CHAPTER - 1

HRD MANAGEMENT IN IT
INDUSTRY

1.0 INTRODUCTION

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

1.0.2 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.

1.0.3 The basic aim of human policies is the genuine concern for the people. Proper
design of human policies is based on the higher responsibilities, personal and positive
approach in the total perspective of organisational 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 help in building up their spirit, morale and
espirit-de-cops which becomes strength of the company. The culture of excellence thus
nurtured contribute to growth with stability and continuous improvement in productivity.

1.0.4 Finding the right man for the job and developing him into a valuable resource is an
indispensable requirement of every organisation. 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 organisational goals, every manager is expected to pay proper attention to recruitment,
selection, training, development activities in an organisation. Proper promotional avenues
must also be created so as to motivate employees to peak performance. Thus, personnel
functions such as manpower planning recruitment, selection and training, when carried
out properly, would enable the organisation to hire and retain the services of the best
brains in the market.

1.0.5 The human resource management is very crucial in respect of 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.

1.1 ROLE OF HR MANAGERS

1.1.1. And Some industry commentators call the Human Resources function the last
bastion of bureaucracy. Traditionally, the role of the Human Resource professional in
many organizations has been to serve as the systematizing, policing arm of executive
management. In this role, the HR professional 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. Successful organizations are becoming more adaptable, resilient, quick to
change direction, and customer-centered. Within this environment, the HR professional,
who is considered necessary by line managers, is a strategic partner, an employee sponsor
or advocate, and a change mentor.

1.1.2 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. The tactical HR
representative is deeply knowledgeable about the design of work systems in which people
succeed and contribute. 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.

1.1.3 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. This advocacy includes expertise in how to create a work environment in which
people will choose to be motivated, contributing, and happy. Fostering effective methods
of goal setting, communication, and empowerment through responsibility build employee
ownership of the enterprise. The HR professional helps establish the organizational
culture and climate in which people have the competency, concern, and commitment to
serve customers well. In this role, the HR manager provides employee development
opportunities, employee assistance programs, gain sharing and profit-sharing strategies,
organization development interventions, due process approaches to problem solving, and
regularly scheduled communication opportunities.

1.1.5 Change Champion:-The constant evaluation of the effectiveness of the organization

results in the need for the HR professional to frequently champion change. Both
knowledge about and the ability to execute successful change strategies make the HR
professional exceptionally valued. Knowing how to link change to the strategic needs of
the organization will minimize employee dissatisfaction and resistance to change. The
HR professional contributes to the organization by constantly assessing the effectiveness
of the HR function. He also sponsors change in other departments and in work practices.
To promote the overall success of his organization, he champions the identification of the
organizational mission, vision, values, goals, and action plans. Finally, he helps
determine the measures that will tell his organization how well it is succeeding in all of
this.

1.2 LEADERSHIP AND EMPLOYEE INVOLVEMENT.

1.2.1 The main role of leadership was seen as creating a participatory process for
employee involvement, to build collective wisdom. Control has given way to
collaboration and the old paradigm of promoting competition and motivating through
incentives shifted to creating co-operation and oneness amongst people. 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.

1.2.2 Story telling and appreciative enquiry are emerging as a new dimension in
positive motivation. Finding out what's 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 organisation. 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 realise that talent is equal to brand". His new
theory is EVP which means "Employee Value Proposition".

1.2.3 Rosabeth Moss Kanter said, " Human beings are good raw material, they
become assets when you train them to increase their knowledge and skills". She added
that only a few organisations really train people to 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.

1.2.4 He also stated that the HRD department should be renamed TDFD (Talent
Development Fanatic Department) and wealth for this new regime will flow from
innovation, not organisation. Quoting Gary Hamel he said, only those employees will
succeed who are "certified radical". Only those companies will succeed who create a
cause, not a business. Leaders according to him are living individuals, whom people can
smell, feel and touch. Their passion for work must be infectious.

1.2.5 Another aspect of leadership if the decision to introduce fun in the work place.
Research shows that this reduces absenteeism and builds stronger, deeper and longer
lasting relationships. It appears out of every 100 Fortune companies in the last decade, 69
are dead and only 31 are alive. In a Forbes Magazine study of around 100 companies
from '17 to '87, only 39 companies were found to survive. Management of Change:-
Research proves that many change models don't consider the human experience during
change. The overriding concern seems to be to downsize. It was found that most change
processes go through four fundamental stages.

• People try to resist or deny change

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

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

1.2.7 E-Learning :- Organisations 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.

1.2.8 CEO's are talking to their people about new ideas and enlisting their support
through forums and message boards. This is changing the way people behave and work.
The advantages of e-learning are many: It is self-paced, flexible, less expensive, modular
and has a huge reach.

1.2.9 Universities like Cornell, MIT, Stanford, etc, have started emphasizing e-learning to
attract a worldwide audience. Web-centric universities are becoming the order of the day.
William Taylor, editor and managing partner 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.

1.3 INNOVATIVE PRACTICES IN HR

1.3.1 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.

1.3.2 Practices and technologies include:

• Internet and intranet employee services

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

1.4 LINKING PAY TO PERFORMANCE

1.4.1 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.

