HUMAN RESOURCES DILEMMAS IN IT/ITES INDUSTRY IN INDIA:

EVIDENCE FROM LITERATURE SURVEY

Mr. D. C. EBINEZAR
Research Scholar, Anna University, Chennai.
Email: dc.ebinezar@gmail.com

Dr. V. SAKTHIRAMA
Faculty, Tamilnadu Agricultural University, Coimbatore
E-Mail: sakthirama@gmail.com

Dr. P. VIKKRAMAN
Associate Professor and Head, Department of Management Studies,
Anna University - Regional Centre, Coimbatore, Tamilnadu – India,
Email: dr.p.vikkraman@gmail.com

ABSTRACT

IT/ITES industry is an important engine of economic growth for developing countries

like India. This industry has played a major role in placing India on the international
map. India has already established its brand equity in the global IT market. The
employees are the key resource in software industry. The HR managers of Indian IT
industry face baffling challenges which include India becoming expensive, lack of
managerial skills, ageing factor, gender issues, cross cultural issues, sexual
harassment, technological obsolescence, customer service, selecting the best talent,
retaining skilled people and work –life balance issues. The key Issues of the HR
dilemmas are discussed and few suggestions are made in this paper.

KEY WORDS

IT/ITES, NASSCOM, Employment, Export Revenue, Domestic Revenue, Ageing Factor,

Gender Issues, Cross Cultural Issues, Technological obsolescence, Sexual Harassment,
Customer Service, Work Life Balance, Growth of IT/ITES
 Huaman Resources Dilemmas in IT/ITES Industry in India: Evidence from Literature Survey
– Mr. D. C. Ebinezar and Dr. P. Vikkraman
1.1 INTRODUCTION
Indian IT/ITES firms offer a wide range
of software products which include
system management and maintenance,
consultancy services, system
integration, BPO assignments, call
centre related assignments, Chip design,
E-Governance, E-Commerce, ITES in
Banking and Insurance sector, E-
Publishing, Data conversion or
digitization, Medical transcription
services and other related services.
Emergence of a vibrant start up product
ecosystem creating solutions for India
and the world also enhanced the
product opportunities for India
(NASSCOM 2012). The domestic
market for last two years has been
growing faster than the export to
foreign countries and would continue to
be a key thrust area for India’s software
industry. This industry has increased its
contribution to India’s GDP from 1.2
percent in FY 1998 to 7.5 percent in the
FY 2012 (Wikipedia). The industry
share in the total Indian export
increased from less than 4 percent in
the FY 1998 to about 25 percent in the
FY 2012. The present paper makes an
attempt to discuss the growth of
employment opportunities in IT/ITES
industry and also discuss the various
human resource challenges faced by the
IT/ITES industry in India.
1.2 Growth of IT/ITES Industry
in India
According to the NASSCOM estimates
the IT/ITES industry is expected to
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grow by 19 percent during the FY 2012
- 2013. India’s share in the global out
sourcing market rose to 55 percent in
2010 from 51 percent in 2009. The
growth of this industry in India is
highly impressive and companies are
providing services in low-end as well as
in high-end services for domestic and
foreign countries. The main growth
drivers of the IT/ITES industry are low
manpower cost, high utilization rate of
human resources, diversification into
new verticals, and shifting business and
pricing models. India is a preferred
destination for countries that are
seeking to offshore IT and back-office
functions. The revenue from industry
increased from 10 billion in the FY
2001 – 02 to more than 100 billion in
the FY 2011 – 2012. Even though the
total revenue from IT/ITES industry
had increased every year, the
percentage of increase from export
sector of the industry had decreased
every year except last two years. But in
the case of domestic revenue, the
percentage had increased every year
except during the years 2008 – 09 and
2009 – 10. For the next year the
revenue is expected to increase by more
than 24 percent. During the last
financial year there was a rapid increase
in the domestic revenue (84 percent).
From the data it was clear that the
industry had a very good potential in
domestic market than export market
due to economy slowdown in the
western countries in the recent years.
The revenue generated from IT/ITES
industry from 2001 - 02 to 2011 – 2012
is presented in Table 1.1.
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 Huaman Resources Dilemmas in IT/ITES Industry in India: Evidence from Literature Survey
– Mr. D. C. Ebinezar and Dr. P. Vikkraman

