: Whether IT industry can afford old traditional

trade union methods of agitations like Strike or Gherao etc.

was also asked from the employees. The question was direct in

nature of Yes or No. 67% of the respondents has given their

reply in No and 28% answered in affirmative. 5% has ticked No

Comments choice. So, it is concluded that old agitational

techniques of trade unions are not desired in IT industry.

4. 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 Laws/Rules should be

designed for IT Industry?

Respondent’s observations with % -Strongly agree (57%)

agree (32%) No comments (11%)

Interpretation: 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 Laws/Rules should be designed

for IT Industry: This hypothesis was presented to the

respondents. They were to respond up to which extent they

agree or disagree. The comfortable majorities 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.

5. What the HR managers of Indian IT sector should do to

increase the retentivity rate of its employees?

Respondents' Suggestions with %: Increase wages to international levels (22%), Increase foreign postings (36%),

Increase profit sharing (10%), More promotions (11%), Others

(21%)

Interpretation:  A 22% of the respondents has suggested

increasing the wages to international 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.

6. The most of the employees of Indian IT sector or highly

educated and sensitive in nature. Moreover, the

opportunities outside are very attractive, Whether Indian

IT Industry is able to retain its employees?

Respondent’s observations with % - Yes (61%) No

(23%) No comments (16%)

Interpretation: 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. 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.

7.  What is the state of employee employer relationship in

Your Organisation?

Respondents grading with %: Excellent (14%) Very Good (44%)

Satisfactory (28%) Poor (14%)

Interpretation: 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. 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.

8. Whether IT Industry has a Positive attitude towards its

employees?

Respondent’s observations with % - Yes (43%) No

(48%) No comments (9%)

Interpretation: It has been found that

in many organisations the management ignores the employee’s

welfare for their profit sake and does not give proper

attention towards employee’s career and prospects. What is the

state of affairs in IT Industry in India was quizzed from our

valued learned respondents. 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

9."The grievances of the employees in Indian IT sectors are

handled properly". To what extent do you with this statement.

Respondents' Observation with % : Strongly Agree (12%)Agree (39%) No Comments (14%) Disagree Strongly (26%)

Disagree (09%)

Interpretation: The respondents  responses to the status of 

grievances  handling  mechanism  was through  an  indirect 

approach. In this Question 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. Only 12 respondents strongly

agree to the statement and similarly a small number 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.

10. Whether new compensating methods being adopted by the various IT companies are positively affecting the employee’s

welfare?

Respondent’s observations with % positive effect (46%)

negative affect (19%) no effect (26%) Can’t say (9%)

Interpretation: The IT industry has been devising newer

compensation methods like Profit Sharing/ Stock Options etc.

to increase employee welfare and retentively. Whether these

new compensation techniques are positively effecting or not

was the key point in our next question. 46% of the employees

opined that newer compensation methods has a positive effect

in IT industry   while 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, the employees and when an IT

industry share price has gone down mostly welcomed it. It has

a negative effect

11. Whether you feel that HR needs of Indian IT sector is

different from old HR practices?

Respondent’s observations with % - Yes (69%) No (23%) no comments (8%)

Interpretation: Through the Question 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 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 behavior.

Chapter –6

FINDINGS

AND

CONCLUSION

FINDINGS :

As per the survey result Indian IT sector feel different HR

needs.

New compensation techniques in Indian IT Industry are giving

positive effect.

Employees Grievances are not properly handled in these

Industries.

Good relationship between employee and employer in Indian IT

Industry.

Indian IT companies are unable to retain its employees due

to most attractive avenues outside.

Excessive competition in Indian IT sector is harming the

overall long term prospects of employees in this sector.

Shortage of IT workers in India.

More employees say that negative attitude of IT sector

towards its employees.

CONCLUSION:

It can be concluded that Emerging HR trends of Indian It

industry are quite different from the old economy

industry.

India is considered one of Super Power in Information

Technology and allied fields.

Majority of world leaders in IT sector are outsourcing

their requirements from Indian IT Industry and recruiting

Indian IT professionals.

The Indian Government must allow the Industry to meet

international competition and desired environment in

respect of Labour Laws and financial rules must be

liberalized for this Indian IT Industry.

HR managers in Indian IT Industry must keep the sensitive

nature of IT professionals and state of greater

opportunities outside in mind for devising HR policies

for their organization.

