Challenges of HR in IT Sector

This century has belonged to the manufacturing sector. Starting from the days of Fords assembly line to the present emphasis on quality systems. The next millennium will belong to the convergence of Information Technology. How organisations are able to leverage IT to get advantage in a highly competitive market will be the key to success. Leading the way would be the organisations which are in the IT industry. These are the ones which have shown that the quickest way to business excellence would be through optimum utilisation of IT. The IT boom has brought with it, its own set of challenges to organisations. How to put in place systems and process that are in tune with the IT revolution, how to strategies and compete in the IT era? etc. But a major challenge that the IT industry per se has been facing is in the field of Human Resource Management. The IT industry is a service industry. How well are you able to offer quality service to individuals and organisations will determine the success of your organisation. This leads us to the fact that the creativity, innovativeness, knowledge and skill of your employees are your important assets. How you are able to manage these assets is the challenge that the IT industry is facing. It is not capital or finance or marketing management that gives the competitive edge but rather how well you are able to manage your human resources whose intellectual applications drive your business. Recruitment has become an important sub system in HR especially in the IT industry. When your major asset are your Human Resources, it is important that quality people join your organisation. How you are able to fine tune your recruitment process in a manner that you are able to get the best talent available and how well you have been able to put systems in place so that the people that you recruit are a perfect fit for the job and the organisation is one of the major challenges. The challenge does not stop with recruiting the right person but with how you are going to manage the performance of your employees. The challenge would be to create a performance culture wherein opportunities are provided for enhanced performance and where giving out optimum performance becomes a way of life. Training & and Development is another area where challenges arise. In the IT industry training takes a new connotation. It will not be just identifying training needs and giving the required training. It is foreseeing and anticipating the requirements and develop suitable training so that the employees are well equipped to handle the challenges forehand.The IT industry is one of the high paying industries. Since it is also very competitive, vying with each other to attract the best talent, offering the best possible compensation package to their employees is in itself a challenge. But the real challenge would be how we are able to incorporate all the sub systems in HR and help them in achieving the ultimate goal - exceptional performance. In a high performance driven industry like IT, this becomes all the more important. People have to be groomed to get in tune with the performance culture. Creating an environment that stimulates the creation of

knowledge, its sustenance and its dissipation throughout the organisation will be the challenge for organisations in the future. How to go about doing this will fall on the HR department. No longer will the HR department carry on with its traditional functions. That will take care by Human Resource Information Systems that will be put in place. The function would be to build and sustain a performance driven culture. The role will shift to that of a facilitator. Facilitate the process of change, for change would be the only thing that will be constant in the future. HR will have to involve the whole organisation in this process and act as a guide, counselor and facilitator. In the future the competitive edge that the organisations will get will only be through their human resources. How organisations are able to manage them, will determine whether they will run the race or be left behind. HOW THESE CHALLENGES HAVE AFFECTED US : Any organisation in the IT industry will have to face these challenges.We are leaders in the industry. And the reason we are leaders is of the fact that we have been able to meet these challenges quite effectively. As far as recruitment is concerned we have been able to address the issue effectively. We have an excellent databank where updating takes place on a daily basis. This serves as the major chunk that addresses our recruitment needs. Further we also use the services of placement agencies. The real catch lies in our selection process. All the probable candidates have to go through a battery of tests that not only test their technical skills but their all round personality to find out if they will fit into the job as well as into our organisations culture. The rigorous selection process ensures that we get people who will fit into a culture that is our own. But this challenge of recruiting the right person is a continuos one and one that needs continuos refinement. Performance management is a practice that few organisations follow. We happen to be one of them. We have put in place a system that evaluates the organisation as a whole, the systems and processes that are followed in our organisation and the performers. This is done on a contineous basis and the feedback is passed on to the concerned people to take corrective measures. Thus we have been able to tackle the question of performance in a fairly efficient manner and the quality of our services serve as a testimony for this. In the software industry where skill reduncy is very fast there is this need for giving technical training to the employees on a continuos basis. We are one of the very few who provide our employees with the opportunity to get trained on various platforms. This apart from keeping our employees highly skilled, also gives them a sense of security. Apart from this, training is also given in personality development, team working related areas etc to enhance the quality of life of our employees. As discussed earlier the most important of all challenges is in culture building. Now all our efforts are diverted in bringing about a performance driven culture. The very tight schedule ensures that our employees have to perform to the optimum. Apart from this the various systems that we have put in place like the performance management system helps us to work towards achieving a performance driven culture. We are constantly refining our practices in order create an atmosphere where our employees are able to perform to their full potential.

