PROJECT REPORT

On

HRD MANAGEMENT IN IT INDUSTRY

2009-2011

In the partial fulfillment of the

Master of Business Administration Program (MBA)

SHRINATHJI INSTITUTE OF MANAGEMENT

UPALI ODEN, NATHDWARA (RAJ.)

Supervised By: - Submitted By: -

DR. DEEPTI BHARGAVA SANWARIYA LAL VAISHNAV

(Asso. Prof.)

ACKNOWLEDGEMENT

I am thankful to my parents who encourage me for this project work. I avail this opportunity to express my profound sense of sincere and deep gratitude to many people who are responsible for the knowledge and experience I have gained during the project work.

I extend my overwhelming gratitude to DR. DEEPTI BHARGAVA Head of

Department, MBA, for his valuable guidance and meticulous supervision during

the preparation of this Project Report.

I have great pleasure in expressing my deep sense of gratitude to DR. DEEPTI

BHARGAVA guide for his valuable and prompt guidance without which this

project would not have been a successful one. In this context, SHRINATHJI

INSTITUTE OF MANAGEMENT RAJASAMAND.

In preparation of this report, material has been drawn from various resources.

We wish to acknowledge these inputs as starting point of the report and indebted to

the creators and producers of the same.

CONTENTS

1. INTRODUCTION

2. RESEARSH METHODOLOGY

3. HR   PROBLEMS OF INDIAN

IT   PROFESSIONALS  

4. IT   SECTOR   COMPENSATION METHODS

5. DATA ANALYSES &

INTERPRETATION

6. CONCLUSION

7. SUGGESTIONS

8. BIBLIOGRAPHY

CHAPTER - 1

INTRODUCTION

HRD MANAGEMENT IN IT INDUSTRY  

Success of every business enterprise depends on its human resource. Money, material

and machines are inert factors; but man with his ability to feel, think, conscience and plan is the

most valuable resource. At the same time human elements are most difficult to be inspired,

controlled and motivated. The upcoming competition in India will demand high motivational

level of its employees.

Growth of an enterprise is vital for the economic development of the country. This is possible

only by maintaining the enthusiasm and motivation of the employees, which is vital for carrying

out the operations in most efficient manner. The most successful companies, all over the world

have designed their business policies to achieve higher productivity by using potentiality and

strength of people.

The basic aim of human policies is the genuine concern for the people. Proper design of human

policies is based on the higher responsibilities, personal and positive approach in the total

perspective of organizational interest. The world's best companies have established their strength

with their people. The employees identify themselves with the company they are working for.

This also help in building up their spirit, morale and spirit-de-cops which becomes strength of

the company. The culture of excellence thus nurtured contributes to growth with stability and

continuous improvement in productivity.

Finding the right man for the job and developing him into a valuable resource is an indispensable

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

providing an output that is greater than the sum of the inputs. Proper recruitment helps the line

managers to work most effectively in accomplishing the primary objective of the enterprise. In

order to harness the human energies in the service or organizational goals, every manager is

expected to pay proper attention to recruitment, selection, training, development activities in an

organization. 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 organization to hire and retain the services of the best

brains in the market.

The human resource management is very crucial in respect of information technology services

than other manufacturing or marketing enterprises. The IT services are technical in nature and at

every stage the human touch is involved. Hence it is well motivated and devoted manpower

which is very much essential for the success of IT industry.

ROLE OF HR MANAGERS

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.

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.

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.

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.

LEADERSHIP AND EMPLOYEE INVOLVEMENT.

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.

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 organization.

Leaders in Disney concentrate on quality, values and involvement. Speaking in the plenary

sessions, Tom Peters said, “We have transitioned from an asset-based economy to a talent-based

economy. The new definition of lay-off is untalented go talented stay. Leaders must realize that

talent is equal to brand". His new theory is EVP which means "Employee Value Proposition".

Rosebush 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 organizations

really train people to make them a success. Seconding this, Mr. Peters pointed out how most

organizations 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.

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 organization.

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.

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

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.

E-Learning: - Organizations like Ford Motor, Hewlett Packard, Intel and IBM are using e-

learning to increase the knowledge of their people. Companies like Ford star 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.

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, and modular and has a huge reach.

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.

INNOVATIVE PRACTICES IN HR

The Innovative Practices in Human Resources study uncovered 12 practices that are reducing

HR costs and improving service quality to employees. Key findings from this research included

the need for HR managers to streamline processes, lower overhead costs, and enable their

departments to advance from transactional organizations to strategic partners in the business.

Practices and technologies include:

Internet and intranet employee services

Strategic human resources

Centralized HR departments and call centers

360-degree performance appraisals

HRIS systems

Employee self-service

Voice response systems (VRUs)

Resume scanning and Internet recruitment

Kiosks

Automated time and attendance systems

Team policies and development

Outsourcing

Business process reengineering (BPR)

 

LINKING PAY TO PERFORMANCE

Most Human Resource professionals are familiar with the concept of strategy. There is much

more concentration and focus today on the strategic outcomes of human resource activity than

ever before. The area of compensation is no exception.

Pay for performance systems are becoming more and more popular as senior managers reach

beyond the use of compensation systems to deliver pay. 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.

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.

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.

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.

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.

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 them 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.

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.

Why Is This Transition Occurring? :-Well, there are many challenges facing businesses today

and these challenges are driving them to find better ways of linking pay and performance to the

achievement of corporate results..

CHANGING JOB DESIGN IN IT COMMUNITY

The California State University (CSU) system is being challenged to meet increasing demands

for educational and administrative services through the innovative use of technology and human

resource systems. Even though funding levels for higher education have been cut in recent years,

public/taxpayer expectations and the demands for quality education, access, service, and

accountability have grown. Technology initiatives within the CSU have resulted in significant

advances and improved technical capabilities and efficiency. Human resource and organizational

systems are also needed to capitalize on and thrive in this rapidly changing work environment.