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

1,4.3 In experience, most organizations will profess to a "pay-for-performance"

philosophy as a keystone of their compensation system. Such a system requires solid
grounding in a clear and documented link between performance and salary increases.
Unfortunately, the link between individual performance and pay is frequently nonexistent
- "merit" pay is a hollow concept in this regard.

1.4.4 A merit system demands that managers be willing to make distinctions in merit
increases based on performance. However, several factors get in the way of this
happening. 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. So many managers don't make that distinction - it is too much hassle.
So everybody gets the same increase.

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

1.4.6 The end result is usually a lot of avoidance behavior. Managers avoid 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 don't 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.

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

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

1.4.9 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..

1.5 CHANGING JOB DESIGN IN IT COMMUNITY

1.5.1 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.

1.5.2 In 1991, the CSU began a study to look at alternative work and job design
approaches to meet these challenges. The study 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.

1.5.3 This article begins by identifying several trends that led to the study, 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.

1.5.4 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.

1.5.5 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.

1.5.6 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.

1.5.7 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.

1.6 OBJECTIVES OF STUDY

1.6.1 Following were the objectives of the study:-

1. To enlist emerging HR trends in Indian IT Industry

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

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

4. To measure the perceptions of IT sector employees in respect of application of HRD in

their organisation.

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

1.7 RESEARCH METHODOLOGY

1.7.1 The study was exploratory in nature. All published and unpublished available on the
subject matter was consulted. Interview and discussions were held with the various
executive/ Managers/ staff employed in IT sector. The HRD functions/ activities being
undertaken in different IT organisations were also studied. Primary and secondary data
available with these organisations was also used for this project study.
1.7.2 In order to measure the employees perceptions of emerging HR trends in different
IT organisation, the survey was undertaken. 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.

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

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

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

-2

HR TRENDS IN IT INDUSTRY

2.0 HR IT SCENARIO

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

corporate success in the fast changing information era is ‘thinking on your

knees’.

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

know what the situation is and operate from there. A repositioning is

required in your decision process with questions like why, how and when

and not just what. At this point you operate on your knee i.e. with far more

dynamism and with a lot more effectiveness than thinking on your feet.
2.0.3 The employees are like gypsies, on the move all the time. They camp at

some location, enhance their skills, responsibility levels and move on.

This is particularly true of the professional from Software Industry.

Opportunities are plenty and the next job opening is only a mouse click

away. The question is not about what else you can do to retain an

employee but it is about making him productive, while he is with you. The

value addition will then happen for both the employee as well as the

employer resulting in a win-win situation. This means that the new

strategy calls for the recognition that no employee is expected to be

permanently with you. Normal tenure in any organisation is likely to be

between two to three years.

2.1 INNOVATION IS THE KEY

2.1.1 Information technology and Internet have changed several equations.

Reaching out to the world market place is no more the challenge in

achieving corporate victories. Out thinking the competition at electronic

speed is the key to winning corporate battles. The corporate success is sum

total of entrepreneurship practiced by your staff.

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

recognize that to fuel growth and sustain a competitive advantage, they

must make recruiting, hiring and retaining top talent, as the organisation’s

major thrust area. Competent people deliver the rest don’t matter.

Successful business organisations have no choice but to promote the

performers and let non-performers go.

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

distribute information and transform themselves into a learning

organisation will provide continuity and ensure for them their leadership

role. Systematic organizational learning should be central corporate

philosophy. Learning, must be obviously followed by changes, which may

not necessarily be welcomed by veterans in the organisation. But ‘change

is the only Constant’ for guaranteed success.

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

understood.

· People have a great deal of informational knowledge to contribute to the

organisation.

· People are responsible

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

change.

· Organisations need to create awareness amongst their employees about

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

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

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

a team.

· Plan and create short-term win targets – reward employees and recognise
achievers.

· Consolidate improvements through a knowledge base driven system and

institutionalise proven new methodologies.

2.1.5 New Paradigms In HR

 · Business plans must consider HR issues, focus and adapt.

· Corporate goals must factor in individual career growth and personal

growth must be tied to corporate growth and vice versa

2.1.6 Job responsibilities must facilitate personal development and learning

should be institutionalized with well-established knowledge bases.

Capturing experience and making it available ‘corporate wide’ should be a

permanent feature of an organizations.

2.2 WAR FOR TALENT

2.2.1 The 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?

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

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

suddenly we can envision $50-billion software exports target by the end of

this decade. Not impossible, if 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.

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

looking for 20,000 IT specialists and Italy is seeking 15,000 additional

manpower. Their choice destination—India.

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

the IT industry the world over, is struggling with numbers to meet its own
 demand. To meet the overall software and services (domestic and export)

target of $87 billion by 2008, according to the Nasscom-McKinsey report,

the country will require a minimum of 2.2 million knowledge workers for

its domestic needs. This implies that the present strength, which stands at

12,00,000 (December 2004), has to increase about twice, not just in

quantity but in quality as well.

