Project Report

On
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 I

ACKNOWLEDGEMENT II

PREFACE III

SUMMARY IV-V

Chapter -1 INTRODUCTION 1-30

Chapter -2 REVIEW OF LITERATURE 31-33

Chapter -3 OBJECTIVE,SCOPE,SIGNIFICANCE OF STUDY 34-37

& RESEARCH PROBLEB STATEMENT

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

Recruiting Retaining Retraining Restructuring

Signing bonus Retention bonus Job rotation Broad job

descriptions
Finder’s Fee Project pay Team
assignments Flexible
Alumni Reduct FTE/same
compensation
connections pay Skill inventories
programs

Non-techs Telecommuting Competency

Flexible jobs
development
Students Externs
Positive problem-
Certification
solving spirit
Interns Job sharing

Recognition
programs
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 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.

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 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.

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 Test for 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 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 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 Plan Exercise Vesting Current

Shares (Lakh) Plans Period Price

(Rs) (Yrs) (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 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.
 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

Respondents
Non-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,
BIBLIOGRAPHY
 BOOKS REFERENCE:

 Burack, E.R. & Mc. Nicholos, T.J. Human Research Planning: Technology, Policy
and & Change, The Comparative Administration Research Institute of the Centre for
Business and Economic Research, College of Business Administration, Kent State
University, 1973.
 Edwards, John et.al., "Manpower Planning", John Wiley, New York..,1983
 Gelden, P Stevan," Report Writing for Business and Industry", Business
Communication Service.
 Kothari, CR." research Methodology Methods and tech- niques", Wiley Eastern
Limited.
 Lawler III, Edward E., "Control Systems in Organizations," In Handbook of Industrial
and Organizational Psychology, (Rand-Menally, 1976).
 Mustafi, CK 1981. "Statistical Methods in Managerial Decisions, Macmillon New
Delhi.
 Pareek, U and T.V.Rao, 1981, "Designing and Managing Human Resource Systems",
Oxford and IBH Publishing Co., New Delhi.
 Ramaswamy, E.A. & Uma Ramaswam. "Industry and Labour", Oxford Press: New
Delhi, 1981.
 Rao, T.V. and Pereira, D.F., Recent Experiences in HRD, New Delhi, Oxford & IBH,
1985.
 Rao, T.V. and Abraham, E.A.," A Survey of HRD Practices in Indian Industry, in
Rao, T.V. and Pereira, D.F., Recent Experiences in HRD, New Delhi, Oxford & IBH,
1985
 13. Silvera, D.M., "Human Resource Development", 1988, The Indian
Experience.Higher Education and IT:
Websites Reference

www.google.com

www.wikipedia.com

www.investopedia.com

www.kml.com

www.businesslink.gov.com

www.altavista.com

www.yagoohoogle.com

www.beemadeals.com