In 1991, the CSU began a study to look at alternative work and job design approaches to meet

these challenges. The study focused on the information technology community and how works

processes and activities could be better organized to remove artificial barriers and improve

organizational effectiveness, a process often associated with the term "reengineering." Secondly,

the study focused on developing a job design approach that could adapt to changing skill

requirements and that would promote the continuous acquisition of skills for knowledge-based

employees in information technology. The goal of improved organizational effectiveness and an

orientation towards reengineering and skills guided the development of the proposed job design

approach.

This article begins by identifying several trends that led to the study, then describes the overall

project within the context of an organizational effectiveness equation. A new job design

approach that was proposed as a result of the study is presented, including a new classification

structure and competency dimensions and measures for defining and evaluating positions.

Finally, other supporting systems are described for an integrated human resources approach. The

development phase of the project has been completed, and the CSU anticipates entering into

negotiations with its employee representatives in the near future.

Three trends have had a direct impact on the development of a strategic job design approach for

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

technology, increased demand for educational access and (b) changes in instructional delivery

methods; and changing work place demands and priorities.

The technology demands within higher education lead to a complex and dynamic computing

environment. Academic and administrative computing strategies tend to be at cross-purposes in

terms of defining systems requirements. This has resulted in widely diverse systems and

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

systems are becoming more integrated, as data are shared across multiple platforms on a network

"highway" that is linked to external information sources. Networking and desktop computing

have removed traditional boundaries for information access, research, and decision-support

purposes. Data, voice, and video technologies continue to be combined in more interactive and

user-friendly formats.

In terms of educational trends, many institutions offer distance learning using various

transmission media and are incorporating instructional technology into curriculum development.

Students expect guaranteed access to technology and to research databases, and this access has

become an issue of social responsibility.[1] Library and computing functions are becoming

increasingly interdependent in "an infrastructure of scholarly communication" within higher

education.[2] Workplace trends, as presented in Sustaining Excellence in the 21st Century: A

Vision and Strategies for College and University Administration, well represent the outlook for

the CSU. Two key issues are identified:

(1) Economics. There is increasing pressure to constrain administrative costs within the "labor

intensive cost structure" that exists in higher education. Reductions in staff are occurring at the

same time as transaction volume and service expectations are growing.

(2) Decentralization of responsibility. With fewer people and greater access to information,

organizations are moving responsibility for decision-making downward to the point of service.

Work organization is shifting away from job specialization and a task/procedure orientation, to

more generalized job responsibilities focused on outcome and greater participation on cross-

functional teams.

(3) Another central workplace trend is the "earning and learning" environment described by the

U.S. Department of Labor in its Secretary's Commission on Achieving Necessary Skills

(SCANS) report. To quote Thomas P. Foley, Secretary of the Pennsylvania Department of Labor

and Industry:"We've changed from the idea of "one skill, one job" to the reality of a range of

skills that have to apply to a number of different kinds of professions. More to the point, workers

must possess a skill that they continually upgrade just to keep pace in the professions they

choose."

(4) The influx of new technology and applications has created a demand for continual learning

and adaptation. Due to the CSU's relatively stable workforce, maintaining skills to keep pace

with changing technology was identified as a critical goal. Knowledge requirements are

expanding to encompass a greater breadth of technologies and subject expertise, as well as

including process-oriented capabilities such as communication and negotiation skills.

The implications of these technological, educational, and workplace trends point directly to the

need to reengineer organizational structures, work design, and processes. Based on these trends

and overall organizational goals, two key objectives were established for a new job design

approach for the CSU: flexibility and skill development. Fundamentally, each campus needs the

flexibility to achieve its goals by distributing work assignments in a way that optimizes its

available skill mix and promotes individual skill development and initiative.

 

CHAPTER -2

RESEARCH METHODOLOGY

 

RESEARCH METHODOLOGY

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

organizations were also studied. Primary and secondary data available with these organizations

was also used for this project study.

In order to measure the employees perceptions of emerging HR trends in different IT

organization, 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.

Firstly, the pilot survey on ten randomly selected respondents was undertaken. Then the

questionnaire was modified accordingly, if desired.

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.

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.

OBJECTIVES OF STUDY

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 organization.

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

 Limitations of the Study:

Respondents may give biased answers for the required data. Some of the

respondents did not like to respond.

Data are taken from published & unpublished literature of banks.

HR TRENDS IN   IT INDUSTRY

HR IT SCENARIO

The web is altering the HRD landscape beyond recognition. The key to corporate success in the

fast changing information era is ‘thinking on your knees’.

What is this thinking on your knees? Normally as the HR person you know what the situation

is and operate from there. A repositioning is required in your decision process with questions like

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

dynamism and with a lot more effectiveness than thinking on your feet.

The employees are like gypsies, on the move all the time. They camp at some location, enhance

their skills, responsibility levels and move on. This is particularly true of the professional from

Software Industry. Opportunities are plenty and the next job opening is only a mouse click away.

The question is not about what else you can do to retain an employee but it is about making him

productive, while he is with you. The value addition will then happen for both the employee as

well as the employer resulting in a win-win situation. This means that the new strategy calls for

the recognition that no employee is expected to be permanently with you. Normal tenure in any

organization is likely to be between two to three years.

INNOVATION IS THE KEY

Information    technology  and  Internet  have  changed  several equations. Reaching out to the

world market place is no more the challenge in achieving corporate victories. Out thinking the

competition at electronic speed is the key to winning corporate battles. The corporate success is

sum total of entrepreneurship practiced by your staff.

The  key  to  employee  longevity :-Today’s most successful organizations recognize that to fuel

growth and sustain a competitive advantage, they must make recruiting, hiring and retaining top

talent, as the organization’s major thrust area. Competent people deliver the rest don’t matter.