2.2.5 According to industry estimates, majority of the demand for manpower

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

requirement at 11,00,000, MIT says IT-enabled services and e-business

will need 12,70,000 workers by 2007. Experts insist that since this sector

does not require very highly skilled manpower, we can easily meet this

demand. "IT-enabled services is 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,"

2.3 4 R’s of HR in IT

Table 2.1

Recruiting Retaining Retraining Restructuring

Signing bonus Retention bonus Job rotation Broad job descriptions

Finders Fee Project pay Team assignments Flexible compensation

programs
Alumni Reduct FTE/same pay Skill inventories
connections Flexible jobs
Competency
 Non-techs Telecommuting development Positive problem-
solving spirit
Students Externs Certification

Interns Job sharing

Recognition programs

2.3.1 OBSTACLES

· Denial (This is and long term)

· Misalignment (Ramping up/Ramping down)
· Timing
· Treating everyone the same
· Navigating the bureaucracy
· Demographics

2.3.2 WHAT OTHERS ARE DOING

· Pooling recruitment efforts
· Increasing freedom at the dept level
(on-the-spot hiring, broadbanding, etc.)
· Recruiting/retaining students
· Identifying tech skills in all jobs/people
(Skill Inventories/assessment)
· Sharing staff

2.3.3 RETENTION FACTORS

1. Quality of boss
2. Direction of department
3. Exposure to new technologies
4. Confidence in the company
5. Job security
6. Challenging work
7. Location
8. Access to capital resources
9. Caliber of co-workers
10. Empowerment
 11. Department leadership
12. Ability to influence department success

2.3.4 TAKING THE LEAD

· See ourselves as problem-solvers

· Develop critical skills and competencies in ourselves, then others
· Build compensation around results not tasks; competencies, not seniority
· Involve everyone. Constantly align and balance resources to meet
changing needs

2.3.5 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

2.3.6 THE CRISIS

Ø Shortage of IT workers

2.3.6 COMPETITION

Ø Compensation stock options, profit sharing, incentives

Ø Alternatives outsourcing

2.3.7 ATTRACTING

Ø Recruiting sign on bonuses

Ø Relocation incentives

Ø Recruiters

Ø Reduced cycle time for hiring

Ø Campus/ job fairs / referrals/ internet

2.3.8 RETAINING

Ø Work environment

Ø Communication forums

Ø Telecommuting

Ø Flexible staffing

Ø Exciting projects

2.3.9 PRACTICES

Ø Focus on value

Ø Financial and human value

Ø Commitment to core strategy

Ø Linkage between culture an system

Ø Multi dimension communication

Ø Stakeholders partnerships

Ø Mutual support and collaboration ( teamwork)

Ø Risk and innovativeness

Ø Passion

2.3.10 DEVELOPING

Ø Internship programs
 Ø Training programs

Ø Career development programs

2.3.11 LONG TERM SOLUTIONS

Ø Education, government, industry partnerships

Ø Curricula: technical skills and career skills ( teamwork and

communication)

2.3.12 KEY SUCCESS FACTORS

• Understand people

• What they want

• Long term perspective’

• Innovative

• Co ordinated approach

• Career development I

2.4 OUT SOURCING

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

looking towards India for outsourcing their software requirements. The

changing business environment is demanding new applications. In

particular, the spread of client-server computing in decentralised

organisations involves the development of applications specific to a user's

business.

2.4.2 Outsourcing is becoming a strategy for forward thinking IS managers. It is

no longer just a means for reducing costs, but a tool for adding value to
 business. It enables organisations to concentrate on their core business,

carry out business re-engineering and provide information that is valid,

timely and adequate to assist decision making at the management level

and quality and cost control at the middle and lower levels.

2.4.3 As a result, outsourcing has gradually grown beyond the traditional idea of

"having a third party running the data centre". It has come to mean, "any

use of an outside contractor to replace or extend in-house resources".

2.4.4 Outsourcing is closely linked with corporate strategy, since it must support

the organisation's major initiative in using IS. It should enhance and add

value to the business. A rule of thumb to start and gain experience is, "if

IS is low cost and of high value addition, keep it within the organisation,

i.e. in-source. If IS is high cost and of low value addition, consider

outsourcing".

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

outsourced to India, the Indian software companies have substantially

helped to cut costs in software development projects or MIS

environments, while maintaining high quality. Moreover, all these cost

and quality advantages are coupled with the use of state-of-the-art

technologies.

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

work was outsourced to India (The total software exports from India

during the year was US$ 4085 million). This was 56% higher than

outsourcing orders in 2003-04. It is estimated that the quantum of

 outsourcing may jump to US$ 5 billion and reach as high as US$ 10

billion by 2010 A.D.

CHAPTER - 3

HR PROBLEMS OF INDIAN IT PROFESSIONALS

3.0 OVERVIEW OF PROBLEMS

3.0.1 The IT revolution is sweeping the world, particularly the western world in

for nearly a decade now, creating enormous employment opportunities in

this area. India joined the bandwagon well in time and smoothly though it

is yet to entrench itself strongly in terms of corporate identity and

significant share of global revenues in IT.

