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Essay: Essay on Information Technology in India

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The world today functions majotly on the Information Technology. Information technology in India is an industry consisting of two major components: IT Services and business process outsourcing (BPO). The sector has increased its contribution to India’s GDP from 1.2% in 1998 to 7.5% in 2012. According to NASSCOM, the sector aggregated revenues of US$100 billion in 2012, where export and domestic revenue stood atUS$69.1 billion and US$31.7 billion respectively, growing by over 9%.
This sector has also led to massive employment generation. The industry continues to be a net employment generator – expected to add 230,000 jobs in FY2012, thus providing direct employment to about 2.8 million, and indirectly employing 8.9 million people. Generally dominant player in the global outsourcing sector. However, the sector continues to face challenges of competitiveness in the globalized and modern world, particularly from countries like China and Philippines.
India’s growing stature in the Information Age enabled it to form close ties with both the United States of America and the European Union. (http://en.wikipedia.org/)
The small cities in India are witnessing a staggering growth around us in terms of mushrooming of new IT companies in India
. Since there happens to be a dramatic increase in demand for technical things and specially Information technology, we can see high number of Information technology companies in India these days. And by this phenomenon, we can also see a rapid rise in the technical professionals associated with increasing players in IT Sector. Those who are already working with these companies require a sound technical knowledge.
Indore is one of the fastest growing cities in India and is the financial capital of the central India. The entire IT sector in Indore can be classified into Offshore Development, BPO and the IT Departments in the entire industrial and SEZ manufacturing units operating on ERP and department of MNC’S
There are a number of software companies that are located in the city Indore, which provide a variety of software services to the clients. These companies also offer good job opportunities for the youngsters of the entire country of India.
Some of the most well known software companies of Indore are CSC, Impetus, Suvi, Apticraft, Info Beans, Batch Master Inc, Viscus. Armour Software and First Source, Emphasis and Teleperformance. All these companies are important parts of the economy of the city. But these companies HR are now facing a challenging task of retaining the trained employees with the major players hitting the market and the decline in supply of trained IT professionals. The lack of trained professionals is a major cause of these middle level companies for not expanding their operations in the city.
A large number of professionals from Indore move out to other big cities seeking more job satisfaction. The factors of human resource management practices influencing retention of employees are still unknown.
Review of Literature:
Human resource management (HRM) is both an academic theory and a business practice that addresses the theoretical and practical techniques of managing a work force. Synonyms include personnel administration, personnel management, manpower management, and industrial management (http://en.wikipedia.org).
According to Wikipedia, a web based encyclopedia , HRM serves five key functions: 1 ) Hiring, 2) Compensation, 3) Evaluation and Management (of Performance), 4)Promotions, and 5) Managing Relations.
Over the past decade, the way in which people are managed and developed at work has come to be recognized as one of the primary factors in achieving improvement in organizational performance (Machington and Wilkinson 1997; Phillips 1997). This is reflected by popular idioms such as ‘people are our most important asset’ (Accenture 2001).
Baron and Kreps (1999) describe high commitment HRM as “an ensemble of HR practices that aim at getting more from workers by giving more to them” (p. 189). “High commitment” practices are those that make it easier for employees to take responsibility for their own work lives as they contribute to organizational goals. Employees are more pivotal in a high-involvement organization because such a firm is employee-centered by design; information and decision-making power are dispersed throughout the organization, with employees at all levels taking on greater responsibility for its operation and success. To facilitate this approach, high-involvement organizations use human resource practices that develop and support a workforce that is self-programming and self-managing (Lawler 1992). A number of texts have appeared in recent years promoting the advantages of using high-involvement or high-commitment human resource practices, a system of human resources practices thought to enhance employees’ levels of skill, motivation, information, and empowerment (Kochan and Osterman 1994; Lawler 1992; Levine 1995; Pfeiffer 1998).
The extensive use of high-involvement work practices represents a significant investment in human capital. Basic microeconomics suggests that investments in human capital (employees) are justified when such investments are more than offset by future returns in the form of increased productivity. Thus, firms will make greater use of such practices when employees are viewed as particularly vital to firm success (MacDuffie 1995).
Most strategic HRM researchers have tended to take a holistic view of employment and human capital, focusing on the extent to which a set of practices is used across all employees of a firm as well as the consistency of these practices across all employees (eg. Kochan and Osterman 1994; Pfeffer 1994) They suggest that there is an identifiable set of best practices for managing employees that has universal, additive, positive effects on organizational performance (universalistic approach).
