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Human Resource Management (HRM) is the function within an organization that focuses on
recruitment of, management of, and providing direction for the people who work in the
organization. Human Resource Management can also be performed by line managers.
Human Resource Management is the organizational function that deals with issues related to
people such as compensation, hiring, performance management, organization development,
safety, wellness, benefits, employee motivation, communication, administration, and training.


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One of the noteworthy features of the Indian workplace is demographic uniqueness. It is

estimated that both China and India will have a population of 1.45 billion people by 2030,
however, India will have a larger workforce than China. Indeed, it is likely India will have
986 million people of working age in 2030, which well probably be about 300 million more
than in 2007. And by 2050, it is expected India will have 230 million more workers than
China and about 500 million more than the United States of America (U.S.). It may be noted
that half of India¶s current population of 1.1 billion people are under of 25 years of age.
While this fact is a demographic dividend for the economy, it is also a danger sign for the
country¶s ability to create new jobs at an unprecedented rate.

When India¶s young demographic bubble begins to reach working age, India will need far
more jobs than currently exist to keep living standards from declining. India today doesn¶t
have enough good jobs for its existing workers, much less for millions of new ones. If it
cannot better educate its children and create jobs for then once they reach working age, India
faces a population time bomb: The nation will grow poorer and not richer, with hundreds of
millions of people stuck in poverty.

With the retirement age being 55 to 58 years of age in most public sector organizations,
Indian workplaces are dominated by youth. Increasing the retirement age in critical areas like
universities, schools, hospitals, research institutions and public service is a topic of
considerable current debate and agenda of political parties.

The divergent view, that each society has an unique set of national nuances, which guide
particular managerial beliefs and actions, is being challenged in Indian society. An emerging
dominant perspective is the influence of globalization on technological advancements,
business management, educations and communication infrastructures is leading to a
converging effect on managerial mindsets and business behaviors. And when India embraced
liberalization and economic reform in the early 1990s, dramatic changes were set in motion
in terms of corporate mindsets and HRM practices as a result of global imperatives and
accompanying changes in societal priorities. Indeed, the onset of a burgeoning competitive
service sector compelled a demographic shift in worker educational status and heightened the
demand for job relevant skills as well as regional diversity. Expectedly, there has been a
marked shift towards valuing human resources (HR) in Indian organizations as they become
increasingly strategy driven as opposed to the culture of the status quo. Accordingly,
competitive advantage in industries like software services, pharmaceuticals, and
biotechnology (where India is seeking to assert global dominance), the significance of HRs is
being emphasized. These relativities were demonstrated in a recent study of three global
Indian companies with (235 managers) when evidence was presented that positively linked
the HRM practices with organizational performance. In spite of this trend of convergence, a
deep sense of locality exists creating more robust µcross vengeance¶ in the conceptual as well
as practical domain.

Figure
Drivers of Contemporary Indian HRM Trends

Figure presents the key drivers for contemporary Indian HRM trends. In Figure 2 there are
four external spheres of intervention for HRM professionals and these spheres are integrated
in a complex array within organizational settings. The intellectual sphere, which emphasizes
the mindset transaction in work organizations, has been significantly impacted by the forces
of globalization. Indeed, Chatterjee and Pearson (2000) argued, with supporting empirical
evidence from 421 senior level Indian managers, that many of the traditional Indian values
(respect for seniority, status and group affiliation) have been complemented by newer areas
of attention that are more usually linked to globalization, such as work quality, customer
service and innovation. The most important work related attribute of the study was the
opportunity to learn new things at work. Such cross verging trends need to be understood
more widely as practitioners face a new reality of human resource development of post
industrial economic organizations.