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

addition, maintenance, Y2K, quality assurance and customisation of

existing packages. The sudden eruption of opportunities in this area left no

time for development of human resources in a planned manner and also

software solutions which tended to be more ad hoc than being assured of

quality.

3.0.3 With the enormous opportunities for employment, entrepreneurship with

low capital investment and low gestation period for turning profitable,

higher returns per employee and large return on investment/EPS, sustained

encouragement from government, a very large number of organisations -

large, medium, small - have been established. Correspondingly a large

number of training establishments and cyber cafes have come up, most of
 which are in the cities and towns to cash in on the enthusiasm of the urban

middle class.

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

private organisations besides the existing government (State/Central),

university and autonomous institutions. There are about 500 private

engineering colleges besides IITs, RECs, universities, colleges offering

courses such as MCA, M.Sc., M.E., and M.Tech. In view of the apparent

demand that appears to be exaggerated, most of the programmes (barring a

few by government institutions and IITs) are very expensive, almost

beyond the reach of a middle-class student. Yet candidates 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 franchises.

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

those trained in reputed institutions find their jobs monotonous, leading to

depression. Jobs offered by the software industry have demonstrated the

above factors as they are able to carry out the projects with persons of any

background and levels of attainment, but with a few months training either

prior to employment or a short training during probation.

3.0.6 Despite these deficiencies, students prefer software jobs mainly with an

eye on the pay-package and urban locations. The employee- retention

period even in good companies has been shrinking and is found to be three

to six months. The 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.

3.0.7 Even those software professionals, who are offered good financial

packages, spend their earnings on expensive lifestyles, vehicles, and credit

card syndrome and find 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

3.1 MAIN PROBLEM AREAS

3.1.1 The significant problem areas which may be contributing to the present

scenario and can be addressed can be identified as given in the succeeding

paragraphs.

3.1.2 Recruitment process :-Without going into the deficiencies of the present

practices, the following suggestions are made to improve the process in

terms of efficiency, availability of manpower and equity to all the

 aspirants irrespective of the fact where they got educated. The various

steps of the proposed approach are as follows:

i. Aptitude tests could be conducted by reputed institutes like IITs/ private

organizations/HR agencies for prospective professionals preferably ``on-

line'' like GRE, GMAT etc. or physically at regular intervals and scores

are given. If it is no on-line, the periodicity can be a month or two and the

validity can be for an year or so which can also be fixed based on general

agreement.

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

companies can ask for a video clip for subsequent interview if required.

Interviews can also be conducted simultaneously either physically or over

the phone or by video conference and selections completed.

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

organizations should adopt a code of conduct such that the candidates

stays at least for a period of one year.

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

software professionals' services can be tapped and steer clear and

manpower shortage (less than critical mass levels).

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.

3.1.2 Post employment care:- The companies/organizations should take adequate

interest in the career development of the employee by suitable HRD

approaches which should include the following:

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

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

from IITs.

ii. Opportunities to lessen the monotony and improve interpersonal

relationship and mixing and group activities.

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

iv. Opportunities for retraining and upgrading the skills.

v. Conducting effective career development programs regularly.

vi. Incentives like ESOP, lucrative assignments and challenging projects,

opportunities of higher education.

 vii. Make the employee more versatile with wider perspective and flexible for

easy deployment in areas needing strengthening.

viii. Encouraging simplicity and excellence.

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

have the following significant advantages:

i. Cost effective and efficient process.

ii. Proper deployment of skills optimally.

iii. Idle employment can be minimized.

iv. Retention can be improved.

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

cooperative society mode.

vi. The candidate's skills are moulded to suit the needs of the job and need not

waste time, money and efforts.

vii. Equitable opportunities to all aspirants irrespective of location, pedigree

and background.

viii. Reduces the mushrooms of training shops with inadequate faculty.

ix. This may also give the manufacturing and core engineering sector jobs

reasonable chance to attract willing and bright candidates.

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

adequate preparation in core areas.

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

regularly and meeting them even at short notices.

xii. The aptitude tests can become richer and more representative over a few

years and as the question bank becomes larger and random on-line

questioning can be introduced which is more objective like GRE, GMAT

3.2 LONG TERM PERSPECTIVE

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

and train the candidate with or without stipend in courses where he could

get admission for his degree. This will help in decreasing the pressure on

engineering education as otherwise the skills acquired by the candidate at

a great cost in branches other than computer sciences are wasted and lost

for good if employed by the software industry.

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

to science talent test which can be sponsored by NASSCOM and such

other interested groups

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

beneficial as the facilities and manpower can be shared optimally. While

otherwise they may face the problems of lack of adequate manpower

(below the critical mass level) because of less attractive pay and perks

they are able to offer.

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

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

vital area of software manpower which is a national resource

 CHAPTER - 4

IT SECTOR COMPENSATION METHODS

4.0 EMPLOYEE STOCK OWNWERSHIP PLAN

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

employee benefit plan that allows employees to become owners of stock

in the company they work for.

4.0.2 How does ESOP work?

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

tax deductible contributions from the company to purchase company stock

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

employee accounts within the trust.

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

established formulas based on salary, service, or position.

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

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

vesting requirements.