HRM evolved from what used to be known as personnel management (Beaumont, 1992: 20). A distinguishing feature of personnel management was its functional, non-strategic nature. Functions such as recruitment and training were administered independently. Influencing employee behavior, especially by increasing productivity, was regarded as a technical capability to be improved through research (Delery & Shaw, 2001: 167). This focus on individual employee behavior reflected the influence of the human relations school on management theory after the Second World War (Bamber, 1999). Earlier literature theorizing about the effects on firm performance of the way in which people were treated at work tended to be ignored, such as accounts of improved employee satisfaction in companies that practiced ‘welfare capitalism’ as a union-avoidance measure (Kaufman, 2001a).
Indore is the education and industrial hub of the state Madhya Pradesh. In the past few decades a large no of big software companies have made their presence felt in the city due to the special leverage provided by the state government in the form of SEZ’s. The city is also armed with a lot of Engineering colleges and institutes providing technical education .With the news of Tata Consultancy Services agreeing to open its development centre in Indore many more IT giants would be lining up to avail the benefits being provided by the state. But looking at the trends of current scenario also one can understand the major professionals employed in Indore are being lured by big companies situated in other parts of the country.A very big challenge faced now by the companies in Indore is to retain its trained workforce in the volatile market of today and to maintain its supply of people with new players coming in. The paper aims to compare the human resource practices followed by the local software companies and the big MNC’s operating in Indore in the area of Information technology which is the most important element for employee retention.
The purpose of this study is to compare the HRM practices in Information Technology companies in Indore based on the perception of employees.
The quantitative survey method was used to collect the data but personal interviews were also conducted to gain a better perspective of the HRM practices. The survey instrument is a tested questionnaire as a part of Best International HRM practices project.
In this study, the researcher will use survey method by asking question through questionnaire. According to Bell, J (1997) the aim of a survey is to obtain information which can be analyzed and patterns extracted and comparison made. All respondents were asked the same questions.
Population and sampling
The data was collected from 50 software professionals in Indore Once the research design is determined; the process of sampling follows (Zikmund 2000). The original plan was to sample 50 software professionals from Indore 25 from each company one MNC and one local unit.
In order to answer the questionnaire, respondents have to select their choice of answer based on the five-point scale according to their opinion on each question. Each answer will be given a score. It is easier for the respondents to understand the format and produce more accurate answers.
The respondent rated their level of agreement with each item on a five-point Likert scale (interval scale) ranging from 1 (Strongly disagree), 2 (Disagree), 3 (Neither agree or disagree), 4 (Agree), 5 (Strongly Agree).
To allow maximum participation all participants were informed about the purpose, procedure and the possible benefits of the research to their organizations in form of an introductory letter prior to questionnaire mailing.
The design of the questionnaire is a major determinant factor for error free measurement.
This study was carried out primarily for academic requirement. All the ethical codes of research were to maintain privacy of the research subjects, protect confidentiality of the collected data and sources and exclude any possibility of risk to the respondents.
Based on review of the literature following hypotheses have been formulated
‘ H01: Ho1: There exists no significance difference between human resource practices of Information Technology companies in Indore With regard to hiring and recruitment practices.
‘ Ho2: There exists no significance difference between human resource practices of Information Technology companies in Indore regarding training in IT companies
‘ Ho3. There exists no significance difference between human resource practices of Information Technology companies in Indore regarding of performance appraisal
‘ Ho4 There exists no significance difference between human resource practices of Information Technology companies in Indore regarding compensation and bene’ts related practices.
Hypothesis Testing:
The table for the mean difference of human resource practices between both the companies is as follows:
Pay Practices:
Training & Development
Performace Appraisal
S.No Hiring Practices Performance Appraisal Pay Practices Training & Development
1 0.12 0.46 0.5 0.06
2 .05 0.18 0.25 0.46
3 0.49 0.29 0.03 0.14
4 0.58 0.07 0.25 0.84
5 0.24 0.12 0.73 0.82
6 .50 0.09 0.05 0.15
7 .04 0.36 0.08 0.32
8 .04 0.09 0.10 0.24
9 .12 0.21 0.26 0.49
10 .21 0.42 0.34 .03
11 NA 0.18 NA NA
The Z-tests results based on the means are as follows:
Hiring Practices:
z-Test: Two Sample for Means
MNC Local
Mean 3.148 3.181
Known Variance 0.562217778 0.419143333
Hypothesized Mean Difference 0
z -0.1053415
P(Z<=z) one-tail 0.458052415
z Critical one-tail 1.644853627
P(Z<=z) two-tail 0.91610483
z Critical two-tail 1.959963985
Training & Development:
z-Test: Two Sample for Means
MNC Local
Mean 3.326 2.971
Known Variance 0.165871 0.050477
Hypothesized Mean Difference 0
z 2.413525605
P(Z<=z) one-tail 0.007899509
z Critical one-tail 1.644853627
P(Z<=z) two-tail 0.015799018
z Critical two-tail 1.959963985
Pay Practices:
Table 4.9 for Z Tests Pay Practices
z-Test: Two Sample for Means
MNC Local
Mean 2.799 2.937
Known Variance 0.079098889 0.037467778
Hypothesized Mean Difference 0
z -1.27817964
P(Z<=z) one-tail 0.100593046
z Critical one-tail 1.644853627
P(Z<=z) two-tail 0.201186092
z Critical two-tail 1.959963985
Performance Appraisal:
Z-Test: Two Sample for Means
MNC Local
Mean 3.187272727 3.166363636
Known Variance 0.134041818 0.028105455
Hypothesized Mean Difference 0
z 0.172217257
P(Z<=z) one-tail 0.431633366
z Critical one-tail 1.644853627
P(Z<=z) two-tail 0.863266731
z Critical two-tail 1.959963985
Results & Conclusion
Based on the above test results Based on the above tests results, the null hypotheses mentioned above are accepted. So, having the responses of the two samples to the four HRM practices analyzed and the results displayed in the respective Z Test- tables the null hypothesis that there are no significant differences between the two samples in terms of HRM practices can be accepted.