Successful business organizations have no choice but to promote the performers and let non-

performers go.

Organizations recognize that that  their ability to gather, manage, analyze, distribute information

and transform themselves into a learning organization will provide continuity and ensure for

them their leadership role. Systematic organizational learning should be central corporate

philosophy. Learning must be obviously followed by changes, which may not necessarily be

welcomed by veterans in the organization. But ‘change is the only constant’ for guaranteed

success.

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

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

organization.

·           People are responsible

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

·           Organizations need to create awareness amongst their employees about their

vision and then empower them to act on that vision.

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

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

·           Plan and create short-term win targets – reward employees and recognize

achievers.

·           Consolidate improvements through a knowledge base driven system and

institutionalize proven new methodologies.

New Paradigms in HR

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

·           Corporate goals must factor in individual career growth and personal growth

must be tied to corporate growth and vice versa

Job responsibilities must facilitate personal development and learning should be institutionalized

with well-established knowledge bases. Capturing experience and making it available ‘corporate

wide’ should be a permanent feature of organizations.

WAR FOR TALENT

The world’s most popular people resource base seems to be falling short of numbers to meet its

own demands. With added pressures of migration and attrition, can India’s IT industry achieve

its software and services revenue target of $87 billion by 2008? Country: India. Population: 1

billion-plus. If that sounds like too many people, think again. Plug in English-speaking and low

labor costs, and suddenly we can envision $50-billion software exports target by the end of this

decade. Not impossible, if we consider the scarcity of IT manpower across the world. Take a

look at the US, already with a 10- million-strong IT workforce, which needs to fill 1.6 million

new jobs in the next one year. Japan is no different and estimates close to a million new jobs.

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

Their choice destination—India.

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

world over, is struggling with numbers to meet its own demand. To meet the overall software

and services (domestic and export) target of $87 billion by 2008, according to the Nasscom-

McKinsey report, the country will require a minimum of 2.2 million knowledge workers for its

domestic needs. This implies that the present strength, which stands at 12, 00,000 (December

2004), has to increase about twice, not just in quantity but in quality as well.

According to industry estimates, majority of the demand for manpower will be in the area of IT-

enabled services. While Nasscom puts the requirement at 11, 00,000, MIT says IT-enabled

services and e-business will need 12, 70,000 workers by 2007. Experts insist that since this

sector does not require very highly skilled manpower, we can easily meet this demand. "IT-

enabled services are a wonderful opportunity for India and for such services you don’t need

highly skilled professionals. You just need smart graduates who can speak English; all you need

to do is train them. For instance, in a call center, they need to be trained on accents and customer

services,"

4 R’s of HR in IT

Table 2.1

 

Recruiting

Signing bonus

Finders Fee

Alumni connections

Non-techs

Students

Interns

Retaining

Retention bonus

Project pay

Reduct FTE/same pay

Telecommuting

Externs

Job sharing

Recognition programs

Retraining

Job rotation

Team assignments

Skill inventories

Competency development

Certification

Restructuring

Broad job descriptions

Flexible compensation

programs

Flexible jobs

Positive problem-solving spirit

OBSTACLES

·         Denial (This is and long term)

·         Misalignment (Ramping up/Ramping down)

·         Timing

·         Treating everyone the same

·         Navigating the bureaucracy

·         Demographics

WHAT OTHERS ARE DOING

·         Pooling recruitment efforts

·         Increasing freedom at the dept level

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

·         Recruiting/retaining students

·         Identifying tech skills in all jobs/people (Skill Inventories/assessment)

·         Sharing staff

RETENTION FACTORS

1.             Quality of boss

2.             Direction of department

3.             Exposure to new technologies

4.             Confidence in the company

5.             Job security

6.             Challenging work

7.             Location

8.             Access to capital resources

9.             Caliber of co-workers

10.           Empowerment

11.           Department leadership

12.           Ability to influence department success

TAKING THE LEAD

·             See ourselves as problem-solvers

·             Develop critical skills and competencies in ourselves, then others

·             Build compensation around results not tasks; competencies, not seniority

·             Involve everyone. Constantly align and balance resources to meet changing needs

SEARCH FOR TOMORROW

Attract, retain and reward the best performers (Encourage all to be the best) Increase flexibility

Reduce fixed costs

Reduce administrative effort (Simplify, simplify, simplify)

Utilize the full range of individual talents

THE CRISIS

Ø         Shortage of IT workers

COMPETITION

Ø       Compensation stock options, profit sharing, incentives

Ø      Alternatives outsourcing.

ATTRACTING

Ø        Recruiting sign on bonuses

Ø        Relocation incentives

Ø        Recruiters

Ø        Reduced cycle time for hiring

Ø        Campus/ job fairs / referrals/ internet

RETAINING

Ø     Work environment

Ø     Communication forums

Ø     Telecommuting

Ø     Flexible staffing

Ø     Exciting project

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

DEVELOPING

Ø      Internship programs

Ø      Training programs

Ø      Career development programs

LONG TERM SOLUTIONS

Ø         Education, government, industry partnerships

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

KEY SUCCESS FACTORS

Understand people

What they want

Long term perspective’

Innovative

Co ordinate approach

Career development

OUT SOURCING

In the last few years, more and more companies around the world are looking towards India for

outsourcing their software requirements. The changing business environment is demanding new

applications. In particular, the spread of client-server computing in decentralized organizations

involves the development of applications specific to a user's business.

Outsourcing is becoming a strategy for forward thinking IS managers. It is no longer just a

means for reducing costs, but a tool for adding value to business. It enables organizations to

concentrate on their core business, carry out business re-engineering and provide information

that is valid, timely and adequate to assist decision making at the management level and quality

and cost control at the middle and lower levels.

As a result, outsourcing has gradually grown beyond the traditional idea of "having a third party

running the data centre". It has come to mean, "Any use of an outside contractor to replace or

extend in-house resources".

