Introduction

Performance appraisal is an evaluation which includes a systematic and periodic process that assesses
an employee’s performance on any type of job and accordingly the productivity of an employee is
analyzed to check whether an employee had achieved pre-determined goals and objectives of the
organization. Performance appraisal is basically done to see strengths and weaknesses of an employee
so that if there is any problem in the employee, various improvements programs can be conducted in
order to rectify an employee’s performance to bridge the gap between the actual and expected
outcome. Performance appraisal is generally conducted annually in most of the organizations however
some organizations conduct it twice in a year whereas performance assessment is done time to time on
a regular basis by the appraiser. Performance appraisals have been used by companies for various
purposes like salary recommendations, promotion and layoff decisions and training recommendations,
for an employee. In order to satisfy these purposes, an employee has to follow some performance
elements that tell them what they have to do and how well they have to do it and accordingly the
performance of an employee can be assessed. Performance appraisal also measures the performance of
an organization. It tells whether an organization has achieved its goals and objectives through its
employees or not.

IT Industry in India

Information technology (IT) industry in India has been instrumental in making India a major player in the
global horizon. IT has transformed India from an agriculture-based economy to a knowledge based
economy .Today, India is a large, vibrant and one of the fastest growing economies in the world. As a
result of impressive growth of the economy, steadily increasing buying power of the people and
aspirations of the young, the consumption of electronic gadgets in the country is growing fast. India is
one of the world’s fastest growing electronics hardware markets. The Indian IT sector is broadly
categorized into IT services and software, Information technology enabled services (ITeS) and IT
hardware products segment. The domestic demand of electronics hardware is estimated at US$ 400
billion by 2020. Therefore, the Government has accorded high priority to this sector.

As IT industry is grooming rapidly since the last decade, it is surrounded by various types of challenges
and one of the most important challenge faced by the IT sector is dealing with the performance of
operative workforce. Due to advancements in the technologies from time to time, a competitive
workforce is the most crucial resource for an organization and performance appraisal system is a tool
which helps to improve the competitiveness of the workforce. Another major challenge for IT industry is
retaining this competitive workforce where the effectiveness of performance appraisal helps the
organization to overcome this challenge.

Objectives

 To assess the methods of performance appraisal used by some companies in IT sector in India.
 To study the impact of performance appraisal on the employees of IT Sector.
 To compare the data of performance appraisal in IT sector with other sectors in India and
bridging the gap if any.
Literature review

K. Chandhana and Dr. David T Easow (2015) in their article titled ‘Performance

Appraisal Method Used in Top 10 IT Companies – 360 Degree Feedback & Balanced Score

Card: A Review’ has found that the both 360degree feedback and balanced score card has its

own loopholes, through these methods are being used by top IT companies. The satisfaction

levels of employees towards these appraisal methods are very low and there is a need of a new

appraisal method which prevents these errors and has the advantages of these methods.

AnbarasuThangavelu and Dr. J Clement Sudhahar (2014) Performance Management

Challenges in IT Industry – An Overview’ conclude that the performance management system

for a large IT organisation should be designed to measure the past and potential performance

of its employees and its own performance in alignment with the states vision of the

organization.

Talya and Berim (2010) explained that the performance appraisal system is not only an

important tool of human resource management to develop their employees, but is also used by

different companies to reward their employees in form of bonuses, promotions, and pay raise

etc. Usage of performance appraisal to reward employees is also used by different theories of

motivation like reinforcement theory etc.

Sandeep Gudla and Valli Sri Krishna Veni (2012) ‘The Study of Performance

Management System in IT Organizations’ conclude that the performance management system

plays a key role in the organization effectiveness. This system helps to meet business

expectations and helps to speed up to market expectations. It is also helps management in

making promotion decisions and finally, the employees in the organization are satisfied with

system which exists in IT Industry.

Performance Appraisal in IT sector in India

Methods used by some IT companies in India

There are 7 IT companies which are taken into consideration for our study for assessing the methods of
Performance Appraisal used by a particular IT company. These companies are TCS, Infocepts, Syntel,
Here Maps, CIK Telecom, Cap Gemini, Infosys.

TCS use the Self- Rating method for appraising the performance of its employees. This self-rating
method is defined into 4 bands from A to D wherein Band A is the top performer with 5 rating followed
by Band B ranging between 4 and above 3.8, Band C ranging between 3 to 4.5 and Band D ranging from
2.5 to 3.Infocepts use Rating method for appraising the performance of its employees. The rating
method is rated on 1 to 5 pointers. Where 1 stands for Need Improvement followed by 2 stands for
Good Performance,3 stands for satisfactory Performance, 4 stands for Very good performance and 5
stands for exceed the expectation. Syntel use the rating method for appraising the performance of its
employees. Here Maps use the metric method for conducting their appraisal for its employees. CIK
Telecom use the method of face to face appraisal method wherein the employees are given their
performances feedback in one to one meet by the direct reporting manager. Cap Gemini use Rating
method wherein the rating is defined as 1 for high performer and 5 for low performance. Rating method
in Infosys is ranging from 1 to 3 where 1 is low performance, 2 is moderate performance and 3 is highest
performance.

Impact of performance appraisal on employees in IT sector

Benefits of performance appraisal in IT sector

IT Frequency Criteria Method Participants Training and Awards and

Companies of appraisal counselling incentives
TCS Annual/ KPA Band Appraisee 1 to 1 session Depends on
Mid term based and from the top which band
rating reviewee performer an employee
method falls ( A-D)
Infocepts Annual/Mid Self-appraisal Rating Appraisee 40 hours 10-15%
forms method and training, 1st based on
reviewee training on the ratings and
factor lacking, experience
2nd with
mentor
Syntel Annual Goal sheets Rating Appraisee Not specified Based on
method and E-20
reviewee E-30
E-45
parameters
Here maps Annual Project based Metric Appraisee Training Certain cash
method and regarding how amount (
reviewee to design maps every 3
months)
CIK Annual Percent of Face to Reviewee Not Given Not
Telecom achievements face specified
and roles and method
responsibilities
fulfilled
Capgemini Annual/ Project Rating Appraisee 40 hours Based on
Mid term delivering, method and training, team and
extra activity, reviewee knowledge individual
client transfer session performance
escalation or else (Quarterly )
metrics,etc termination
Infosys Annual Performance, Rating Appraisee 1 to 1 with Depends on
Attendence, method and manager. Gives salary
project reviewee suggestions
completion and if the
suggestion is
not
appropriate,the
process repeats

Other Frequency Criteria Method Participant Training and Awards and

Industries s of counselling incentives
appraisal
Metropolis Annual/ Mid Goal sheets Bell curve The HR Performance Score of an
term method improvemen employee
t program should be
more than
100
Eclerx Twice in a Performanc Rating Head HR Performance Based on
year e based method improvemen ratings
t program
Seaoil Annual Target( 5- 360 degree Report to Not specified Not
10%) feedback HR by specified
immediate
manager
and
employee
LIC Annual Knowledge, Confidentia Hierarchy Yes Based on
target, l reports based performanc
behaviour and self e and target
appraisal
forms
TechMahindr Quarterly (4 KPI Rating Report to Action plan Incentives
a times a year) method HR by after and cash
immediate diagnosis of vouchers
manager the problem
and by
employee immediate
manager