MAJOR ISSUES FACED IN RECRUITMENT, ATTRITION AND RETENTION: - RECRUITMENT: The major issue would be of getting the right type of person. The issue would be that we first have to find a person with the required skills and experience, and also he must be suitable for our organisation. Finding such a suitable person is the obstacle that we will have to cross over. - ATTRITION AND RETENTION: Software is one of the industry with the highest attrition rate. The challenge facing software companies is how to keep this as low as possible. Various companies adopt different techniques to retain their employees. Most of them offer exorbitant pay packets. But the attrition rate is low compared to industry standards. Though our compensation has been on par with what the industry is offering, that's not the reason why our rate is low. It has to do with the opportunities that are offered to our employees and organisational climate prevailing here. Our employees are given the opportunity to learn and grow in the company itself. They are given a lot of technical training and exposure to various types of project. The challenging work makes it difficult to leave our organisation. - WORK FORCE RETENTION AND MOTIVATION Retention and motivation of personnel are major HR concerns today. People in management of human capital in IT organizations has observed that the average tenure for an IT professional is less than three years. Further, the use of new technologies, the support of learning and training, and a challenging environment ranked higher than competitive pay structures as effective retention practices. Our own recent survey of 1028 software professionals from 14 Indian software companies, showed that while the professional gave importance to personal and cultural job-fit, HR managers believed that the key to retention was salary and career satisfaction. Money was a prime motivator for 'starters', but for those into their third or fourth jobs, their valueaddition to the organization was more important. Monetarily, offering 'the best salaries in industry' is the minimum every company is doing, apart from performance-based bonuses, longservice awards, and stock options. Many organizations frequently conduct employee satisfaction and organization climate surveys, and are setting up Manpower Allocation Cells (MAC) to assign 'the right project to the right person'. In fact, some are even helping employees with their personal and domestic responsibilities to satisfy & motivate their workforce! - ATTRECTING THE BEST TALENT In a tight job market, many organizations often experience precipitous and simultaneous demands for the same kinds of professionals. In their quest for manpower, they are cajoling talent around the world. In such a seller's market, software companies are striving to understand which organizational, job, and reward factors contribute to attracting the best talent one having the right blend of technical and person-bound skills. This would mean a knowledge of 'the tools of the trade' combined with conceptualization and communication skills, capacity for analytical and logical thinking, leadership and team building, creativity and innovation. The Indian

software industry suffers from a shortage of experienced people such as systems analysts and project managers, and attracting them is a key HR challenge. - COMPENSATION AND REWARD Increasing demands of technology coupled with a short supply of professionals (with the requisite expertise) has increased the costs of delivering the technology. This makes incentive compensation a significant feature, with the result that software companies have moved from conventional pay-for-time methods to a combination of pay-for-knowledge and pay-forperformance plans. With the determinants of pay being profit, performance and value-addition, emphasis is now on profit sharing (employee stock option plans) or performance-based 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. - ENCOURAGING QUALITY AND CUSTOMER FOCUS Today`s corporate culture needs to actively support quality and customer orientation. With globalization and rapid technological change, quality is of utmost importance for the Indian companies, which earn most of their revenues through exports. Hence, the HR professional as a strategic partner needs to encourage a culture of superior quality to ensure customer satisfaction. To be competitive today, an organization needs to be customer responsive. Responsiveness includes innovation, quick decision-making, leading an industry in price or value, and effectively linking with suppliers and vendors to build a value chain for customers. Employee attitudes correlate highly with customer attitude. The shift to a customer focus redirects attention from the firm to the value chain in which it is embedded. HR practices within a firm should consequently be extended to suppliers and customers outside the firm. Where HR can add the most value - Start the culture conversation at all levels. One way to accomplish this is to conduct a cultural assessment or audit of your organisation through employee surveys, focus groups or interviews. Review your organisational history, leadership styles, HR programming and industry practices to determine what currently drives and reinforces the culture. Finally, what is your customer experience? What cultural elements are obvious to customers? Is culture aligned with business strategy? What needs to change? This can be the basis for healthy discussion at team meetings and employee chat sessions. - Develop a business case for cultural change. Why is the change needed? How will desired changes in culture support the business strategy? - Work with the senior leadership team to determine the desired culture. Core values, desired behaviours and shared vision are essential for a positive culture change effort to succeed. Every leader must embrace the need to change.