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

organization’s major initiative in using IS. It should enhance and add value to the business. A

rule of thumb to start and gain experience is, "if IS 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".

In the past few years, whenever organizations around the world have outsourced to India, the

Indian software companies have substantially helped to cut costs in software development

projects or MIS environments, while maintaining high quality. Moreover, all these cost and

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

In  2004-05  more than US$ 2500 million worth of software development work was outsourced

to India (The total software exports from India during the year was US$ 4085 million). This was

56% higher than outsourcing orders in 2003-04. It is estimated that the quantum of outsourcing

may jump to US$ 5 billion and reach as high as US$ 10 billion by 2010 A.D.

CHAPTER - 3

HR   PROBLEMS OF INDIAN

IT   PROFESSIONALS  

 

OVERVIEW OF PROBLEMS

The IT revolution is sweeping the world, particularly the western world in for nearly a decade

now, creating enormous employment opportunities in this area. India joined the bandwagon well

in time and smoothly though it is yet to entrench itself strongly in terms of corporate identity and

significant share of global revenues in IT.

Our main contribution seems to be in the less glamorous areas of value addition, maintenance,

Y2K, quality assurance and customization of existing packages. The sudden eruption of

opportunities in this area left no time for development of human resources in a planned manner

and also software solutions which tended to be more ad hoc than being assured of quality.

With the enormous opportunities for employment, entrepreneurship with low capital investment

and low gestation period for turning profitable, higher returns per employee and large return on

investment/EPS, sustained encouragement from government, a very large number of

organizations - large, medium, small - have been established. Correspondingly a large number of

training establishments and cyber cafes have come up, most of which are in the cities and towns

to cash in on the enthusiasm of the urban middle class.

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

besides the existing government (State/Central), university and autonomous institutions. There

are about 500 private engineering colleges besides IITs, RECs, universities, colleges offering

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

be exaggerated, most of the programmed (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.

Except in well-established institutions, job-placements are poor. Even those trained in reputed

institutions find their jobs monotonous, leading to depression. Jobs offered by the software

industry have demonstrated the above factors as they are able to carry out the projects with

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

to employment or a short training during probation.

Despite these deficiencies, students prefer software jobs mainly with an eye on the pay-package

and urban locations. The employee- retention period even in good companies has been shrinking

and is found to be three to six months. The companies also try to devise methods to make their

employees almost captive with surety bonds, bank guarantees, employee's stock option (ESOP)

and housing facilities, among others. The employees, for their part, resort to innovative methods

to wriggle out of their contracts. There does not appear to be any respectable ethics even among

companies as well as the employees in this type of free for all market. To go abroad and become

rich has become the motive of most of the employees even if the job does not offer any

intellectual satisfaction. The manufacturing and hard-core engineering sector has also shrunk in

terms of job opportunities and attractiveness.

Even those software professionals, who are offered good financial packages, spend their earnings

on expensive lifestyles, vehicles, and credit card syndrome and find themselves disenchanted on

all fronts including the intellectual front. It should also be a cause for concern to project beyond

the present software boom as to what happens to all these if the opportunities decline. The

scenario appears to be quite fluid with a predominant western bias in all the activities concerning

software profession with scores of Indian boys getting lured and sucked into the vortices created

by the opportunities in this area.

MAIN PROBLEM AREAS

The significant problem areas which may be contributing to the present scenario and can be

addressed can be identified as given in the succeeding paragraphs.

Recruitment process:-Without going into the deficiencies of the present practices, the following

suggestions are made to improve the process in terms of efficiency, availability of manpower and

equity to all the aspirants irrespective of the fact where they got educated. The various steps of

the proposed approach are as follows:

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

organizations/HR agencies for prospective professionals preferably ``on-line'' like

GRE, GMAT etc. or physically at regular intervals and scores are given. If it is no

on-line, the periodicity can be a month or two and the validity can be for 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.

Post employment care:- The companies/organizations should take adequate interest in the

career development of the employee by suitable HRD approaches which should include the

following:

I.             Opportunities for creative work in the first phase particularly for those who are

bright, and have an aptitude and come with a good pedigree say from IITs.

ii.            Opportunities to lessen the monotony and improve interpersonal relationship and

mixing and group activities.

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

iv.           Opportunities for retraining and upgrading the skills.

v.            Conducting effective career development programs regularly.

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

opportunities of higher education.

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

deployment in areas needing strengthening.

viii.       Encouraging simplicity and excellence.

Advantages: -

The suggested processes in 4 and 5 above can be expected to have the following significant

advantages:

I.             Cost effective and efficient process.

ii.            Proper deployment of skills optimally.

iii.           Idle employment can be minimized.

iv.           Retention can be improved.

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

society mode.

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

time, money and efforts.

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

background.

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

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

chance to attract willing and bright candidates.

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

preparation in core areas.

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

and meeting them even at short notices.

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

and as the question bank becomes larger and random on-line questioning can be

introduced which is more objective like GRE, GMAT.

LONG   TERM     PERSPECTIVE

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

with or without stipend in courses where he could get admission for his degree. This will help in

decreasing the pressure on engineering education as otherwise the skills acquired by the

candidate at a great cost in branches other than computer sciences are wasted and lost for good if

employed by the software industry.

It may be a good idea to have a National Test for Software Talent similar to science talent test

which can be sponsored by NASSCOM and such other interested groups

The idea of forming a cooperative society by small firms may prove to be beneficial as the

facilities and manpower can be shared optimally. While otherwise they may face the problems of

lack of adequate manpower (below the critical mass level) because of less attractive pay and

perks they are able to offer.

Renowned organizations like IITs, IIMs and MNCs, and can play a catalytic roll in streamlining

the processes for an efficient HRD in this vital area of software manpower which is a national

resource.