4.1 STOCK OPTIONS

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

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

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

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

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

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

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

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

'spread'.

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

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

4.2 MERIT PAY

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

give all employees an equal opportunity for consideration, regardless of

funding source. The merit increase program is implemented when funds

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

dependent upon the availability of funds and other constraints. .

4.2.2 Advantages OF Merit Pay :-

· Allows the employer to differentiate pay given to high performers.

 · Allows a differentiation between individual and company performance.

· Allows the employer to satisfactorily reward an employee for

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

of new systems).

4.3 GAIN SHARING

4.3.1 Gainsharing is a technique that compensates workers based on

improvements in the company's productivity.

4.3.2 How does Gainsharing work? A Company shares productivity gains

with the workforce. Workers voluntarily participate in management to

accept responsibility for major reforms. This type of pay is based on

factors directly under a 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, gainsharing plans do not adversely affect company costs.

4.3.2 What are the 'Gains' that are measured?

· Increases in production with equal or less effort.

· Equal levels of production with less effort.

4.3.3 What are examples of Gainsharing formulas?

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

hours (for the given level of output) equals the gain in hours.
4.4 PROFIT SHARING
4.4.1 Profit Sharing is an incentive based compensation program to award

employees a percentage of the company's profits.

4.4.2 How does Profit sharing work? The company contributes a portion of

its pre-tax profits to a pool that will be distributed among eligible

employees. The amount distributed to each employee may be weighted by

the employee's base salary so that employees with higher base salaries

receive a slightly higher amount of the shared pool of profits. Generally

this is done on an annual basis

4.4.3 How to Choose an Employee Stock Plan for Your Company:-Many

companies we encounter have a pretty good idea of what kind of employee

ownership plan they want to use, usually based on specific needs and

goals. However, sometimes they might be better served by another kind of

stock plan. And yet others say they'd like to have an employee ownership

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

the path to choosing and implementing the plan or plans best suited to your

company.

4.5 ASSESSMENT OF PLANS FOR BROAD-BASED

EMPLOYEE OWNERSHIP

4.5.1 Let us begin by quickly reviewing the main possibilities for broad-

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

all employees can participate.

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

employee benefit plan in which most or all of the 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.

4.5.3 A stock option plan grants employees the right to buy company

stock at a specified price during a specified period once the option has

vested. So if an employee gets an option on 100 shares at $10 and the

stock price goes up to $20, the employee can "exercise" the option and

buy those 100 shares at $10 each, sell them on the market for $20 each,

and pocket the difference. But if the stock price never rises above the

option price, the employee will simply not exercise the option. Stock

options can be given to as few or as few employees as you wish. Perhaps 7

to 10 million or more employees in thousands of companies, both public

and private, presently hold stock options.

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

option plan. It gives employees the chance to buy stock, usually through
 payroll deductions over a 3- to 27-month "offering period." The price is

usually discounted up to 15% from 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.

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

designed to provide the employee with a diversified portfolio of

investments. Like an ESOP, however, a 401(k) plan is a tax-qualified plan

that generally must include all full-time employees meeting age and

service requirements. The 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.

4.6 EMPLOYEE OWNERSHIP : COMPANIES PAY LESS FOR

WORKERS' COMPENSATION COSTS

4.6.1 A study has found that employee ownership companies have lower

workers' compensation insurance rates than comparable non-employee

ownership firms. Leslie Hakala authored the study. She began the project

as an NCEO research intern and completed it for a thesis requirement at

Harvard University. The study was unable to ascribe a specific causal

relationship between employee ownership and lower workers'

compensation costs, but it did find that these costs declined as employee

ownership plans matured.

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

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

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

increases were partly attributable to increased benefits mandated

by state workers' compensation insurance reforms. At the same

time, as employer provided health care coverage has declined,

more employees sought to cover health problems under workers'

compensation. Many people believe there has been increased

fraud as well.

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

in most programs, insurers attempt to provide employers with an

incentive to limit safety problems by developing an experience rating.

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

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

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

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

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

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

assigned to all companies based on their industry classification.

These rates are then adjusted for companies with a premium above

a certain level according to their actual experience. This means

smaller and less risky firms are not assigned an experience

modification rating. The experience modification rate is set for each

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

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

experience modification rate is determined by looking at actual

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

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

given a lower weight because a single incident can skew results

dramatically. This weighted experience rating now becomes the

"experience modification" figure.

4.6.4 Theoretically, the average experience modification factor for any

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

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

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

practice, the average rating is somewhat under 100.

4.7 IT COMPANIES WRITE NEW ESOP STORY

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

haunting IT industry professionals sitting on piles of employee stock

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

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

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, neighbours and everyone else went up like a blimp, companies

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

higher prices that the grants came from.

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

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

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

merely on paper.

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

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

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

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

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

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

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

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

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

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

has terminated the ESOP scheme.

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

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

difference.

4.8 ESOPs HARDLY BENEFICIAL -

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

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

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

period, also known as the vesting period in industry jargon, in the 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 lockin period expired. For instance, this was one year in the case

of Silverline, and 10 in the case of Aptech.