- Develop an agenda or action plan for enhancing the culture or bringing about change. Start with the highest priorities and work on the toughest issues. For your culture to become self replicating, the way things are done will have to reinforce the core values and the culture. - Communicate what needs to change and why. Solicit input from people. Once the needed changes and process for change is defined, tell people what is expected. What are the rewards for changing, and the consequences for more of the same. - Change the organisational structure to enable change. Find new ways to accomplish work tasks. Use teams for one-time projects. Broaden roles and responsibilities. - Acquire talent based on cultural fit. Identify the characteristics of people who exhibit those behaviours that you've identified as desirable. The people who fit and thrive in your culture will perpetuate that culture in everything they do. If you have to choose between the candidate who has better skills or knowledge but doesn't fit, and a candidate who is slightly less qualified but fits culturally, choose the slightly less qualified person and provide the necessary training or onthe-job experience. Get rid of those who don't fit in the culture. - Redesign your on-boarding process. Make sure that every new hire knows what it will take to fit in, and understands the cultural imperatives. Talk about the ways of working that lead to success and those that will derail careers. Create legendary stories of successes and failures. - Create cultural messages. Be sure that every meeting, every training program, every communication to people includes cultural messaging and reinforces the values, mission, traditions and practices. - Involve everyone. Southwest Airlines has a culture committee, but there are many ways to get people involved. Try focus groups around topics. Form cross functional teams. Call random groups of employees together for monthly breakfast or lunch meetings. Engage the help and support of a group of passionate, committed people to identify cultural disconnects and recommend remedies. - Build an internal brand that supports the external brand. Make a promise to deliver a consistent employee experience. Be sure that your employees know the differentiating elements in their experience in the organisation that will enhance their work lives and careers. Begin to create an employer of choice reputation internally and externally. - Recognise and reward results. Your recognition and rewards should support the culture that you are working to reinforce. - Cultivate leaders who promote your culture. Develop excellent leaders who will propel the culture down the ranks. Identify high potential leaders and promote them. Invest in leadership development programs. Be sure content reinforces cultural messages. Keep the good ones, and get rid of those who are unable to pass the culture on.

- Make it interesting and fun. Create contests, activities that enhance the culture. Decorate the office in inspiring ways. Celebrations and events can reinforce the message. - Use of HR tools. Something as mundane as the annual benefits enrollment can be a source of key cultural messages. Every training class should reinforce the basic behaviors and values that reinforce the culture. Performance review forms should measure cultural fit, as well as, job performance. - No one should be locked out of the efforts to build a high-performance culture. Culture has to become the DNA that forms the building blocks over everything else. So the entire organisation must have a role in keeping it alive. Work with corporate communications, advertising, and marketing to capture the culture messages and tout these internally and externally. With lifetime employment in one company not on the agenda of most employees, jobs will become short term. Today's high-tech employees desire a continuous up-gradation of skills, and want work to be exciting and entertaining a trend that requires designing work systems that fulfill such expectations. As employees gain greater expertise and control over their careers, they would reinvest their gain back into their work. HR practitioners must also play a proactive role in software industry. As business partners, they need to be aware of business strategies, and the opportunities and threats facing the organization. As strategists, HR professionals require to achieve integration and fit to an organization's business strategy. As interventionists, they need to adopt an all-embracing approach to understanding organizational issues, and their effect on people. Finally, as innovators, they should introduce new processes and procedures, which they believe will increase organizational effectiveness. With the advent of a work situation where more and more companies are having to concede that their valued employees are leaving them, a new concept of career and human resource management is bound to emerge. The focus of this new paradigm should not only be to attract, motivate and retain key 'knowledge workers', but also on how to reinvent careers when the loyalty of the employees is to their 'brain ware' rather than to the organization.