CHAPTER - 4

IT   SECTOR  

COMPENSATION METHODS

 

EMPLOYEE STOCK OWNWERSHIP PLAN

Employee Stock Ownership Plan (ESOP): is a defined contribution employee benefit plan that

allows employees to become owners of stock in the company they work for.

How does ESOP work?

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

deductible contributions from the company to purchase company stock

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

employee accounts within the trust.

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

established formulas based on salary, service, or position.

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

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

requirements.

STOCK OPTIONS

Stock Options: The ‘right’ to purchase stock at a given price at some time in the future. Stock

Options come in two types:

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

taxation until the shares bought with the option 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'.

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

may 'exercise' the 'right' to purchase a company’s stock at a certain price (the 'grant' price) by a

certain (expiration) date in the future. Usually the price of the option (the 'grant' price) is set to

the market price of the stock at the time the option was sold. If the underlying stock increases in

value, the option becomes more valuable. If the underlying stock decreases below the 'grant'

price or stays the same in value as the 'grant' price, then the option becomes worthless.

MERIT PAY

Merit Pay is an incentive plan implemented on an institutional wide basis to give all employees an equal

opportunity for consideration, regardless of funding source. The merit increase program is implemented

when funds are designated for that purpose by the institution's administration, dependent upon the

availability of funds and other constraints.

Advantages OF Merit Pay:-

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

·               Allows a differentiation between individual and company performance.

·               Allows the employer to satisfactorily reward an employee for accomplishing a task that

might not be repeated (such as implementation of new systems).

GAIN SHARING

Gain sharing is a technique that compensates workers based on improvements in the company's

productivity.

How does Gain sharing work? A Company shares productivity gains with the workforce.

Workers voluntarily participate in management to accept responsibility for major reforms. This

type of pay is based on factors directly under a worker’s control (i.e., productivity or costs).

Gains are measured and distributions are made frequently through a predetermined formula.

Because this pay is only implemented when gains are achieved, gain sharing plans do not

adversely affect company costs.

What are the 'Gains' that are measured?

·                     Increases in production with equal or less effort.

·                     Equal levels of production with less effort.

What are examples of Gain sharing formulas?

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

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

PROFIT SHARING

Profit Sharing is an incentive based compensation program to award employees a percentage of

the company's profits.

How does Profit sharing work? The company contributes a portion of its pre-tax profits to a

pool that will be distributed among eligible employees. The amount distributed to each employee

may be weighted by the employee's base salary so that employees with higher base salaries

receive a slightly higher amount of the shared pool of profits. Generally this is done on an annual

basis

How to Choose an Employee Stock Plan for Your Company:-Many companies we encounter

have a pretty good idea of what kind of employee ownership plan they want to use, usually based

on specific needs and goals. However, sometimes they might be better served by another kind of

stock plan. And yet others say they'd like to have an employee ownership plan, but they're not

sure what it might be. This article will start you down the path to choosing and implementing the

plan or plans best suited to your company.

ASSESSMENT OF PLANS FOR BROAD-BASED EMPLOYEE OWNERSHIP

Let us begin by quickly reviewing the main possibilities for broad-based employee ownership.

A "broad-based" plan is one in which most or all employees can participate.

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

in which most or all of the assets are invested in stock of the employer. Like profit sharing

and 401(k) plans, which are governed by many of the same laws, an ESOP generally must

include at least all full-time employees meeting certain age and service requirements.

Employees do not actually buy shares in an ESOP. Instead, the company contributes its own

shares to the plan, contributes cash to buy its own stock (often from an existing owner), or,

most commonly, has the plan borrow money to buy stock, with the company repaying the

loan. All of these uses have significant tax benefits for the company, the employees, and the

sellers. Employees gradually vest in their accounts and receive their benefits when they leave

the company (although there may be distributions prior to that). Over 8 million employees in

over 11,000 companies, mostly closely held, participate in ESOPs.

A stock option plan grants employees the right to buy company stock at a specified price

during a specified period once the option has vested. So if an employee gets an option on 100

shares at $10 and the stock price goes up to $20, the employee can "exercise" the option and

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

difference. But if the stock price never rises above the option price, the employee will simply

not exercise the option. Stock options can be given to as few or as few employees as you

wish. Perhaps 7 to 10 million or more employees in thousands of companies, both public and

private, presently hold stock options.

An employee stock purchase plan (ESPP) is a little like a stock option plan. It gives

employees the chance to buy stock, usually through payroll deductions over a 3- to 27-month

"offering period." The price is usually discounted up to 15% from the market price.

Frequently, employees can choose to buy stock at a discount from the lower of the price either

at the beginning or the end of the ESPP offering period, which can increase the discount still

further. As with a stock option, after acquiring the stock the employee can sell it for a quick

profit or hold onto it for awhile. Unlike stock options, the discounted price built into most

ESPPs means that employees can profit even if the stock price has gone down since the grant

date. Companies usually set up ESPPs as tax-qualified "Section 423" plans, which means that

almost all full-time employees with 2 years or more of service must be allowed to participate

(although in practice, many choose not to). Many millions of employees, almost always in

public companies, are in ESPPs.

Section 401(k) plan is a retirement plan that, unlike an ESOP, is designed to provide the

employee with a diversified portfolio of investments. Like an ESOP, however, a 401(k) plan

is a tax-qualified plan that generally must include all full-time employees meeting age and

service requirements. The employees can choose among several or more choices for

investments, and the company may make a matching contribution. Perhaps several million

employees in a few thousand companies participate in plans with a heavy company stock

component; company stock may be an investment choice for the employees and/or the means

by which the company makes matching contributions. 401(k) plans may be combined with

ESOPs (these are called "KSOPs"), where the company match is an ESOP contribution.

