HRM Systems in Indian IT Industry

MSL 705

Submitted by:
Ishaan Khurana
Gautam Thakur
Rishabh Gupta
Apanshu Goel

We live in a world which is booming with the latest revelation in Information technology sector.
Ever since the computer crisis in starting of the millennium, the industry was looking for a
remedy for the aftermath and Indian service sector with a superior quality service and the best
software engineer pool in the world have proven to be the stabilizing pillar of the industry.
Working with all the big multinational companies (MNC), the professionalism shown from all
the spheres of Indian Service industry has given them the respect and the credibility that Indians
rightfully deserved.
Indian work quality has been classified as one of the best in the world and hence is attracting the
best of the companies of the world. From the liberalization and globalization policies that started
Indias outsourcing program to the versatile and well educated working sector with professionals
fluent in speaking English has been many reasons that are responsible for such a high growing
industry.
This extraordinary growth of the industry has led to an astonishing increase in the Indian
workforce and hence have carried with it many human resource management challenges with it.
With the number of employees multiplying by almost 5 times in 10 years and the sheer
magnitude of the people getting recruited at the entry level and such a dynamic and people
oriented industry, has made HR management as one of the most important departments of any
software company.
In this paper, we will discuss the various challenges that are being faced by the IT industry.
Many key practices of HRM systems like manpower planning, appraisals, compensations,
training and development programs, managing the unions etc. are being counted as the one of the
most important aspect for creating a sustainable competitive advantage over the competitors. All
these key aspects have many challenges to overcome. Employee turnover, retention and
motivation (not only through compensation and rewards) are the prime challenges that are faced
by any HRM system. Another important challenge is attracting the right kind of taken for the
right kind of job. Technological or manpower Obsolescence can hurt any growing company and
hence training and development challenges pose a threat to HRM systems. Finally, we will
discuss about how openness and approachability to the HR department in any company is one of
the most pivotal challenge to be overcome by the HRM systems.

We will also discuss the HR practices (both positive and negative) being followed by TATA
Consultancy Services (TCS).
Challenges: (Gautam)
1.
2.
3.
4.
5.
6.

Employee turnover, retention and motivation

Attracting the best talent
Compensation & Rewards
Openness & Approachability
Aligning personal and organization goals
Building the culture

Add some more challenges (atleast 10 to ho)

Some

of

the

practices

being

followed:

(google

some

better

ones)

(Apanshu)

Fair Evaluation system

Safe, Healthy and Happy Workforce
Feedback System for Performance Management
Performance linked Bonus
Reward Management discussion
Knowledge sharing
No Gender Discrimination
Opportunities to Non- Engineering Graduates

HR practices to be followed very carefully: (Rishabh) [Make sure you tell positive and
negative about each]

Connecting with Employees family

Training policies
Mutual Admiration (MAD)
Spot Awards
No Attendance Monitoring
Equal privileges at all levels
Succession Planning
Reach Out
Work Life Balance

HR Practices in TCS (Ishaan)

Introduction
Background
Overview of HR in TCS
o Diversity in Workplace
o Learning and Development
o Initial Learning Program (ILP)
o Continuous Learning Program (CLP)
o Leadership Development Program (LDP)
o Foreign Language Initiative (FLI)
o Workplace Learnings
o EVA & Compensation Management.

Conclusion (Apanshu)
For Reference: https://www.scribd.com/doc/30321041/Hrm-Practices-in-IT-Industry

Challenges in Indian IT Industry

The competitive landscape of today makes it very difficult to satisfy all the needs of the
organizations for people and the needs of people for the organizations. Effective People
Management can prove to be a competitive advantage in this highly charged red ocean industry.
Indian Software Service Industry is close to 125 billion $ industry with 81 % of the revenue
coming from exports & a growth rate of around 20 %. Now talking about the human resource
requirements of this particular industry are very high being a knowledge intensive sector. A high

intellectual capital owned by a firm differentiates it from the other competitors. With a global
expansion of the IT services industry, there is no dearth of opportunities for the Indian IT
professional currently working in India. The shortage of human capital both in intellect &
numbers is a prime most problem faced by HR professionals nowadays. According to Peterson
[10], as an professional workforce, there are certain distinguishing traits defining IT
professionals, namely, youth, mobility, short tenure, intenseness, adaptability to change,
craftsman approach to work with a unique mix of product/service orientation, more loyal to
their profession than the organization, sensitivity to work (as they see their output as an
extension of their personality) isolation and aloofness in relating to and dealing with overall
organisational environments, and association with absolutes with a black and white
approach to problem. The majority HR issues range from recruitment of a world class
workforce, their retention, compensation & career planning to the technological obsolescence &
employee turnover. Through secondary research following were the challenges identified:
1. Motivation & Retention of Employees:
Gartner Group, which is a company specializing in the management of human capital
conducted a survey in all the leading IT companies in India and found the average turnover
period of people working in the ITES sector in India is less than 2.5 years. Moreover the ITES
sector witnesses one of the highest a job termination & resignation rates. Further factors like
working on newer technologies, support for learning & training, personal and cultural job
fit were the major factors apart from compensation & career prospects that decided the level of
retention of employees in an organization. Salary is the key motivator for employees who have
started their career but for people who are serving their 3-4 th job, Value addition to the
organization is the more important retention factor. Offering the industry best salaries,
performance based bonuses, long service awards & employee stock options is the common
practice for each & every organization in this highly competitive industry. In order to give
yourself a competitive edge HR professional need to go one step further and employ measures
such as creation of Manpower Allocation Cells (MAC) to assign right responsibilities to a
right person & even helping employees manage domestic personal responsibilities to increase
their performance at work.