Table 4.1

ESOP IN INDIAN CONTEXT

Recent ESOPs
No of Plan Exercise Plans Vesting Current Price
Shares Period
(Rs) (Rs)
(Lakh)
(Yrs)
NIIT 18.1 Aug '04 1,593 1 162
Silverline 10.0 Nov '04 425 1.5-3.5 41
Patni 5.5 Dec '04 245* 1 54
HCL Infosys 30.2 Aug '04 289 NA 72
SSI 1.5 Sep '04 555 3 164
Wipro 3.5 Oct '04 2,397 1-2 1,485
Infosys 19.6 Oct '04 6,249 5 3,532
VisualSoft 0.2 Aug '04 NA 1 116
 Polaris 8.5 Aug '04 480 5 120

4.9 EMPLOYEE STOCK PURCHASE PLANS (ESPPS)

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

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

which about 1,500 companies offer. Our estimates are based on data from

ShareData'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.

4.9.2 Multiple Plans: Many companies offer multiple e plans, and many

employees participate in more than one plan. For example, many ESPP

participants are also in 401(k), stock option, or other equity compensation

plans. Hence, the total number of participants in all these plans is

definitely not the total of the numbers in the "Number of participants"

column.
4.10 ESOPS AND CORPORATE GROWTH
4.10.1. A 2000 study by Joseph Blasi and Douglas Kruse at Rutgers

Univerity found that ESOP companies grow 2.3% to 2.4% faster than

would have been expected without an ESOP 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.

4.10.2 Subsequent studies by the General Accounting Office and by

academics in Washington State and New York found the same

relationship. A 1999 study for Hewitt Associates by Hamid Mehran of

Northwestern University found that the returns on assets for 382 publicly

traded ESOP companies was 2.7% per year greater than what a model of

their predicted performance would have been.

4.10.3 Studies on participative management alone find a small positive

impact on performance, but not nearly enough to explain the synergy

between ownership and participation these other studies have found.

CHAPTER – 5

SURVEY ANALYSIS
5.0 SURVEY BACKGROUND

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

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

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

requirements of Indian IT Industry are quit different from traditional

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

development has been the increasingly dominant role of service sector

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

identified..

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

exchange. A developing country like India can ill afford continued

conflict ridden; rigid and litigation oriented Industrial Relations. What

employees perceive about the emerging HR trends of the IT organisations

has been measured.

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

Industry a structured questionnaire was designed for this purpose. The

questionnaire included both open ended and close ended questions. The

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

data collection was interview with the employees randomly selected

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

responses given by the respondents were recorded on the questionnaire.

The views expressed by the respondents has been analysed in the

 succeeding paragraphs. About 100 respondents were selected by

convenient random sampling technique.

5.1 RESPONDENTS PROFILE

5.1.1 The main features of the employees randomly selected

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

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

Male and 46 per cent of the respondents were Female

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

technical and technical. The education qualification wise distribution of

the employees who agreed for responding to our questionnaire has been

given below in Table 5.1.

Table 5.1

RESPONDENTS PROFILE - EDUCATION-WISE

(%age)

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%

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

has also been compiled and the same is tabulated below in the Figure 5.2.
 As per Figure the IT industry is dominated by the software professionals

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

other half. Only 13 percent are working in HR and Personnel Management

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

professionals at priority.

5.2 WHETHER HR NEEDS OF INDIAN IT INDUSTRY

ARE DIFFERENT

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

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

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

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

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

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

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

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

behaviour.

TABLE-5.3

Emerging HR TRENDS OF INDIAN IT INDUSTRY

ARE DIFFERENT

(%age)

Respondents' Percentage Of
Observation Respondents
Yes 69%
 No 23%
Can not say 08%
TOTAL 100%

5.3 EFFECT OF NEW COMPENSATION METHODS

5.3.1 The IT industry has been devising newer compensation methods like

Profit Sharing/ Stock Options etc. to increase employee welfare and

retentively. Whether these new compensation techniques are

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

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

compensation methods has a positive effect in IT industry while

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

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

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

mostly welcomed by the employees and when IT industry share

prices has gone down. It has a negative effect..

5.4 WHETHER IT INDUSTRY HAS POSITIVE

ATTITUDE TOWARDFS ITS EMPLOYEES

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

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

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

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

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

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

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

proper welfare management in Indian IT Industry.

TABLE - 5.5

WHETHER IT INDUSTRY HAS A POSITVE

ATTITUDE TOWARDS ITS EMPLOYEES

(%age)

Respondents' Percentage Of
Observation Respondents
Yes 43%
No 48%
No comments 09%
TOTAL 100%

5.5 STATE OF GRIEVANCES HANDLING IN

INDIAN IT INDUSTRY

5.5.1 The respondents responses to the status of grievances handling mechanism

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

questionnaire the respondents were to comment upon the positive

hypothesis that grievance handling is done properly in the IT

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

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

below in Table-5.6.