EMPLOYEE   OWNERSHIP: COMPANIES   PAY LESS FOR WORKERS'

COMPENSATION COSTS

A study  has found that employee ownership companies have lower workers' compensation

insurance rates than comparable non-employee ownership firms. Leslie Hakala authored the

study. She began the project as an NCEO research intern and completed it for a thesis

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

relationship between employee ownership and lower workers' compensation costs, but it did

find that these costs declined as employee ownership plans matured.

Background:- In 1989, the last year for which we have data, U.S. employers spent over $48

billion on workers' compensation costs. These costs grew at 16.9% per year in the mid-1980s.

Cost increases were partly attributable to increased benefits mandated by state workers'

compensation insurance reforms. At the same time, as employer provided health care

coverage has declined, more employees sought to cover health problems under workers'

compensation. Many people believe there has been increased fraud as well.

Workers' compensation programs vary from state to state, but in most programs, insurers

attempt to provide employers with an incentive to limit safety problems by developing an

experience rating. The ratings compare an individual firm's experience with other firms of its

type. If the rating is better than average, insurance premiums will be lower; if it is worse, they

will go up.

In this study, we looked only at California firms. In California, employers are assigned a

"manual rate," an insurance rate expressed as a percentage of every $100 of payroll. Rates are

assigned to all companies based on their industry classification. These rates are then adjusted

for companies with a premium above a certain level according to their actual experience. This

means smaller and less risky firms are not assigned an experience modification rating.

The experience modification rate is set for each year based on three years of past experience,

excluding the most recent year (because data are generally not yet available). The experience

modification rate is determined by looking at actual experience modified by a size weighting

factor. For larger firms, the adjustment may be very small; for smaller firms, actual

experience is given a lower weight because a single incident can skew results dramatically.

This weighted experience rating now becomes the "experience modification" figure.

Theoretically, the  average  experience  modification factor for any business classification

should be 100%. A company with a good record would have a rating under 100%; a bad

record would rate higher. These numbers are then multiplied by the manual rate to set the

premium. In practice, the average rating is somewhat under 100.

IT COMPANIES WRITE NEW ESOP STORY

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

professionals sitting on piles of employee stock options. All those who happily grabbed at

ESOP's issued by their companies last year, have now been left holding pieces of paper that

are, in some cases, worth a fraction of the price at which employees brought into them. Except

for a few who have benefitted from older schemes like Infosys 1994 scheme, the great ESOPs

dream is turning out to be a nightmare. Last year, if you were given ESOPs in an IT company,

your friends, neighbors and everyone else went up like a blimp, companies issued ESOPs in

cartloads. And employees brought into them, even at the higher prices that the grants came

from.

According to a study carried out by Nasscom , there were more than 10,000 IT staff last year

holding around 18 million ESOPs valued at roughly Rs 12,000 crore($3 billion) at February

'00 prices. But all this was merely on paper.

A year later, the 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 are selling

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

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

options which they would have to exercise at a price of Rs 1,593 or Silver line options, which

they would have to exercise at a price of $25.

At Visual Soft, for instance, all employees who were granted options have returned them to

the company. Consequently, the company has terminated the ESOP scheme.

Theoretically, an employee who exercised his option now would have to buy at the exercise

price, sell at the current market price, and pay out the difference.

ESOPs   HARDLY   BENEFICIAL -

At the height of the IT euphoria in the markets, those employees saw their company's scrip’s

scaling new heights, they could not benefit as the ESOP's had 1-2 year lock-in periods, and

could not be sold. The lock-in period, also known as the vesting period in industry jargon, in

the period during which the employee cannot convert his or her option into shares. To make

matters worse, some companies has specified that the option had to be exercised, that is

converted into shares, within a specified time frame after the locking period expired. For

instance, this was one year in the case of Silver line, and 10 in the case of Aptech.

\

Table 4.1

ESOP IN INDIAN CONTEXT

Recent ESOPs

  No of

Shares  

(Lakh)

Plan Exercise

Plans

(Rs)

Vesting

Period

(Yrs)

Current

Price

(Rs)

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

 

EMPLOYEE STOCK PURCHASE PLANS (ESPPS)

Employee stock purchase plans (ESPPs) include both tax-qualified "423 plans," which about

2,400 companies offer, and nonqualified plans, which about 1,500 companies offer. Our

estimates are based on data from Share Data’s Equity Compensation Trends in America

(1991), Hewitt Associates' On Employee Stock Ownership (1996), Hewitt Associates' Survey

Findings: Employee Stock Purchase Plans (1998), and the National Association for Stock

Plan Professionals' Stock Plan Design and Administration Survey (1998), especially the more

recent studies.

To estimate the number of employees covered under the plans, we took the total number of

companies offering plans, multiplied those numbers by the average number of employees in

the companies (13,207 for 423 plans and 17,790 for nonqualified plans), and multiplied that

number by the average percentage of participation in the plans (34% for 423 plans and 17%

for nonqualified ESPPs). Almost all companies with ESPPs are public.

Multiple Plans: Many companies offer multiple e plans, and many employees participate in

more than one plan. For example, many ESPP participants are also in 401(k), stock option, or

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

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

ESOPS AND CORPORATE GROWTH

A 2000 study by Joseph Blasé and Douglas Kruse at Rutgers University found that ESOP

companies grow 2.3% to 2.4% faster than would have been expected without an ESOP for

sales, employment, and sales per employee. The study looked at all ESOP plans set up

between 1988 and 1994 for which data was available. A 1987 NCEO study of 45 ESOP and

225 non-ESOP companies found that companies that combine employee ownership with a

participative management style grow 8% to 11% per year faster than they would otherwise

have been expected to grow based on how they had performed before these plans.

Subsequent studies by the General Accounting Office and by academics in Washington State

and New York found the same relationship. A 1999 study for Hewitt Associates by Humid

Tehran of Northwestern University found that the returns on assets for 382 publicly traded

ESOP companies was 2.7% per year greater than what a model of their predicted performance

would have been.