2. Attracting the best Talent in the IT Industry

Hiring is one of the most crucial roadblocks for the HR professional in the ITES sector.
According to the Nasscom-McKinsey report 1999, a minimum of 2.2 million IT professionals
are required by India by 2008, excluding the 1 million IT professionals that will eventually
move to other countries.

Work profile in this sector requires a mix of skills like

conceptualization & communication, critical problem solving ability, capacity for analytical
&logical thinking, ability to innovate and think creatively and last but not the least technical or
domain specific knowledge. Such high levels of skill requirement makes recruitment difficult as
India still behind in terms of creating skilled graduates. According to the 3rd National
Employability report only 25 % of the IT graduates are readily employable. This in turn
increases cost of hiring for the IT firms as they need to provide for adequate training of these
employees. Apart from hiring newer recruits there is also a scarcity of professionals in the
managerial positions in the IT industry. Now hiring of employees at the managerial level
becomes more difficult as professionals at this level are not available in numbers of the
engineering graduates from colleges. Thus adequate hiring practices must be employed for
different positions. Setting up of information centers in engineering colleges to train young
graduates in advance & a strong alumni network for rehiring etc.
3. Designing a Compensation & Reward System
The demand of technology has increased with a shortage of relevant knowledge professionals.
Compensation & Reward is not a motivating factor but still a crucial one in deciding whether a
IT professional want to continue in an organization or not. The conventional pay for time method
is not successful hence companies have moved forward to a pay for knowledge and pay for
performance plans. With the determinants of pay being profit, performance and value-addition,
emphasis is now on profit sharing i.e. the provision of employee stock options or performancebased pay, keeping in view the long-term organizational objectives rather than short-term
production-based bonuses. Skills, competencies, and commitment supersede loyalty, hard work
and length of service. This pressurizes HR teams to devise optimized compensation packages,
although compensation is not the motivator in this industry.
4. Difficulties with team work

The ITES industry mainly focuses on team driven work. The ability to work in a team becomes
very crucial. However the study revealed a number of team-related issues and challenges in the
Indian software services industry that inhibits effective functioning of teams:
1. Many software professionals stated that they prefer to work by themselves so that they
have complete control over how they engage in problem solving and troubleshooting
without wasting time in team meetings, resolving differences, arriving at a consensus,
compromising their stand for the sake of team cohesion and letting somebody piggy-back
on their achievements.
2. The project teams work for a limited duration and in many cases their life span is as short
as three months. This makes it very difficult for team members to develop a social bond
and link their personal goals of learning and rewards to those of the team members.
3. While junior members look forward to interacting with senior team members to learn, the
latter consider mentoring an unnecessary headache for their already busy schedule. Many
project managers and module leaders prefer to engage in trouble shooting them to save
time. The preference of seniors to micromanage blocks the process of knowledge transfer.
The project work in this industry is temporary relative to the domain you are working on
this makes the managers even more reluctant to invest time and effort in teaching junior
members as they are not able to harvest the returns.
4. Knowledge is power and many software professionals would like to hoard their expertise
to create a niche for themselves in the organisation in general and in their teams, in
particular. The fast changing technology is creating insecurity for software professionals
and one way to manage insecurity is by creating and hoarding knowledge that is unique
and exclusive.

5. Work Preference:
Many of the IT firms in the ITES sector are moving up the value chain & looking forward to
maximize the percentage of software exports & development work, majority of them however
are still working on outdated technologies, proprietary languages & legacy systems. Apart of
being boring & monotonous this work is not valued in the industry and employees are generally
worried about their growth prospects. Also USA has been perceived as the most preferred onsite
location to work for all the IT professionals in India as according to them its the best market to

work in terms of remuneration & opportunity to work on the new emerging technologies. Hence,
the HR professionals find it difficult to align the individual preferences with the organizational
requirements.
6. Learning & Development:
Moving up the value chain in the ITES Sector creates new learning opportunities. As a result
nowadays organizations are investing substantial amount of resources to help employees learn
what they value & the skills that are relevant to the organization itself. According to a study 5 %
of the HR budget is usually spent on Training & Development. Hewitts study of the 25 best
employers in India for 2001, ten of them were from the IT industry and between them, they
offered an average of 48 hours of training/year to their employees. Nowadays many
organizations have encouraged building a campus like learning atmosphere through selfcontained townships, information rich intranets, regular work & hobby related workshops. The
depth & breadth of the induction program has increased to provide proper grounding to non
CS/IT recruits from engineering colleges. Participation of CEO and top management is a must in
all the internal leadership development programs. There is really a gap in the abilities of both the
project leaders and the team members in the IT firms. Lack of proper training & development
also raises project cost as recruits with lesser competencies are forcefully inducted into the team.