Table 1.1 – The Growth of IT/ITES industry Revenue in India

(Figures in USD/Billion)
Export Percentage Domestic Percentage Total
Year
Revenue of Increase Revenue of Increase Revenue
2001 - 02 7.5 (74.26) - 2.6 (25.74) - 10.1(100)
2002 - 03 9.5 (76.0) 26.67 3.0 (24.0) 15.38 12.5 (100)
2003 - 04 12.9 (77.25) 35.79 3.8 (22.75) 26.67 16.7 (100)
2004 - 05 17.7 (78.67) 37.21 4.8 (21.33) 26.32 22.5 (100)
2005 - 06 23.7 (77.96) 33.9 6.7 (22.04) 39.58 30.4 (100)
2006 - 07 31.1 (79.13) 31.22 8.2 (20.87) 22.39 39.3 (100)
2007 - 08 40.4 (77.54) 29.9 11.7 (22.46) 42.68 52.1 (100)
2008 - 09 46.3 (78.88) 14.6 12.4 (21.12) 5.98 58.7 (100)
2009 - 10 51.0 (78.58) 10.15 13.9 (21.42) 12.1 64.9 (100)
2010 - 11 57.61 (76.91) 12.96 17.3 (21.09) 24.46 74.9 (100)
2011 - 12 69.01 (65.52) 19.79 31.7 (31.48) 83.24 100.7 (100)
Source: Department of Electronic and Information Technology, Ministry of Communication and
Information Technology, Govt. of India and NASSCOM

1.3 Growth of Employments in are professionally qualified and are

IT/ITES Industry in India
Employees’ skills and competencies
play a vital role in the success of the
industry. Hence, attracting, retaining
and motivating the employees are the
critical success factors of the software
industry (Anoop and Ganesan 2012).
Software professionals in the industry
young knowledge workers with high
levels of ambition and aspiration. (Ekta
Sharma 2005). Human resource is the
greatest asset in the software industry.
This industry continues to be one of the
largest employers in the country. The
growth of employment in IT/ITES
industry from 2001 – 02 to 2012 – 13 is
presented in Table 1.2.

Table 1.2 Growths of Direct Employments in IT/ITES Industry in India

(Figures in Millions)
Employment in Percentage
Year IT/ITES Increase to the previous year of Increase
Industry to the previous year
2001 - 02 0.52 - -
2002 - 03 0.67 0.15 28.85
2003 - 04 0.83 0.16 23.88
2004 - 05 1.06 0.23 27.71
2005 - 06 1.31 0.25 23.58
2006 - 07 1.62 0.31 23.66
2007 - 08 2.01 0.39 24.07
2008 - 09 2.21 0.20 9.95
2009 - 10 2.30 0.09 4.07
2010 - 11 2.50 0.20 8.70
2011 - 12 2.80 0.30 12.00
2012 - 13 3.10* 0.30 10.71

Namex International Journal of Management Research 79 Vol. 3, Issue 1, Jan – June 2013. ISSN 2250 - 2076
 Huaman Resources Dilemmas in IT/ITES Industry in India: Evidence from Literature Survey
– Mr. D. C. Ebinezar and Dr. P. Vikkraman

Source: Department of Electronic and Information Technology, Ministry of Communication

and Information Technology, Government of India and NAASCOM. *Projected by NAASCOM

From Table 1.2 it was clear that the
growth of employment in the IT/ITES
industry is not in a steady manner.
From 2001 – 02 to 2007 – 08 the
growth was accelerating. Later the
growth percentage has decreased. But
during the last ten years employment
opportunity has been increasing from
0.52 million in 2001 – 2002 to 2.8
million in 2011 – 12. Further, the
industry is also providing indirect
employment opportunities to more than
8.9 million people in various associated
sectors such as housekeeping, catering,
security and transportation (IBEF
2012). In India availability of skilled
human resources is more compared to
developed countries leading to lowering
of man power cost to nearly one tenth
of those in developed countries.
(ECSEPC 2012). The growth of
employment opportunities is expected
to increase to more than 14 million
(both direct and indirect) in 2015 and to
around 30 million job opportunities in
2030 (Shine 2012).

Figure 1.1

1.4 Human Resource Dilemmas in IT/ITES Industry in India

The issue faced by HR managers is coming decades. Hence, HR managers

expected to change dramatically in the must play key roles in dealing with

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 Huaman Resources Dilemmas in IT/ITES Industry in India: Evidence from Literature Survey
– Mr. D. C. Ebinezar and Dr. P. Vikkraman

these dilemmas and must develop attempt has been made to review the
strategies to overcome the above issues. available literature and the research
Regarding the above problems an findings are given below.