China is also entering this area vigorously and

Government of India must help Indian It industry to meet

this challenge.

Chapter –7

SUGGESTIONS

AND

LIMITATIONS

SUGESSATIONS :

It is found that in these Industries employees grievance

are not properly handled so for retaining the employee

first of all employee grievance are handled.

Indian IT Industry want that they provide the attractive

avenues to its employee for retaining good employee.

Provide the training & development program time to time

to employee for meeting the competition.

The main problem of Indian IT sector is hoe they retain

the employee , so Indian IT sector want that they provide

the job security to employee.

LIMITATIONS:

Employees by and large are reluctant in expressing their

feelings/thoughts in the Questionnaire and tend to be

biased.

The Organization is reluctant to openly share

data/information and tend to keep sensitive

data/information confidential which is understandable.

Some personnel in the Organization, irrespective of their

seniority, cannot pay adequate attention to the requests

of such studies given the constraints of time and the

work pressures prevalent in the Industry today.

Long term perspective

APPENDICES

AND

ANNEXURE

QUESTIONNAIRE FOR   PROJECT STUDY ON EMERGING HR

TRENDS IN INDIAN IT INDUSTRY

  Dear Sir/Madam,

I am a management student of Fore School of Management. As

part of course I a undertaking this project study. I would a

request you to kindly answer a few questions. This

questionnaire gives you the opportunity to express your

opinion regarding various aspects of emerging HR trends in

Indian a new IT Sector.

As a you are all aware that Information Technology (IT)

industry is achieving a great success in Indian employment

context. As you are to a part of IT industry and must be

observing that the HR trends of IT sector are quite different

from the conventional old economy sectors.

The results shall be submitted to the university in the report

format for the usage of researchers and other concerned

authorities. As is the case for entire study, no individual

will be identified. Only group averages will be reported.

Thanking You 

Date.....

Personal Profile of the Respondent

1.     (a) Place of survey..................................

(b) Name.............................................

(c) Address...........................................

(d) Male/Female.......................................

(e) Educational qualifications:

(i) Non Tech Graduate or below

(ii) Non-Tech Post-Graduate

(iii) B.Tech/BCA etc.

(IV) M.Tech/MCA/MBA

(f) Your Nature of Job:

(i) Computer Hardware

(ii) Computer Software

(iii) Marketing Services of IT

(iv) HR/ Personnel management

2. Whether do you feel there is any roll of trade union in the

IT Industry?

(i) No Trade Union

(ii) Single Union

(iii) Multi Union

(iv) Only welfare association

(iv) Can not say

3. In your view whether excessive competition in Indian IT

sector is harming the overall long term prospects of employees

in this sector.

(i) Yes

(ii) No

(iii) No Comments

4. Whether old methods of employee’s association/trade union

like strike or Gherao etc. are desirable in Indian IT Sector

(Please Tick)

 (i) Yes

(ii) No

(iii) No Comments

5. "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 Laws/Rules should be

designed for IT Industry:. Do you agree with this proposition?

(i) Strongly Agree  

(ii) Agree

iii) No Comments

(iv) Disagree

(v) Strongly Disagree

6. "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 Laws/Rules should be

designed for IT Industry:. Do you agree with this proposition?

(i) Strongly Agree  

(ii) Agree

iii) No Comments

(iv) Disagree

(v) Strongly Disagree

7. What is the state of employee employer relationship in Your

Organisation

(i) Excellent

(ii) Very Good

(iii) Satisfactory

(iv) Poor

8. "An Indian IT sector company has a positive attitude

towards its employees and is not neglecting their welfare and

prospects for their profit sake." Do you agree with the

statement?

(i) Yes

(ii) No

(iii) No Comments

9. "The grievances of the employees in Indian IT sectors are

handled properly". To what extent do you with this statement.

(i) Strongly Agree

(ii) Agree

(iii)No Comments

(iv) Disagree

(v) Strongly Disagree

10. Whether new compensating methods being adopted by the

various IT companies are positively effecting the employees’

welfare?

(i) Positive Effect

(ii) Negative Effect

(iii) No Effect

(iv) Can Not Say       

11. Whether you feel that HR needs of Indian IT sector are

different from old HR practices.(Please Tick)

(i) Yes    

(ii) No

(iii) Can Not Say

12. Please give your comments and suggestions to bring further

improvement in HR Management in Indian IT Industry.

Thank You,

B I B L I O G R A P

H Y

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