The other three spheres, of Figure, namely the emotional, the socio cultural and the
managerial domains are undergoing, similar profound changes. For instance, the socio
cultural sphere confronts the dialects of the national macro level reform agenda as well as the
challenge of innovating by addressing the hygiene and motivational features of the work
place. Consequently, this sphere, which is underpinned by the anchors, has the opportunity to
leverage work setting creativity in dimensions of autonomy, empowerment, multi-skilling
and various types of job design. And the emotional sphere, which focuses on creativity and
innovation to encapsulate the notions of workplace commitment and collaboration as well as
favourable teamwork, brings desirable behavioural elements of transparency and integrity
into organisational procedures and practices. The managerial sphere provides the mechanisms
for shifting mindsets, for in Indian organisations HRM is viewed to be closely aligned with
managerial technical competency. Thus, understanding of the relativity of HRM to strategic
intended organisational performance is less well articulated in Indian firms. The current
emphasis of reconfiguring cadres (voluntary and non voluntary redundancy schemes),
downsizing, de-layering and similar arrangements will become less relevant as holistic
perspectives gain ground. A hallmark of future Indian workplaces is likely to be a dominant
emphasis on managerial training, structural redesign and reframing of institutional
architectures to achieve enterprise excellence. Thus, a primary role of Indian managers will
be to forge new employment and industrial relationships through purposeful HRM policies
and practices.
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The statement "people are our greatest asset", though a cliché that is often heard in corporate
boardrooms is, nevertheless, true in most industries. However, nowhere are human resources
as critically important as in the IT software sector. Human resources are not only the drivers
and principal value-creators of the output of this industry they are also the intellectual capital
or the "infrastructure investment". Therefore, attracting, training, retaining and motivating
employees are the critical success-determinants.

The Indian IT industry poses a baffling challenge to HR professionals-from recruitment to

retainment, compensation to career planning and from technological obsolescence to
Challenges in Modern Human Resource Management labour turnover. This problem can be
tackled with the use of HR planning which in itself is a challenging task in IT industry.
Determining the strength required for the near future is a very complex problem in an IT
company. The deciding factor is the company¶s perceived ability to bag projects both locally
and internationally. The problem here is that until the company have sufficient right-mix of
people, it cannot clinch a project. But unless there is a project, it cannot attract and retain
people. With the advent of MNC¶s it may be noted that job prospects are gearing up. The
multinational are offering fantastic pay packets and working environments to their
employees.

The IT software and services industry has grown rapidly over the last decade. It now
encompasses about 650,000 employees. Over the next five years, this number is expected to
triple, to over 2 million persons, so as to meet the target of $75 billion in revenues, including
exports of over $50 billion. The HR challenges that will emerge for this industry in the
process of growth are discussed in this paper.

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Available estimates indicate that about 200,000 engineering graduates and diploma-holders
are produced in India every year. Of these, according to NASSCOM analysis, about 90,000
are IT professionals, and 70,000 enter the workforce. Another 60,000 non-IT professionals
too join the industry, making for a total of about 130,000 fresh entrants. This number is
clearly inadequate to meet the needs, as projected over the next five years.

Fortunately, over the last few years, a great deal of additional capacity has been created in
technical education. Apart from the expansion in existing institutions, many private colleges
have been set up. A recent government estimate indicates that the intake capacity for
technical education has increased from 134,000 to 386,000 in the last five years. As a result
of this three-fold increase in admissions, there should be a nearly-equivalent rise in output
over the next few years. Further growth though new institutions and expansion of present
ones is also likely. This, and the fact that over 1.5 million other graduates are available every
year (including about 500,000 in Science and Mathematics), should ensure that the challenge
of numbers is met.

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While numbers will not be a serious impediment, the same cannot be said about quality. It is
true that some Indian institutions (the IITs and IIMs, in particular) have established an
enviable world-wide reputation for turning out top-quality professionals. However, the
average engineering graduate is hardly of world-class, and the average non-technical graduate
is of distinctly inferior quality. The curriculum in most universities is obsolete, as are the
texts. The quality of faculty and of infrastructure (laboratories, equipment, etc.) is poor, and
the pedagogic methods and materials are completely inadequate.

As the IT industry moves beyond tapping the talent in the best campuses, to recruiting large
numbers from second and third rung institutes, the challenge of quality is going to be a major
one. Urgent steps are needed to upgrade the physical and intellectual infrastructure of
colleges, and also the syllabi and teaching materials/methods.

The government has launched a Rs. 1500 crores Technical Education Quality Improvement
Programme, with help from The World Bank. It is also upgrading 17 National Institutes of
Technology (formerly Regional Engineering Colleges). These initiatives should be of some
help in upgrading quality.