Studies on participative management alone find a small positive impact on performance, but

not nearly enough to explain the synergy between ownership and participation these other

studies have found.

CHAPTER – 5

SURVEY ANALYSIS

 

SURVEY BACKGROUND

HR management gets best out of its employees to meet the organization’s goals.  And employees

are the best judge of the HR policies of any organizations. 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.

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 organizations has

been measured.

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

organizations 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.

RESPONDENTS PROFILE  

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

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

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%

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.

WHETHER HR NEEDS OF INDIAN IT INDUSTRY ARE DIFFERENT

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 behavior.

TABLE-5.3

                   EMERGING HR TRENDS   OF INDIAN   IT   INDUSTRY     ARE  

DIFFERENT

Respondents' Observation

Percentage Of Respondents

Yes 69%

No 23%

Can not say 08%

TOTAL 100%

EFFECT OF NEW COMPENSATION METHODS

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 have gone down. It has a

negative effect.

WHETHER IT INDUSTRY HAS POSITIVE     ATTITUDE

TOWARDFS ITS EMPLOYEES

In has been found that in many organizations the management ignores the employee’s welfare

for their profit sake and does not give proper attention towards employee’s career and prospects.

What is the state of affairs in IT Industry in India was quizzed from our valued learned

respondents. The respondent’s 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 employee’s proper welfare management in Indian IT

Industry.

 

          TABLE - 5.5

                   WHETHER   IT INDUSTRY HAS A   POSITVE

                                    ATTITUDE TOWARDS ITS EMPLOYEES

Respondents' Observation

Percentage Of Respondents

Yes 43%

No 48%

No comments 09%

TOTAL 100%

STATE OF   GRIEVANCES HANDLING IN INDIAN IT   INDUSTRY

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 

organization. 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 INDIAN IT INDUSTRY IS PROPER

Respondents' Observation

Percentage Of Respondents

Strongly Agree 12%

Agree 39%

 No Comments 14%

Disagree 26%

Strongly Disagree 09%

TOTAL 100%

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.

TOP   MANAGEMENT   AWARENESS

Whether top management awareness about working conditions of  the employees and state of

working conditions in  the organization 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 organizations 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

Respondents'

Observation

Percentage Of

Respondents

Not at all aware 20%

Very little  aware 45%

Some what aware 11%

Much aware 18%

Very much aware 06%

TOTAL 100%

EMPLOYEE EMPLOYER RELATIONSHIP IN IT INDUSTRY

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

Respondents Grading Percentage Of   Respondents

Excellent 14%

Very Good 44%

Satisfactory 28%

Poor 14%

TOTAL 100%

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.

EMPLOYEES     RETENTIVITY     IN     INDIAN     IT INDUSTRY

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.

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.

HOW TO INCREASE EMPLOYEES     RETENTIVITY     IN    

INDIAN     IT INDUSTRY

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.

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)

A 22% of the respondents have suggested increasing the wages to international level to increase

employees retentively in Indian IT industry. 36% want more foreign postings, 10% suggest

increase profit sharing and 11% suggested more promotions. 21% of the other suggestions

included lateral induction from lower the institutes and better HR management.

APPLICABILITY   OF   EXISTING INDIAN   LABOUR   LAWS      

IN   INDIAN   IT   INDUSTRY

"Existing Indian labor 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 Labor to whether as a Laws/Rules should be designed for IT Industry:. This

hypothesis was presented to the respondents. They were to respond up to which extent they agree

or disagree. The employee’s responses have been tabulated below in the Table 5.11. The

comfortable majority of respondents (89%) strongly agrees or agrees with the hypothesis that

Indian IT sector requires separate labor management system/ regulations. While only minority of

13% has given divergent views. Low

    TABLE-5.11

                 INDIAN IT INDUSTRY REQUIRE

                 SEPARATE LABOUR LAWS/ RULES

Respondents'

Observation

Percentage Of

Respondents

Strongly Agree 57 %

Agree 32  %

 No Comments 02%

Disagree 07%

Strongly Disagree 02%

TOTAL 100%

EFFECTIVENESS   OF   OLD AGITATIONAL METHODS   IN   IT

INDUSTRY

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 imitational techniques of trade unions are

not desired in IT industry.

EFFECT OF EXCESSIVE COMPETION IN INDIAN IT

INDUSTRY

Whether excessive competition in Indian IT sector is harming the overall long term prospects of

employees in this sector the respondent’s 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 have replied in Yes to this question.  While 35% has a

negative viewpoint.

TABLE - 5.13

    EXCESSIVE COMPETITION IS HARMING

     EMPLOYEES LONG TERM WELFARE

Respondents' Observation

Percentage Of Respondents

Yes 53%

No 35%

No Comments 12%

TOTAL 100%

 

ROLE OF   TRADE UNION IN IT INDUSTRY

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

Respondents Grading Percentage Of   Respondents

No Trade Union 21%

Single Trade Union 13%

Multi Trade Union 09%

Only welfare association 57%

Total 100%

\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.

CHAPTER - 6

PROBLEMS & SUGGESTIONS  

OVERVIEW

The era of skill-based workers has arrived but if India wants to truly move to the global arena, it

has to spruce up its workforce. Small may be beautiful, but not in the IT industry. In the

knowledge era and a skill-based economy, it has become imperative that human resources

become one of the most essential ingredients of success. The growth of IT companies worldwide

depends on its people and the intellectual capital it possesses.

‘Knowledge workers’ has become a buzzword in today’s IT scenario. And if we look at the top

software exporters, they have been growing phenomenally in workforce strength. To make it big

in the global software market, India needs to increase its mass of knowledge workers. The

establishment of Indian Institutes of Information Technology is definitely a step ahead in the

right direction, but what the industry needs is experts in niche areas, in other words, persons with

domain expertise. In the era of cutting-edge technologies, it is this skilled workforce that will

make all the difference.