Table: 6.1 Summary of the Research Outcomes
Hypothesis Results Accepted Not Accepted
Ho1 There exists no significance difference between human resource practices of Information Technology companies in Indore With regard to hiring and recruitment practices. 0.91610483( z test two tailed) ‘
Ho2 There exists no significance difference between human resource practices of Information Technology companies in Indore regarding training in IT companies 0.863266731( z test two tailed) ‘
Ho3 There exists no significance difference between human resource practices of Information Technology companies in Indore regarding of performance appraisal 0.201186092( z test two tailed) ‘
Ho4 There exists no significance difference between human resource practices of Information Technology companies in Indore regarding compensation and bene’ts related practices. 0.015799018( z test two tailed) ‘
Managerial Implications
Human resources management practices (HRM) are the foundation of any organization (Pfeffer 1998). An organization should be focused on building and sustaining dedicated employees instead of hiring purely based on their capabilities through refined HRM framework (Beechler, Bird & Raghuram 1993). From the results, HRM practices in the MNC’s and the local companies in Indore do not differ. But the companies in the near future should strategize their HRM practices in Indore to retain trained professionals.
1. (n.d.). Retrieved 25 09, 2012, from http://en.wikipedia.org/wiki/Information_technology_in_India
2. Marchington, M.,& Wilkinson, A. (1997). Core Personnel and Development. London: Institute of Personnel and Development.
3. Phillips, R. (1997). New measures for business. Measuring Business Excellence, 1, 4-7.
4. Accenture. (2001). The high performance work force: seperating the digital economy’s winners from losers. Battle for Retention Accenture’s Study, 1-5.
5. Baron, J. N, & Kreps, D. (1999). Consistent Human Resource Practices. California Management Review, Spring, 41 (3), 29-31.
6. Lawler, E. (1992). The Ultimate Advantage: Creating the High- Involvement Organization. San Francisco: Jossey-Bass. .
7. Kochan, T., & Osterman, P. (1994). The Mutual Gains Enterprise. Boston: Harvard Business School Press
8. Levine, D. (1995). Re-Inventing the Workplace: How Business and Employers Can Both Win. Washington, DC: Brookings Institution.
9. Pfeffer, J. (1998). The Human Equation: Building Profits by Putting People First. Harvard Business School Press.
10. MacDuffie, J. (1995). Human resource bundles and manufacturing performance: organizational logic and flexible production systems in the world auto industry. Industrial and Labor Relations Review, 48, 197-221.
11. Delery, J. & Shaw, J. (2001). The strategic management of people in work Organizations: Review, synthesis and extension. Research in Personnel and Human Resource Managemnet, 20, 165-197.
12. Bamber, G. (September). Fads, Fashion and Fantasies: Reflections on Management Trends and on University Business Schools.
13. Kaufman, B. (2001). Human resources and industrial relations: Commonalities and difference. Human resource Management Review, 11, 339-74.
14. Zikmund, W. G. (2002). Business Research Methods. USA: Thomas Learning
15. Beaumont, P. (1992) The US Human Resource Management Literature: a Review, in G. Salaman (ed.), Human Resource Strategies, London, Sage Publications.
16. Bell, J. (1997). Doing your research project. Buckingham, England: Open University Press.
17. Beechler, S., Bird, A. & Raghuram, S. (1993). Linking business strategy and human resource management practices in multinational corporations: A theoretical framework. Advances in International and Comparative Management, 8: 199-215

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