It is essential that industry work with academic institutions in the continuous updating of
syllabi and ensuring relevance. Industry could also provide attachments and internships to
both students and faculty so as to create greater motivation. Well-funded chairs and research
grants will serve to attract and retain good faculty.

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Despite the large number of students graduating, it is not uncommon to hear companies
complain about not finding suitable candidates. The updating of syllabi and ensuring relevant
content would be useful. In addition, it would be worthwhile to include some basic IT courses
for the Science and Mathematics students. In fact, such courses could be introduced even for
Commerce and Economics students. This would enable graduates in these streams to be
considered for employment in a number of IT-enabled services (ITES) and back-
office/business process outsourcing (BPO) jobs.

Introduction of courses in international accounting practices/standards (including US GAAP)

for Commerce students would greatly enhance the pool of readily-employable people for the
IT industry.

Good language skills (particularly English, but potentially also in Spanish, French, German
and Japanese) is one of the requirements of the booming ITES/BPO sector, and one of the
opportunities for the education system, including private training institutions. So far, this
industry has been concentrated in just 4 or 5 of the metros. Its long-term growth, however,
depends upon moving large parts of its operations to smaller cities. One of the major
challenges is to find enough people with good language skills in these cities. This is
potentially a major problem for the whole ITES/BPO industry.

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One of the comments often heard about Indian IT professionals is that their skills in their core
function are excellent, but that they lack other capabilities. As the industry grows, it is
essential that IT professionals be more rounded personalities. In particular, it is important that
they improve articulation - both oral and written - become a little more aggressive (though
not abrasive) and develop social skills. As the focus of the work moves from mere code-
writing to consulting, problem-definition, system integration and project management, there
is need for adding other capabilities to the repertoire of technical skills. The development of
such soft skills (amongst at least a core of top performers) must become a priority for IT
companies.

Marketing, in a broad sense of the term, is another essential skill. While specialists in this
discipline - e.g., MBA¶s - may often be used, there are many situations in which the
"marketing" is of a complex solution, and can best be done by the technical expert. In a
changing and interestingly competitive international scenario, as well as the need to create a
domestic market for IT, marketing is going to assume far greater importance.

Team-work is another essential soft skill. With more complex projects, teams are the norm
and efficient delivery requires smooth team-work. The added requirement now is that the
teams are often international. Cross-cultural skills and cultural sensitivity are, therefore, of
special importance.

While the development of these soft skills needs to become an integral part of education, in
the immediate future much of it will have to be done in-service. Corporate will have to create
in-house programmes or find suitable agencies to out-source the training of their employees
in these areas.

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The IT industry has, during the last decade, been probably the most attractive sector to work
in. It has, therefore, been able to get the best talent. The challenge now is to safeguard and
build on this prime position. Attractive compensation, challenging assignments, good
working conditions and growth opportunities are amongst the main determinants of where
talent gravitates, along with the indefinable "glamour value" of an industry or a specific
company. Taking care of these parameters is a necessary task for the IT industry.

Retaining talent is a major challenge for companies, especially in a growth boom, when a lot
of "seduction" of employees between one company and another is commonplace. However,
the attrition rate for the industry as whole, (i.e., people moving out of IT into other industry
sectors) has been low. Even so, this will continue to be a challenge at both levels: for the
individual company and the industry.

The IT industry has provided an excellent physical work-environment. It needs to continue to

be a leader in providing these facilities, including food, fitness and sports facilities. While
these "add-ons" are not inconsequential, work satisfaction through challenging, cutting-edge
assignments, and substantial growth prospects are definitely major determinants for retention.
Providing these is critical, and is of particular importance in the ITES/BPO sector, where
attrition rates tend to be high for just these reasons.

Compensation is probably the single most important parameter in most cases. The challenge
here is to provide on attractive package in the context of rising expectations, and yet
minimise overall cost escalation. In this situation, "poaching" people from other companies
by offering higher pay packages is self-defeating for the industry as a whole. An important
corrective lies in ensuring an ever-growing and sufficiently large supply pipeline of fresh
entrants.
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Motivating individuals is amongst the most vital tasks of a leader. While this is easier in
some circumstances, it is far more difficult in situations where the job is repetitive and
routine, as is the case in many ITES/BPO operations. This is where there is a real challenge
to managers. This is particularly important because a key part of India's value proposition as
the outsourcing destination is based on productivity and quality - factors that depend
critically on motivation.