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EXECUTIVE SUMMARY Talented persons are like frogs in a wheelbarrow, which can jump at any point of time when they sense opportunities Attracting the best professionals is never easy no matter what industry segmentwe consider. There is some truth in saying that what the Middle East is to oil,India is to software professionals. So, in a predominantly manpower intensives o f t w a r e i n d u s t r y , issues of the manpower availability, its cost, turnover a n d productivity are critical issues.A major proportion of the turnover issue is attributed to movement of manpower to the so-called land of opportunities-USA .The average stay of a software consultant in any given in any given IT companyi s n o t m o r e t h a n t w o y e a r s w h i c h h a s f u r t h e r d r o p p e d d o w n t o o n e y e a r . H R managers in India are realizing that employee retention is a Herculean task for the IT industry, even for big players.I n s u c h a s c e n a r i o , w h e r e c o m p a n i e s a r e f i g h t i n g t o c o m b a t g l o b a l b u s i n e s s competition, and struggling to survive, employee turnover comes as a doubleblow. The scenario is becoming worse. Companies are facing double-edgedsword-to recruit and to retain talent . The present skill crisis has caused a panic in the employment market, with skilledprofessionals being poached or choosing to change jobs. The attrition rate in theindustry is at an all-time high. This trend is likely to continue and even accelerateas more companies suffer erosion while business demands continue to escalate.HR department must therefore ensure that they donot fall fowl to the talent war by ensuring, foremost, that their talent does not run out the door and go knockingon the next. Companies that can recruit the best talent and retain them will have anedge in the long run.

INTRODUCTION The current scenario in the IT sector India has the largest pool of manpower, second only to the US.A c c o r d i n g t o a s t u d y c o n d u c t e d b y t h e N a t i o n a l A s s o c i a t i o n o f S o f t w a r e a n d Services Companies (NASSCOM)-quantity of skilled knowledge workers in Indiaseems to be a nonissue, and it would be so atleast for another couple of years.The arithmetic out of 1.22lakh engineering graduates qualifying every year inI n d i a , a b o u t 7 3 , 0 0 0 a r e s o f t w a r e e n g i n e e r s f r o m I I T s a n d o t h e r R E C s . T h u s , around 73,000 fresh software engineers are expected to be available annually.T o t a l d e m a n d f o r s o f t w a r e p r o f e s s i o n a l s d u r i n g t h e n e x t c o u p l e o f y e a r s i s estimated at 1.40 lakh. Against this, India is expected to have a pool of 1.46 lakhsoftware engineers. Besides, quite a few Indian universities have started coursesl e a d i n g t o M a s t e r s i n c o m p u t e r A p p l i c a t i o n s a n d t h e r e a r e p r i v a t e T r a i n i n g Institutes which offer high level software engineering courses.A c c o r d i n g t o a n A I M A s u r v e y , 6 0 % o f t h e I T C o m p a n i e s h a v e a w r i t t e n j o b description of all levels of employees. The rest 40% either have a partly written job description or they donot have anything written at all making it difficult for both the employee and the employer.Most CEOs site lack of skilled professionals as one of the major hindrances togrowth in the Indian Software Industry. Reputed software companies might getpeople at the base level but getting somebody with an experience of more than4 - 6 y r s i s a p r o b l e m . T h e p r o b l e m o f r e t e n t i o n w a s m o r e p r e v a l e n t i n t h e telecom, IT and the Services sector than manufacturing and traditional sector.When asked about employee retention, the majority among HR professionals of IT felt that it was all about retaining good people in the company and creatingsuch situations for the non-performing employees that they quit on their own. Itw a s f e l t t h a t e m p l o y e e r e t e n t i o n w a s a c o l l e c t i v e r e s p o n s i b i l i t y o f t h e H R department, top management and individual departments in an ascending order with the HR Department having the maximum and individual department havingminimum accountability.D a t a shows that in companies with more than 1000 employees, the

H R Department was strong whereas in mid-sized c o m p a n i e s , t h e i n d i v i d u a l department was responsible along with the top management.Large companies with growth rate higher than 10% did not face serious retentionproblems, but large companies with lower growth rates had acute problems inretaining their employees. In all industry segments, the employee attrition rates atthe junior level were on the higher side compared to that at the top managementlevel. Studied over the last two years, retention levels have either increased o r remained same due to better compensation, healthy competitive environment,higher profitability of the company, and good working conditions. But the case isnot so with the IT sector, where the key motivator is the lure of U.S market