Figure 1.2 - Human Resource Dilemmas in IT/ITES Industry

India becoming
Work Expensive
Life Lack of
Balance managerial skills

Retaining and
Attracting Ageing factor
Talent
Human Resource
Dilemmas

Customer Gender issues

Service

Cross-Cultural Sexual harassment

Issues
Technological
obsolescence

1.4.1. Is India becoming expensive? government support, a supply of

IT industries have become expensive
due to rapid increase in the cost for
manpower. There has been regular
increase of salaries by 10-20% every
year. This increase in the salaries
without a corresponding increase in the
output level per person is eating into the
profit levels of the Indian IT
companies. In 2010, the Philippines
have surpassed India as the largest
business process outsourcing (BPO)
industry in the world.
For the past decade, Americans dialling
customer service stood a strong chance
of being connected to someone in India.
Now, they're more likely to end up
phoning the Philippines. Strong
English-speaking college graduates and
an effort by call-centre operators to
reduce their dependency on India have
helped the Philippines to overtake India
in call-centre revenue, reports
Bloomberg BusinessWeek.
New Call Telecom has left its Mumbai
operations to open up a call centre in
Burnley, Lancashire after the allure of
low commercial rents and cheap labour
was too much to pass on. “Salaries in
India aren’t that cheap anymore,” New
Call Telecom CEO Nigel Eastwood
told The Daily Mail. “Add to that the
costs of us flying out there, hotels and
software, and the costs are at an
absolute parity.” Indeed, India’s labour
costs are quickly rising, real-estate