TABLE - 5.6
 GRIEVANCE HANDLING IN

INDIAN IT INDUSTRY IS PROPER

(%age)

Respondents' Percentage Of
Observation Respondents
Strongly Agree 12%
Agree 39%
No Comments 14%
Disagree 26%
Strongly Disagree 09%
TOTAL 100%

5.5.2 Only 12 respondents strongly agree to the statement and similarly a 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.

5.6 TOP MANAGEMENT AWARENESS

5.6.1 Whether top management awareness about working conditions of the

employees and state of working conditions in the organisation was

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

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

aware about the employees working conditions in the IT organisations

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

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

Table 5.7
 TOP MANAGEMENT AWARENESS

(%age)

Respondents' Percentage Of
Observation Respondents
Not at all aware 20%
Very little aware 45%
Some what aware 11%
Much aware 18%
Very much aware 06%
TOTAL 100%

5.7 EMPLOYEE EMPLOYER RELATIONSHIP IN IT

INDUSTRY

5.7.1 Cordial employee employer relationship is very essential in the

upcoming highly competitive economy. The state of employee

employer relationship in Indian IT Industry was measured through

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

not very encouraging.

Table 5.8

STATE OF EMPLOYEE EMPLOYER

RELATIONSHIP IN IT INDUSTRY

(%age)

Respondents Grading Percentage Of

Respondents
 Excellent 14%
Very Good 44%
Satisfactory 28%
Poor 14%
TOTAL 100%

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

percent consider it satisfactory and below. The employment of modern

technology requires more positive and effective relationship between

management and the employees. Indian IT Industry has very effective

employee employer relationship.

5.8 EMPLOYEES RETENTIVITY IN INDIAN IT

INDUSTRY

5.8.1 The most of the employees of IT sector are highly educated and sensitive in
nature. Moreover, the opportunities outside are very attractive, Whether

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

query from the randomly selected IT industry employees. Their opinions

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

in the Figure 5.9.

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

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

they are able to retain the employees.

5.9 HOW TO INCREASE EMPLOYEES

RETENTIVITY IN INDIAN IT INDUSTRY

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

the IT sector employees in India are very quickly jumping the

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

professionals was asked from the respondents. Few suggestions were

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

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

TABLE- 5.10

SUGGESTIONS FOR INCREASE RETENTIVITY

IN INDIAN IT INDUSTRY

Respondents' Suggestions Percentage Of Respondents

Increase wages to international levels 22%

Increase foreign postings 36%

Increase profit sharing 10%
More promotions 11%
Others 21%
TOTAL 100%

(%age)

5.9.2 A 22% of the respondents has suggested to increase the wages 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.
5.10 APPLICABILITY OF EXISTING INDIAN

LABOUR LAWS IN INDIAN IT INDUSTRY

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

IT Industry as IT sector employees are quite different from general

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

whether as a Laws/Rules should be designed for IT Industry:. This

hypothesis was presented to the respondents. They were to respond upto

which extent they agree or disagree. The employees responses have been

tabulated below in the Table 5.11. The comfortable majority of

respondents (89%) strongly agree or agree with the hypothesis that Indian

IT sector requires separate labour management system/ regulations. While

only minority of 13% has given divergent views. Low

TABLE-5.11

INDIAN IT INDUSTRY REQUIRE

SEPARATE LABOUR LAWS/ RULES

(%age)

Respondents' Percentage Of
Observation Respondents
Strongly Agree 57 %
Agree 32 %
No Comments 02%
Disagree 07%
Strongly Disagree 02%
TOTAL 100%
5.11 EFFECTIVENESS OF OLD AGITATIONAL

METHODS IN IT INDUSTRY

5.11.1 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. As has been listed in Figure 5.12
below, 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.

5.12 EFFECT OF EXCESSIVE COMPETION IN

INDIAN IT INDUSTRY

5.12.1 Whether excessive competition in Indian IT sector is harming the overall

long term prospects of employees in this sector The respondents opinion

is tabulated below in Table 5.13. The table above clearly indicates that

excessive competition is observed as harmful to the employees prospects. .

53 percent of the respondents has replied in Yes to this question. While

35% has a negative viewpoint.

TABLE - 5.13

EXCESSIVE COMPETITION IS HARMING

EMPLOYEES LONG TERM WELFARE

(%age)

Respondents' Percentage Of
Observation Respondents
Yes 53%
No 35%
 No Comments 12%
TOTAL 100%

5.13 ROLE OF TRADE UNION IN IT INDUSTRY

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

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

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

in this regard.

Table 5.14

ROLE OF TRADE UNION IN IT INDUSTRY

(%age)

Respondents Grading Percentage Of

Respondents
No Trade Union 21%
Single Trade Union 13%
Multi Trade Union 09%
Only welfare association 57%
Total 100%

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

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

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

multi trade union.

5.14 OVERALL ASSESSMENT OF EMERGING HR

TRENDS IN INDIAN IT INDUSTRY

5.14.1 In the end respondents were asked to give their overall assessment/ grading
of emerging HR trends in Indian IT Industry. The overall assessment on

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

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

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

assessment of satisfactory and poor

CHAPTER - 6

SUMMARY AND CONCLUSION

6.0 OVERVIEW

6.0.1 The era of skill-based workers has arrived but if India wants to truly 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.

