Comparative Analysis of Fringe Benefits Provided by Public and Private Sector Telecom Service Provider

Comparative Analysis of Fringe
Benefits between Public and Private

Telecom Service Provider
Project Report submitted in partial fulfillment for award of the

diploma - Post Graduate Diploma in Management (PGDM)
Date of Submission:
Submitted by:
Sonam Lata
PGDM/08/831
Comparative Analysis of Fringe Benefits Between Public and Private Telecom Service Providers
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Name of Faculty :
Signature of Faculty :
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Date of Checking :
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Declaration
I Sonam lata, 831, PGDM final year student of Shri Balwant Institute of Management
hereby declare that the final project report entitled “Comparative Analysis of Fringe
Benefits Between Public and Private Telecom Service Providers” is an original
research work and same has not been submitted to any other institute for the award of
other degree. A seminar presentation of the project report was made on…………….
and the suggestions as approved by the faculty were duly incorporated.
Signature of Project Mentor Signature of Candidate

Countersigned
Project Coordinator
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Acknowledgements
Success of every project depends largely on the SELF & encouragement and guidance of many others. I
take this opportunity to express my gratitude to the people who have been instrumental in the successful
completion of this study project.
With immense pleasure, I would like to present the project report for Comparative Analysis of Fringe
Benefits Between Public and Private Telecom Service Providers. It has been an enriching experience for
me which would not have possible without the goodwill and support of the people around. As a student
of Shri Balwant Institute of Management, I would like to express my sincere thanks to all those who
helped me during my project. Words are insufficient to express my gratitude towards Ms. Rekha
Goutam(faculty PGDM HR) who helped me at every step whenever needed. At last but not the least my
grateful thanks is also extended to Prof- R.K.Ratan. My thanks to all my faculty members for the proper
guidance and assistance extended by them. I am also grateful to my parents and friends to encourage &
giving me moral support. However, I accept the sole responsibility for any possible error of omission and
would be extremely grateful to the readers of this project report if they bring such mistakes to my
notices.
Sonam Lata
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Abstract
Mobile penetration is currently exploding in India and Bharti Airtel has been riding the crest of the huge
mobile industry wave that has been formed. Vast market opportunities have now opened up the playing
field in Indian telecom market and also have made it much more competitive. In this type of competitive
environment it will be interesting to find out comparison between AIRTEL and BSNL fringe benefits.
Fringe Benefit is any privilege, service, facility or amenity, directly or indirectly provided to employee
by an employer. It’s reimbursement for any purpose.
The term Fringe benefits refer to various extra benefits provided to the employees, in addition to the
compensation paid in the form of wage or salary. These benefits can be defined as any wage cost not
directly connected with the employee’s productive effort, performance, service or sacrifice.
It is also defined as those benefits which are provided by an employer to or for the benefit of an
employee and which are not in the form of wages, salaries and time-related payments.
Different terms are used to denote fringe benefits. They are welfare measures, social charges, social
security measures, supplements, sub-wages, employee benefits etc. In addition workers commonly
receive such benefits as holiday with pay, low cost meals, low-rent housing etc. Such additions to the
wage proper are sometimes referred to as fringe benefits.
Benefits that have no relation to employment or wages should not be regarded as fringe benefits even
though they may constitute a significant part of the workers total income.
BSNL can provide the better fringe benefits to employees as compare to Bhartia Airtel. There are
different methods of companies to deciding the how much we can pay to our employees. Fringe benefits
can play major role in performance of the employees. It’s a strong motivational factor. High fringe
benefits high satisfaction level.