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 Huaman Resources Dilemmas in IT/ITES Industry in India: Evidence from Literature Survey
– Mr. D. C. Ebinezar and Dr. P. Vikkraman
prices have gone up massively and the
country is currently battling with the
highest inflation rate of the big Asian
economies. India’s salaries will rise by
almost 13 percent this year, up from the
11.7 percent increase of last year.
1.4.2 Lack of Managerial Skills
The leadership skills of managers are
the greatest source of employee
fulfilment at work, according to
research. The question is how far the
managers have managerial skills?
Gallup Organization surveyed over a
million employees and 80,000
managers and the results were
published in a book called "First Break
All The Rules". "People leave managers
not companies," write the authors
Marcus Buckingham and Curt
Coffman. "So much money has been
thrown at the challenge of keeping good
people - in the form of better pay, better
perks and better training - when, in the
end, turnover is mostly a manager
issue." If you have a turnover problem,
look first to your managers.
From the survey conducted by
MyHiringClub, an Asia and
Gulf/Middle East recruitment tendering
platform, among 11,800 employees and
249 employers between May and June
2011, MyHiringClub.com Founder and
CEO Rajesh Kumar has said,"Beside
pay packages, career level growth and
relationships with supervisors are the
other reasons for higher job attrition".
Similar to Gallup surveys, surveys in
India show more challenges faced by
Indian managers. Indian managers are
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ineffective in communications skills,
soft skills, handling heterogeneous
people, defining deadlines, skills to say
”no” to the customers, team
management skills etc.
1.4.3 Ageing Factor
For the past 2 decades India was young
in ITES. Most of the work force was
young, so recruiting older employees
was fine in India. Now, the industry is
getting older and so the ageing factor
rises. Indian ITES has been growing
with an organizational structure, where
for 2 years – 12 years employees will
grow in the ladder of organizational
structure. When experience grows they
have to decide the course of their career
path: to be in technical side or non-
technical side in the organization. Most
of the people will choose to be in non-
technical areas viz., managing
resources, projects etc. Now the
experienced people would have grown
in the organization and organizations
feel the heat of handling them in middle
level management. If there are ‘n’
numbers of engineers it is not possible
to move all the ‘n’ number of engineers
into management. The industry should
also grow in the same manner or there
will be a crisis due to ageing factor.
A case in point is the recent lawsuit
filed against Infosys, wherein an
individual alleged that the company
declined employment to him just on the
grounds that he was old. While Infosys
has reiterated that they do not
discriminate on age, however, they
were unable to give a plausible reason
for rejection. There are many more such
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 Huaman Resources Dilemmas in IT/ITES Industry in India: Evidence from Literature Survey
– Mr. D. C. Ebinezar and Dr. P. Vikkraman
cases that Indian IT companies now
face as they expand global operations.
1.4.4 Gender issues
In India, many women are unwilling or
unable to work as many hours as their
male counterparts for several reasons.
Firstly, unmarried women are less
likely to be able to stay in the working
place till late night, because they may
face objections from their parents or
social disapproval (Vasavi 2005).
Further, senior women executives are
under stressful condition when they are
working for long hours /late night,
especially those with young children. A
break in women’s career due to child
bearing and health problems is also one
of the key challenges when they are
unable to update themselves with the
rapid changes in technology and find it
difficult to keep abreast of new
developments. As married women have
family commitments viz., take care of
their children etc., they are not able to
extend their work timings. Whereas
their male counterparts show more
flexibility in work timings and are able
adapt with their managements’
unrealistic deadlines. They also try to
impress their management by extending
their timings, unwilling to say “no” to
management, unable to give importance
to work-life balance etc. So men are
given more opportunities. Due to
reasons as discussed above many
women quit the IT/ITES industry at the
later stage.
1.4. 5 Cross Cultural Issues
Many research findings indicate that the
varying perspectives of the western and
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Asian cultures result in differences in
attitudes and behaviour of employees in
IT sector. Employees /Managers
unawareness about the cultural
difference may result in increasing
negative criticism on both sides and
also affect the relationship between
manager and sub-ordinates. A US
manager may criticize the lack of
performance of Indian Sub-ordinates
based on US team expectations or
Indian sub-ordinates may complain
about US manager for the lack of
guidance throughout the software
development based on the expectations
of Indian managers (Patel 2009).
European managers describe Indian
software developers that they are
disorganised and inefficient, that they
spend long hours in the office but are
still relatively unproductive. On the
positive side they are hand-working,
technically sound, are quick learners
and are adaptable (Carol Upadhya
2006).
1.4.6 Technological obsolescence:
Due to rapid and unpredictable
technological changes, the software
companies have to recruit adaptable and
competent employees. Due to the swift
pace of technological innovation,
diverging application of IT, the roles
and responsibilities of a software
professional to maintain up-to-date
professional competency is turning out
to be very difficult. The research
findings indicated that outmoded
knowledge and skill deficiencies among
the software professional is the key
challenge of IT Industry. The research
studies in the engineering discipline
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 Huaman Resources Dilemmas in IT/ITES Industry in India: Evidence from Literature Survey
– Mr. D. C. Ebinezar and Dr. P. Vikkraman
have stated that individual
characteristics, nature of work, and
organizational climate are the important
determinants of obsolescence of
software professionals. (Trimmer 1998)
Further, they have to update their work
in a new technology throughout their
career. (Meenakshi Gupta 2004).
1.4.7 Sexual Harassment
A recent survey reported that nearly 88
percent of the women workforce in the
IT/ITES sector suffered from some
form of workforce sexual harassment
during their course of their work (Aarti
Dhar, 2010). According to the survey
report of Centre for Transforming India,
(2010) more than 47 percent of the