The total human resource strength of the IT industry as a whole stands at 425,609. A company-

wise break-up of this figure reveals that nearly 525 companies constituting 35% of the IT

industry employ an average of 58 persons each, 750 companies constituting 50% of the industry

employ an average of 275 persons each, and 150 companies constituting 10% of the industry

employ an average of 726 persons each. At least 40 companies have more than 1,000 employees,

while some very big companies like TCS, Wipro, HCL and Infosys have staffs above 5,000 each.

Despite having abundant English-speaking skilled workforce, an acute shortage of skilled

workforce will affect the country’s software exports in the long run, if remedial actions are not

taken immediately. Geometrical growth of Information Technology in the world as well as India

has created lot of revenues for government and number of avenues for employees. The

introduction of computers has changed the way of life 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.

This fastness of services and higher level of education/training standards are not easy to manage

by the organizations concerned. As we already know that Human Resource Management of the

organization deals with the individuals putting their hard work to meet the organizations goals.

Managing people is the toughest element of any organization than land, machinery or finances.

Every human being has its own degree of preferences, likings and attitude. So, HR managers

have to take care of all these things in mind while dealing with the number of people working in

the organization.

Different type of employees/workers recruited for different level of working has to be managed

in different styles. The hundreds years of organizational management experience has been

converted into a standard personnel management and industry and service organizations are

following these HR techniques for their organizational management. Due to availability of

written down procedures and rules by the learned managers, it was felt that HR managing was

not so typical.

But, emerging HR trends of Information Technology industry can not be managed properly by

the old traditional HR techniques. As it is commonly known that man learns by experience. 50

years of introduction of computers has provided us the areas to be additionally addressed by the

HR managers in IT sector. Indian IT industry is not an exception. Moreover, due to existence of

old conservative .and protective labor laws it is not possible to meet the ever-growing

international competition in the IT services.

Hence, the IT industry has been devising newer Personnel Management/ HR techniques which

specifically meet the needs of IT industry. The main reason for this is high standards of

education and professional training required for this industry. Secondly, there are 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 have 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.

RESPONDENTS OBSERVATIONS

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

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.

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.

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.

As per 48% of the respondents IT organization has more concern for profit motive than

employee’s welfare. While 43% were not agree to this proposition

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.

Whether top management awareness about working conditions of the employees and state of

working conditions in the IT organizations, 65% of the respondents view that the top

management's are not aware or little aware about the employees working conditions in the IT

organizations . Only 4 percent vouched that top management is very well aware about the nature

of working conditions and 16 percent say "Much Aware".

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.

Whether Indian IT Industry is able to retain its employees was the 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 have suggested

increasing the wages to international level to increase employees retentively in Indian IT

industry. 36% want more foreign postings, 10% suggest increase profit sharing and 11%

suggested more promotions. 21% of the other suggestions included lateral induction directly

institutions and better HR management.

Existing Indian labor 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 Labor Laws/Rules should be designed for IT Industry:. This hypothesis was

presented to the respondents. The majority of respondents (89%) strongly agrees or agrees with

the hypothesis that Indian IT sector requires separate labor management system/ regulations.

While only minority of 11% has given divergent views. Further, 67% of the respondents has

opined that old imitational techniques of trade unions are not desired in IT industry.

Whether excessive competition in Indian IT sector is harming the overall long term prospects of

employees in this sector. 53 percent of the respondents have replied in Yes to this question.

While 35 percent has a negative viewpoint... 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. 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

CHAPTER - 7

CONCLUSION

CONCLUSION

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 organizations China is

also entering this area vigorously and Government of India must help Indian It industry to meet

this challenge.

OVERALL   ASSESSMENT OF EMERGING HR TRENDS   IN INDIAN IT INDUSTRY

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.

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 have 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 organization 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 Organization?

(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 labor 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 Labor 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,

CHAPTER - 8

B I B L I O G R A P H Y

B I B L I O G R A P H Y

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2. Coch, Lester and John R.P. French, "Overcoming Resistance to Change," Human relations, Vol. I, 1948, pp. 512-532.3. Douglas, Paul. & Aaron, Director. The Problem of Unemployment, Macmillan, N.Y. 1931.

3.  Edwards, John et.al. "Manpower Planning", John Wiley, New York..,1983

4. Gelden, P Stevan," Report Writing for Business and Industry", Business Communication Service.

5. Kothari, CR." research Methodology Methods and tech- niques", Wiley Eastern Limited.

6. Lawler III, Edward E., "Control Systems in Organizations," In Handbook of Industrial and Organizational Psychology, (Rand-Menally, 1976).

7. Mustafi, CK 1981.  "Statistical Methods in Managerial Decisions, MacMillan New Delhi.

8. Pareek, U and T.V.Rao, 1981, "Designing and Managing Human Resource Systems", Oxford and IBH Publishing Co., New Delhi.

9. Ramaswamy, E.A. & Uma Ramaswam. "Industry and Labor", Oxford Press: New Delhi, 1981.

10. Rao, T.V. and Abraham, E.A.," A Survey of HRD Practices in Indian Industry, in Rao, T.V. and Pereira, D.F., Recent Experiences in HRD, New Delhi, Oxford & IBH, 1985.

11. Robertson, J. et.al. "Structure and Employment Prospects of the Service Industries", Department of Employment, Australia, 1982.

12. Shadecor George W, “Statistical Methods" The IOWA State University Press, AMES, IOWA, USA (6th edition)

13. Silvera, D.M., "Human Resource Development", 1988, the Indian Experience. Higher Education and IT:

14. Ehrmann, Stephen C. "Reaching Students, Reaching Resources: Using Technologies to Open the College." _Academic Computing_, April 1990, pp. 10-34.