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TABLE OF CONTENTS
1 INTRODUCTION...................................................................................................................................1
1.1 SIGNIFICANCE OF THE STUDY....................................................................................................................5
1.2 REVIEW OF EXISTING LITERATURE.............................................................................................................6
1.2.1 THE COST OF STAYING HOME SICK ....................................................................................6
1.2.2 TRAI ASSESSES THE LIFETIME VALIDITY OFFERS OF SERVICE PROVIDERS.

(TELECOM REGULATORY AUTHORITY OF INDIA)(BRIEF ARTICLE)...................................7
1.2.4. UNION TALKS SEEN AS KEY AS G.M. MAKES CASE FOR FUNDS .............................11
1.3 CONCEPTUALIZATION..............................................................................................................................15
1.4 FOCUS OF THE PROBLEM.........................................................................................................................16
1.5 OBJECTIVES OF THE STUDY.....................................................................................................................17
1.6 HYPOTHESES.........................................................................................................................................18
2 RESEARCH METHODOLOGY........................................................................................................19
2.1 RESEARCH DESIGN................................................................................................................................19
2.2 UNIVERSE & SURVEY POPULATION .........................................................................................................19
2.3 SAMPLE...............................................................................................................................................20
2.4 COLLECTION OF DATA...........................................................................................................................20
2.5 ANALYSIS PATTERN...............................................................................................................................20
3 ORGANIZATION OF THE STUDY..................................................................................................21
3.1 MODERN GROWTH................................................................................................................................21
3.2 HISTORY..............................................................................................................................................21
3.1.1 Introduction of the telephone.....................................................................................................21
3.1.2 Further developments................................................................................................................22
3.2 EMERGENCE AS A MAJOR PLAYER.............................................................................................................23
3.2.1 Liberalisation of telcommunications in India............................................................................23
3.2.2 Growth of mobile technology....................................................................................................25
3.3 REVENUE AND GROWTH..........................................................................................................................25
3.4 TELEPHONE..........................................................................................................................................26
3.4.1 Wireless telephones...................................................................................................................27
3.4.2 Landlines...................................................................................................................................28
3.5 INTERNET.............................................................................................................................................29
3.5.1 Broadband.................................................................................................................................30
3.6 BROADCASTING....................................................................................................................................30
3.7 NEXT GENERATION NETWORKS................................................................................................................31
3.8 MOBILE NUMBER PORTABILITY (MNP)...................................................................................................31
3.9 INTERNATIONAL.....................................................................................................................................32
3.9.1 Submarine cables.......................................................................................................................32
4 DATA ANALYSIS & INTERPRETATION......................................................................................32
4.1 QUESTIONNAIRE ANALYSIS.....................................................................................................................32
4.2 SWOT ANALYSIS................................................................................................................................48
4.2.1 Strengths....................................................................................................................................48
4.2.2 Weaknesses................................................................................................................................49
4.2.3 Opportunities.............................................................................................................................50
4.2.4 Threats.......................................................................................................................................51
4.3 CASE STUDY ANALYSIS.........................................................................................................................52
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4.3.1 Summary....................................................................................................................................56
4.3.2 Fact Analysis.............................................................................................................................58
4.3.3 Problem Solving – Primary Issues & Secondary Issues ...........................................................59
4.3.4 Recommendations and Suggestions...........................................................................................60
4.3.5 Conclusion.................................................................................................................................61
4.4 PESTE ANALYSIS...............................................................................................................................62
4.4.1 Political/Legal Environment .....................................................................................................62
4.4.2 Economic Environment .............................................................................................................63
4.4.3 Socio-Cultural Environment .....................................................................................................64
4.4.4 Technological Environment ......................................................................................................65
5 LIMITATIONS OF THE STUDY......................................................................................................66
6 CONCLUSION.....................................................................................................................................67
7 SUGGESTIONS & RECOMMENDATIONS....................................................................................68
8 BIBLIOGRAPHY.................................................................................................................................69
EN.WIKIPEDIA.ORG/WIKI/TELECOMSECTOR..........................................................................69
WWW.ANSWERS.COM/TOPIC/TELECOMSECTOR...................................................................69
.WIKIPEDIA.ORG/WIKI/TELECOM................................................................................................69
WWW.HR.COM/ - UNITED STATES................................................................................................69
BEAKWARE.COM/RESOURCES/DEFAULT.PHP.........................................................................69
WWW.HUMANRESOURCESIQ.COMEN.........................................................................................69
WIKIPEDIA.ORG/WIKI/HUMAN_RESOURCES...........................................................................69
RESEARCH METHODOLOGY – C.R.KOTHARI...........................................................................70
HUMAN RESOURCE MANAGEMENT – K.ASWATHAPA..........................................................70
9 ANNEXURE..........................................................................................................................................70
Name: _____________________________________________________.....................................70
Designation: _______________________________________________.....................................70
Organization’s Name: ________________________________________.....................................70
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1 Introduction
Fringe Benefit – meaning:
• Any privilege, service, facility or amenity, directly or indirectly provided to employee by an

employer
• Any reimbursement for any purpose.