women employees did not know where
to report while 91 percent did not report
due to fear of being victimised. Further,
the report pointed out that more than 82
percent of the harassment occurred
outside the boundaries of the office and
in nearly 72 percent of the incidents the
perpetrator was a superior or a higher
official. It was reported that more than
60 percent of the female employees
were not aware of the workplace sexual
harassment policy of their organisation.
Hence it is very difficult to find
redressal against such harassment.
According to the survey conducted by
the Oxfam India (2012) majority of the
women are aware about the sexual
harassment in working place, but they
were reluctant to take any formal action
due to ‘fear of losing the job’, ‘absence
of any complaint mechanism at the
work place’, and ‘fear of getting
stigmatized’.
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1.4.8 Customer Service
One of the challenges faced by IT
sector in India is to improve customer
service by listening to and meeting the
client’s need. Nowadays IT is suffering
from bad reputation when it comes to
satisfying customer needs. Many a
times, the work is done incorrectly or
not up to the customer’s satisfaction
and requirements and it is towards the
end that the customer ultimately
determines what is good and what is not
says NSPL. Attrition has increased as
workers in India learn a trade and then
leave the company for higher salaries
increasing turnover rates that cause
production slow down.
1.4.9 Retaining and attracting Skilled
People
The Indian software companies have
difficulties in attracting and retaining
the right kind of employees for their
project. In India, the attrition rate in IT
sector is higher than the western
countries. With Software Engineers
continually floating between jobs and
companies it’s difficult to attract talent
personal. Meenakshi Gupta (2004)
reported that the average tenure of IT
professionals is less than three years in
India. Organizations pay more to newly
joined employees and give the
designation which they ask for. They do
this to fill the open positions. So the
employees are led to believe that the
only way to move up to a higher
position or get a higher salary is to
change jobs. (Vasavi 2005) Hence,
employees are continuously looking for
new opportunities.
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 Huaman Resources Dilemmas in IT/ITES Industry in India: Evidence from Literature Survey
– Mr. D. C. Ebinezar and Dr. P. Vikkraman
1.4.10 Work-Life Balance
In earlier day’s work-life balance issues
was not addressed or given importance.
R N Sharma, former professor, Tata
Institute of Social Sciences, says it had
much to do with the complete
dismantling of labour movements in
India. "Foot-loose labour, once meant
for hawkers, now applies to white-
collar workers too. With weakening
labour movements, employees don't
have bargaining power." China and
India are the top nations where
employees spend more time at work
and less with family. A recent study
conducted by Regus, a flexible
workplace provider says India in work-
life balance doesn't fare too badly. But
it doesn't fare too well either.
One of the main reasons why India was
preferred in IT/ITES was it was cheap.
Companies started to quote low rates to
pull the projects/work to India from
overseas which was indirectly affecting
the work-life balance of people. India’s
economy is growing and various
industries show rapid growth. The
standard of Indian living is increasing.
For the past 3 decades the IT/ITES
industry has grown rapidly. Because of
socio-economic changes and
information age employees expect
quality of work-life balance nowadays.
SUGGESTIONS
1) The Indian IT/ITES organizations
should focus more on value added
services to be completive. Innovation is
needed models, ecosystems and
knowledge.
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2) To improve the managerial skills of
managers’ soft skill trainings and
workshops should be made mandatory.
Trainings should have been given in
communication skills.
3) Job rotation and movement within
the organization based on their skills
and experience can be suggested for
ageing problem in organizations.
Organizations should be ready to
provide voluntary retirement schemes
for the employees who have served
them for long years.
4) Work from home, In-house projects,
regular shift projects can be preferred
for women.
5) Many employees work with their
customer’s without knowing them.
Small trips to the customer locations
regarding KT, study, requirements
gathering can be encouraged. Video
conference meeting should be
encouraged frequently.
6) Certifications on technologies should
be encouraged by the organizations.
Bonus, rewards can be provided for the
employees who keep their technical
skills updated.
7) Every organization has a website for
their employees to view their salary,
leave management etc. In the same
page a link to report sexual harassment
should be provided. Necessary
guidance should be provided to the
employees.
8) Improving the customer service is a
collective work at various levels.
Organizations should do a self-
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 Huaman Resources Dilemmas in IT/ITES Industry in India: Evidence from Literature Survey
evaluation and bench-mark
organizations which provide
services.
9) The organizations should be very
clear on their policy for hike and
promotions. They also need skilled
managers to evaluate the persons in a
very professional manner. They should
be very cautious on selecting people
who have made frequent movements
because their attitude may not be
favourable to the organizations.
10) To retain and hire top talent we
cannot afford to ignore the value of a
good work-life balance. Various
surveys have proved that good work-
life balance have increased the
productivity at various levels.
Organizations should conduct internal
surveys to evaluate their work-life
balance standards.
Conclusion
The future of the Indian IT industry
looks bright and promising towards the
potential revenue of USD 225 billion by
2020. According to NASSCOM,
employee base in the rural areas is
expected to increase by over 10 times
by 2013-14, compared to 5000 in 2009-
10. It is estimated that the growth of
employment in IT industry is expected
to increase to more than 14 million
(direct and indirect) by 2015 and to
around 30 million by 2030. The
industry will find suitable ways and
avenues for deploying the potential
workforce in the years to come. This
industry is look into advanced
processes, innovation and product
development that require a human
Namex International Journal of Management Research
– Mr. D. C. Ebinezar and Dr. P. Vikkraman
with resource with specialised skills. In
best consideration of the above there is a
strong rationale behind investment in
human capital. It is believed India will
become the software superpower of the
world by 2020.
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