6.0.2 ‘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.

6.0.3 The total human resource strength of the IT industry as a whole stands at 425,609.
A company-wise break-up of this figure reveals that nearly 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.
6.0.4 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.

6.0.5 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 every where, 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.

6.0.6 These fastness of services and higher level of education/training standards are not
easy to manage by the organisations concerned. As we already know that Human
Resource Management of the organisation deals with the individuals putting their
hardwork to meet the organisations goals. Managing people is the toughest element of
any organisation than land, machinery or finances. Every human beings has its own
degree of preferences, likings and attitude. So, HR managers has to take care of all these
things in mind while dealing with the number of people working in the organisation.

6.0.7 Different type of employees/workers recruited for different level of working has to
be managed in different styles. The hundreds years of organisational management
experience has been converted into a standard personnel management and industry and
service organisations are following these HR techniques for their organisational
management. Due to availability of written down procedures and rules by the learned
managers, it was felt that HR managing was not so typical.

6.0.8 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.

6.0.9 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 excessive job demands 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. HR managers 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.

6.1 RESPONDENTS OBSERVATIONS

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

6.1.2 The 54% of the were Male and 46 per cent of the respondents were Female. It was
observed that IT industry is dominated by the software professionals (46%), computer
hardware and marketing services of IT are sharing the other half.

6.1.3 The respondents were asked to comment whether the HR needs of Indian IT
industry are different from traditional HR Management systems.. 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.

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

6.1.5 As per 48% of the respondents IT organisation has more concern for profit motive
than employees welfare. While 43% were not agree to this proposition

6.1.6 51 percent of the respondents strongly agree/agree to the statement that grievance
are handled properly in the Indian IT industry. While 33% think otherwise.

6.1.7 Whether top management awareness about working conditions of the employees
and state of working conditions in the IT organisations, 65% of the respondents view that
the top management's are not aware or little aware about the employees working
conditions in the IT organisations . Only 4 percent vouched that top management is very
well aware about the nature of working conditions and 16 percent say "Much Aware".

6.1.8 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
very encouraging. 58 percent of the respondents has graded it very good and above.
While 42 percent consider it satisfactory and below.

6.1.9 Whether Indian IT Industry is able to retain its employees was the a query from the
randomly from IT industry employees. 61% of the employees view that Indian IT
companies are unable to retain its employees due to most attractive avenues outside .
22% of the respondents has suggested to increase the wages to international level to
increase employees retentivity 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 directly institutions and better HR
management.
6.1.10 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:. This hypothesis was presented to the respondents. The majority of respondents
(89%) strongly agree or agree with the hypothesis that Indian IT sector requires separate
labour management system/ regulations. While only minority of 11% has given divergent
views. Further, 67% of the respondents has opined that old agitational techniques of trade
unions are not desired in IT industry.

6.1.11 Whether excessive competition in Indian IT sector is harming the overall long
term prospects of employees in this sector . 53 percent of the respondents has replied in
Yes to this question. While 35 percent has a negative viewpoint..

6.1.9 The largest 57 percent of the respondents view that there should be only welfare
association in Indian IT industry. 21% need no trade union and 13% like single trade
union only.. 9 percent of the respondents opted for multi trade union.

6.1.10 In the end respondents were asked to give their overall assessment/ grading of
emerging trends of Indian IT industry. The overall assessment on five point scales of
excellent, very good, good, satisfactory and poor. 65% of the respondents were in
positive grading of excellent, very good and good. While 35% gave a assessment of
satisfactory and poor

6.2 CONCLUSION

6.2.1 Hence, 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. Hence, 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. Moreover, 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 organisations China is
also entering this area vigorously and Government of India must help Indian It industry to
meet this challenge.

APPENDIX "I"

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 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 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

3. 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

4. "Indian IT sector companies has a positive attitude towards its employees and are not
neglecting their welfare and prospects for their profit sake." Do you agree with the
statement.

(i) Yes

(ii) No

(iii) No Comments

5 "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

6. How much do you think the top management of your organisation is aware of the
working conditions of its employees?

(i) Not at all aware

(ii) Very little aware

(iii) Somewhat aware

(iv) Much aware

(v) Very much aware

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

(i) Excellent

(ii) Very Good

(iii) Satisfactory

(iv) Poor

8. 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.(Please Tick)

(i) Yes

(ii) No

(iii) Comments

9. What the HR managers of Indian IT sector should do to increase the retentivity rate of
its employees (Please Tick)

(i) Increase wages to international level

ii) Increase foreign postings

iii) Increase profit sharing

(iv) More promotions

(v) Any other(please specify) __________________________

10. "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

11. Whether old methods of employees association/trade union like strike or Gherao
etc. are desirable in Indian IT Sector (Please Tick)

(i) Yes

(ii) No

(iii) No Comments

12. 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

13. 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

14. Give your overall assessment of HR Management in Indian It Industry.

(i) Excellent

(ii) Very Good

(iii) Good

(iii) Satisfactory

(iv) Poor

15. Please give your comments and suggestions to bring further improvement in HR
Management in Indian IT Industry.

Thank You,

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