• Any free or concessional ticket for private journeys of employees and family members
• Contribution to approved superannuation fund
The term Fringe benefits refer to various extra benefits provided to the employees, in addition to the
compensation paid in the form of wage or salary. These benefits can be defined as any wage cost not
directly connected with the employee’s productive effort, performance, service or sacrifice.
It is also defined as those benefits which are provided by an employer to or for the benefit of an
employee and which are not in the form of wages, salaries and time-related payments.
Different terms are used to denote fringe benefits. They are welfare measures, social charges, social
security measures, supplements, sub-wages, employee benefits etc. In addition workers commonly
receive such benefits as holiday with pay, low cost meals, low-rent housing etc. Such additions to the
wage proper are sometimes referred to as fringe benefits.
Benefits that have no relation to employment or wages should not be regarded as fringe benefits even
though they may constitute a significant part of the workers total income.
Thus, fringe benefits are those monetary and non-monetary benefits given to the employees during and
post employment period which are connected with employment but not to the employees contributions to
the organization.
Coverage: Fringe benefits covers bonus, social security measures, retirement benefits like provident
fund, gratuity, pension, workmen’s compensation, housing, medical, canteen, co-operative credit,
consumer stores, educational facilities, recreational facilities, financial advice and so on.
OBJECTIVES OF FRINGE BENEFITS:
The important objectives of fringe benefits are:
1. To create and improve sound industrial relations
2. To boost up employee morale.
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3. To motivate the employees by identifying and satisfying their unsatisfied needs.
4. To provide qualitative work environment and work life.
5. To provide security to the employees against social risks like old age benefits and maternity benefits.
6. To protect the health of the employees and to provide safety to the employees against accidents.
7. To promote employees welfare by providing welfare measures like recreation facilities.
8. To create a sense of belongingness among employees and to retain them. Hence, fringe benefits are
called golden hand-cuffs.
9. To meet requirements of various legislations relating to fringe benefits.
NEED FOR EXTENDING FRINGE BENEFITS
Most organisation have been extending the fringe to their employees, year after year, for the
following reasons
1. EMPLOYEE DEMANDS:-Employees demand more the valued types of fringe benefits rather
than pay hike because of reduction in tax burden.
2. TRADE UNIONS DEMANDS:-Trades unions compete with each other for getting more fringe
benefits to their members.
3. EPLOYER’S PREFERENCE:-fringe benefits motivate the employees for better contribution to

the organisation.
4. AS A SOCIAL SECURITY:-Fringe benefits provide social security to employees against

various contingencies.
5. TO IMPROVE HUMAN RELATIONS:-Human relations are maintained when employers are

satisfied economically, social and psychologically.
TYPES OF FRINGE BENEFITS:
1. For Employment Security : Benefits under this head include unemployment, insurance,
technological adjustment pay, leave travel pay, overtime pay, level for negotiation, leave for
maternity, leave for grievances, holidays, cost of living bonus, call-back pay, lay-off, retiring
rooms, jobs to the sons/daughters of the employees and the like.
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2. For Health Protection: Benefits under this head include accident insurance, disability insurance,
health insurance, hospitalization, life insurance, medical care, sick benefits, sick leave, etc.