Empowering, engaging and energising employees are established ways of creating

effectiveness and efficiency through motivation. Organisational structures, systems, and
procedures are facilitators of these, and companies need to focus greater attention on these
aspects.

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As Indian IT companies grow, and enter new geographies, they will need to become truly
international. Their delivery models too will need this, as customers push for multi-country
disaster recovery sites. Also, they will need to increasingly tap the best talent from whichever
country it is available. These factors, and the possibility of inorganic growth by acquiring
foreign companies, will all dictate the increasing globalisation of Indian IT companies. To do
this successfully, they will have to modify and adapt their structure and organisational culture
to be able to absorb and draw the best from professionals of different nationalities and
cultures. A basic change in mind-set is needed for this to happen successfully, and this is a
major challenge for home-grown, very "Indian" companies: how to transform into global
corporations without losing the positive values and culture that they have developed.

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A major challenge for the Indian IT industry is developing true leaders. The industry has
evolved and grown rapidly through the vision and leadership skills of a few key individuals.
In many companies, a change of guard is now taking place or due, as a new generation begins
to take the reins. How to ensure that strong leadership continues and is available down the
organisational hierarchy? This is going to be a key issue, as the industry grows and needs not
a few dozens, but hundreds of leaders. The challenge of creating the leaders of tomorrow is a
major one, especially as the problems and issues move from the technical to the socio-
economic and even to the political. Managing the environment - often an adverse
environment - is going to be an increasingly major task of leadership. This is not a challenge
with easy solutions, but clearly it is a critical one.

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The final challenge that we discuss here is one that is going to be increasingly important:
developing creativity. As the Indian IT industry moves into a higher orbit, it will have to
focus greater attention on creating new solutions, technologies and providing thought-
leadership. This is very different from working within defined boundaries or servicing
existing software products. This is critical for India's on-going success, even though only a
small proportion of IT professionals work in such new and creative tasks. Supporting and
encouraging creativity is, therefore, essential. Facilitating this in well-defined organisational
and work structures is not easy, and is going to require perceptive leaders and innovative
organisational structures. This is a challenge of a different type, but one that industry must
take up. It should probably dovetail this with incubation and innovation centres that may
function as arms, but very independent ones, of existing companies or may be completely
new ones.



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Percentage of employees with formally defined work roles is very high in

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the public sector.

Strong dependence on formal labour market. Direct recruitment from

institutions of higher learning is very common amongst management,

 | engineering and similar professional cadres. Amongst other vehicles,
placement agencies, internet and print media are the most popular medium
for recruitment.

Strong emphasis on security and lifetime employment in public sector

 
| including a range of facilities like, healthcare, housing and schooling for
children.


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| Poorly institutionalised in Indian organisations. Popularity of training
/ | programmes and their effect in skill and value development undeveloped.

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| A very low coverage of employees under formal performance appraisal
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| and rewards or organisational goals

Moderately variable across industries. Seniority systems still dominate the

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public sector enterprises. Use of merit and performance limited mostly to
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globally orientated industries.

Limited in scope. The seniority based escalator system in the public sector
provides stability and progression in career. Widespread use of voluntary

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retirement scheme in public sector by high performing staff. Cross
functional career paths uncommon.

Driven by proactive court rulings, ILO guidelines and legislature

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provisions. Lack of strategic and inclusion vision spread.

The central government has fixed 15 per cent reservations for scheduled
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castes, 7.5 per cent for scheduled tribes and 27 per cent for backward
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communities. States vary in their reservation systems.

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All the challenges covered above, though far from exhaustive, already indicate the strategic
importance of HR. Too often is this function looked on as an "administrative" and support
one. The biggest challenge, then, is to bring about a change in the mind-set of the IT industry
so that it recognises the crucial role of HR as an investment for future growth. Since people
are the primary asset, it is essential to not only invest in them, but also to ensure that the
supporting elements for this asset are such that it can provide the maximum value on a
sustainable basis. With this, Indian IT professionals will certainly be able to take the industry
to its goal of $100 b in exports in 2012.
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