3. For Old Age and Retirement: Benefits under this category include: deferred income plans,
pension, gratuity, provident fund, old age assistance, old age counseling , medical benefits for
retired employees, traveling concession to retired employees, jobs to sons/daughters of the
deceased employee and the like.
4. For Personnel Identification, Participation and Stimulation: This category covers the following
benefits: anniversary awards, attendance bonus, canteen, cooperative credit societies,
educational facilities, beauty parlor services, housing, income tax aid, counseling, quality bonus,
recreational programs, stress counseling, safety measures etc.
CLASSIFICATION OF FRINGE BENEFITS
1. PAYEMENT FOR TIME NOT WORKED:-Benefits under this category include sick
leave with pay, vacation pay, paid rest and relief time, paid lunch periods, grievance
time, bargaining time, travel time etc.
2. EXTRA TIME FOR TIME WORKED:-This category covers benefits such as premium
pay, incentive bonus, shift premium, old age insurance, profit sharing, unemployment
compensation, deewali or pooja bonus, food cost subsidy, housing subsidy, recreation
etc.
3. EMPLOYEE SECURITY:-Provided with the benefits of confirmation of the employee

on the job creates a sense of job security. Further, a minimum and continuous wage or
salary gives a sense of security to life.
4. SAFETY AND HEALTH:-In India, the Factories Act, 1948, stipulated certain
requirements regarding working conditions with a view to providing a safe working
environment
Fringe benefits are compensations made to an employee beyond the regular benefit of being paid for their
work. Some fringe benefits are fairly standard, such as offering a few days of sick time or paid vacation
time. Others can be significantly greater, and more rare. Key executives in large companies might also
enjoy fringe benefits like use of time-share condominiums, paid continuing education, use of a company
jet, use of a company credit card, discounted or free health club memberships, and a significant amount
of paid vacation.
Most people who work full time in the US could probably not get along without fringe benefits. For
example, offering health insurance to employees, where the employer pays part of the insurance is a
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typical example of fringe benefits. According to the laws in some states, companies of a certain size must
offer health insurance with some sharing of payment at least to a full-time employee. Some companies
avoid this by employing more part-time workers.
Most companies, however, realize that fringe benefits like health insurance contribute to the well being
of their employees. Whenever possible, they try to offer at least partially discounted insurance to an
employee, even if they are not legally required to do so. Fringe benefits like sick or vacation time tend to
be fairly standard as well, even if an employee does not work full time. These paid days off do tend to
have a cap on them. For example, a new employee might get a week’s vacation time to start, and eight to
ten days of sick time for year. Employees entering higher-level positions may be offered greater fringe
benefits as incentive to join a company.
In fact, in fields where there is a high demand for workers, such as nursing and teaching, some unusual
fringe benefits may be offered to attract employees. Small school districts have gotten quite creative in
this respect, since teacher salaries are still relatively low. A few unusual fringe benefits offered by school
districts have been paid housing or use of private lakes for fishing. More likely are paid incentives for
joining a teaching staff such as hiring bonuses, offers to fund continuing education so teachers get higher
degrees and thus higher pay, or offering mentor programs for new teachers.
Registered nurses are badly needed due to new requirements on nurse/patient ratio. This has led to
uncommonly large hiring bonuses, agreements to pay off student loans for new nurses, and generous
health insurance and time off packages. Other fields with high demands for workers and low worker
supply are likely to offer the most attractive fringe benefits packages.
Sometimes the fringe benefits turn out to be greatly needed. For example, the rising cost of private health
insurance often makes obtaining a job with a good health plan highly desirable. Programs like 401ks can
help employees save money for the future. Where job compensation is not commensurate with money
needed to live comfortably, housing allowances, or company housing can often make the difference
between being able to take a job and looking elsewhere.
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1.1 Significance of the Study
• The study provide an insight, how fringe benefits play a crucial role in the increasing the
performance of employees.
• Performance of employees will be increased after getting the fringe benefits.
• The employees will perform their work with best of their abilities.
• The fringe benefits play a crucial role in achieving the organizational objectives.
• Motivation level should be high after getting benefits.
• Efficiency of employees should be increased.
• Enhance the leadership quality should be there.
• Productivity should be increased.
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1.2 Review of Existing Literature
1.2.1 The Cost of Staying Home Sick
It sounded like the responsible course of action when President Obama and the Centers for Disease
Control and Prevention urged people with flu symptoms to stay at home so they do not infect others in
the community — and to keep any sick children out of school as well. So far, the new swine flu virus has
caused only mild disease in the United States, but it has spread through most of the country, making it
likely that rising numbers of people will be developing symptoms.
But what are civic-minded workers to do when staying home will cost many their daily pay and, in a
recession-plagued economy, possibly their jobs if employers become exasperated over their absence?
Roughly 60 million American workers have no paid sick leave, and only a minority can draw pay if they
stay home with sick children. The lack of paid leave is especially acute in this country among low-wage
workers, food-service workers and part-timers, among others.
Many other countries do better. According to Dr. Jody Heymann, director of the Institute for Health and
Social Policy at McGill University, more than 160 countries ensure that all their citizens receive paid sick
leave and more than 110 of them guarantee paid leave from the first day of illness.
If President Obama is serious about responsible action to control infectious disease threats, he should
back legislation to grant Americans at least seven paid sick days a year — long enough to stay home until
an influenza infection subsides. Then virtually all Americans could heed his advice, and we would all be
safer.
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1.2.2 TRAI assesses the lifetime validity offers of service providers.(Telecom Regulatory
Authority of India)(Brief Article)
The Telecom Regulatory Authority of India (TRAI) has identified the grey areas in the lifetime validity
scheme offers for free incoming calls that was recently launched by service operators. According to
TRAI, these offers could have implications such as a rise in the number of incoming calls on mobiles and
outgoing calls from landlines.
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1.2.3 Telecom service providers must ensure a high uptime of 99.99% or more
HCL BPO, a division of HCL Technologies, started its venture in 2001, and now is a dominant player in
the BPO field drawing the revenue of $232.15 mn. With over 11,400 professionals operating out of India,
the UK and the US, HCL BPO runs twenty-one delivery centers. HCL BPO's focus pertains to telecom,
retail and CPG, banking and financial services, insurance, hi-tech, manufacturing, media, publishing and
entertainment, and utilities. Apart from this, the company services various areas of operations that
include supply chain management, finance and accounting services, knowledge and legal services, CRM,
technical support services and data management services. Vijay Reddy, senior VP, technologies, who has
more than twenty-five years experience in various areas including technology and strategy deployment,
is responsible for the overall technology functions of the company. According to him, a CTO needs to
wear multiple caps as a 'finance officer' to tailor the expenses to the defined budgets, and deliver the best
value for money. He manages big budgets and expenditures and also is cautious about the
implementation of new technology and processes keeping in mind the business, regulatory, and security
risks. He also holds the responsibilities of a HR manager. His role includes bringing business value to the
system, portraying the benefits of investments and profits, and also of selling IT as a service. In an
interaction with VOICE&DATA, he talks about the company's future plans. Excerpts
What are your green initiatives?
A BPO environment demands a scalable, fail proof, and adoptable technology infrastructure to meet its
ever changing needs. HCL's BPO organization has designed its ICT infrastructure to meet these
demands, and is consistently providing an uptime of more than 99%. A global delivery architecture was
planned, designed, and deployed to cater to the rapidly changing requirements of the business.
HCL's BPO organization is dedicated to green IT, and the ICT infrastructure at the BPO organization can
be described as the one that embodies the green IT initiatives of HCL.
Continual efforts are being put to save power, and promote environmentally sustainable computing/IT
practices to ensure that computing resources are used efficiently. These efforts are implemented by
deploying blade and virtual server infrastructure, and optimal desktop configurations.
How has technology evolved over the past few years in the BPO industry?
Technology infrastructure, service, and skills have seen drastic changes over the past few years. This is
due to a number of initiatives with regard to bringing in the best practices, streamline processes, augment
skills, consolidate infrastructure for improving cost effectiveness and customer satisfaction.
Consolidation has resulted in significant savings of both capital and operational expenses. The global
WAN infrastructure has evolved from point-to-point international private leased circuits to meshed high
capacity point-to-point connectivity that has not only reduced the costs, but has also resulted in a scalable
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network. Similar consolidations were done in servers and storage for better utilization of resources,
increasing availability and scalability, and reducing management overheads.
Development of the platform for infrastructure management has brought in an enhanced value for
internal and external customers. Automated tools and defined processes have provided the facility to
monitor, manage, and support the infrastructure to provide both proactive and reactive services by
capturing every event. 24x7 has become a buzz word in IT services, and our support teams are already
providing round the clock services.
Technology practices in HCL BPO are certified for ISO 20000, the international standard for IT service
management. Our services are also certified for information security standard ISO 27001. Technology
department with the support of HCL management has succeeded in bringing a process oriented support
model.
Which latest technologies is HCL BPO planning to deploy in the next couple of years?
Our present infrastructure is built with a mix of multiple technologies, and keeping technology upgraded
is of utmost necessity to meet client requirements, bring about cost effectiveness and infrastructure
efficiency. Technology initiatives that we plan to invest upon in the near future are implementation of
web 2.0; IT services platform upgrade, security operation center, open source software, and remote
support for services.
How do you see technologies like 3G and WiMax helping your business?
Technologies such as 3G and WiMax are commendable technologies in the new age, and I am sure that
the implementation and usage of these technologies will grow exponentially in the next few years. Given
the nature of work and business that we deal with, HCL's BPO organization does not as yet foresee a
requirement to implement these technologies.
For HCL BPO's centers/branches in the remote areas, how do you cope with connectivity challenges?
What kind of ICT tools do you use?
HCL BPO provides global connectivity through trans-Atlantic and trans-Pacific routes for the core
network. This ensures the availability of a point-of-presence across all global centers. It also introduces
challenges to provide fast and secure connectivity across these centers. HCL's BPO organization has a
number of delivery centers in Chennai, Noida, the UK, and the US. All these centers are centrally located
and well networked with the rest of HCL's global centers.
HCL's BPO organization ensures a high level of resilience, while connecting its delivery centers using
disparate routes and multiple suppliers. We have developed and nurtured an exceptional IT management
platform to manage our ICT infrastructure and to measure end-to-end performance from our global
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command center. It is also our practice to consolidate critical infrastructure in pre-designated central
locations where they can be easily managed. For this very purpose, remote connectivity plays a pivotal
role of connecting mobile users across all the centers; and for that we have deployed a safe, secure, and
reliable solution. All the users are connected through the Internet, and are routed through a secured
encrypted tunnel to our network using Cisco network access control.
What would you say are the major technological trends in the outsourcing industry?
Change in the telecom infrastructure and Indian regulation has already resulted in a major positive aspect
for the outsourcing industry. Additionally, technologies such as MPLS, VoIP has brought about a
considerable change in the way outsourcing worked in the past and present. Technology has also proved
its importance in operational areas with customer relationship management, business process re-
engineering, workforce management, and many other operational excellence solutions.
The major trends in the outsourcing industry today would be the various green IT initiatives, effective
resource utilization is a need, and technologies such as virtualization (server, desktop, and application),
blade technologies, storage consolidations, and improved security management for data privacy has
positively and effectively helped in fulfilling the needs.
What are the major issues being faced by the outsourcing industry today where technology deployment is
concerned?
Technological challenges can be looked at from different perspectives; it can be as simple as availability
of adequate man-skills, or it can be managing ROI of the technology deployed. Product obsolescence is
one of the main challenges, as products get obsolete at a much quicker rate now than it did before.
What are your expectations from telecom service providers to help run your company efficiently and
smoothly?
Telecom service providers must ensure a high uptime of 99.99% or more. With the advent of superior
technology practices, they should also adapt to industry practices such as IT service management, and
should come up with good problem management, root cause analysis and resolution practices. There has
also been a paradigm shift in customer expectations; and to address this, a variable pricing model for
advanced technologies is of utmost importance.
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1.2.4. Union Talks Seen as Key as G.M. Makes Case for Funds
G.M. will file what is expected to be the largest restructuring plan of its 100-year history
on Tuesday, a step it must take to justify its use of a $13.4 billion loan package from the federal
government.
The plan will outline in considerable detail, over as many as 900 pages, how G.M. will further cut its
work force, shutter more factories in North America and reduce its lineup of brands to just four, from
eight, according to executives knowledgeable about its contents. The remaining core brands will be
Chevrolet, Cadillac, GMC and Buick.
But G.M.’s plan to shrink its way to profitability will not mean much without an agreement with the
U.A.W.
On Monday, G.M. pressed union leaders in a meeting in Detroit for a deal on financing what was the
centerpiece of the 2007 U.A.W. contract — a perpetual, G.M.-financed trust to cover health care costs of
hundreds of thousands of retired hourly workers and their surviving spouses.
Both sides were hopeful that either an agreement, or at least significant progress, might be achieved by
the time G.M. submitted its plan, according to three people familiar with the substance of the
negotiations.
Talks are also continuing between the U.A.W. and Ford Motor and Chrysler. But the focus of
negotiations has been with G.M., which has to address how a company that lost more than $20 billion
last year can afford $5 billion a year in medical bills.
In its overall plan, G.M. needs to show President Obama’s new cabinet-level task force that it can
substantially reduce costs and make a convincing case about its long-term viability by a March 31
deadline.
The company has already extended buyout offers to its entire United States unionized work force to
reduce their ranks by another 20,000 jobs. It has also announced a 14 percent reduction in salaried
workers around the world, leaving many of its white-collar workers in Detroit with limited prospects.
The plan will also probably include revisions in executive compensation and targets for cutting dealers
and brands like Saturn and Pontiac.
Details of the plan have been closely guarded. G.M.’s board met Monday to review its contents, which
will not be completed possibly until Tuesday, according to one G.M. official who asked not to be
identified because of confidentiality agreements.
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Chrysler was also said to be in the final stages of completing its plan on Monday, which will include
further cuts in its manufacturing operations in the United States and more details on its strategy to rebuild
its product lineup with a network of foreign alliances.
The plan was still under discussion late Monday with officials at Cerberus Capital Management, owner
of an 80 percent stake, according to a person with knowledge of the situation.
The White House press secretary said Monday that the Obama administration was “anxious” to see the
plans, but shared no timetable on when the president’s task force would comment.
“We’re anxious to take a look at the plans, understanding that it is extremely important to have a strong
and viable auto industry,” the press secretary, Robert Gibbs, told reporters aboard Air Force One.
“Obviously that is going to require some restructuring to ensure its viability.”
On Monday, the president designated the Treasury secretary, Timothy F. Geithner, and the chairman of
the National Economic Council, Lawrence H. Summers, to oversee the task force on the auto industry.
The move surprised executives at G.M. and Chrysler, who were expecting the appointment of a “car
czar” who would play an active part in negotiations between G.M. and Chrysler and their unions and
lenders.
The task force is not likely to complete any review of the plans for at least a week or 10 days, according
to an administration official who spoke on condition of anonymity. The president expects negotiations
between G.M. and the U.A.W. and others to continue without pause for the plan’s submission, the
official said.
Talks between G.M. and its bondholders have cooled while the automaker considers the framework of an
agreement offered by the bondholders to reduce G.M.’s debt to $9 billion, from $28 billion.
The U.A.W. talks, however, have been constant since Saturday, when Ron Gettelfinger, the union’s
president, at one point cut off discussions with G.M. — only to drive across town to take up the topic of
retiree health care with Ford.
Ford has not received government loans, so it is significant that the U.A.W. appears to believe it must
address retiree health care at all three Detroit auto companies simultaneously.
G.M. has the most at stake with the U.A.W. Its future obligations for retiree health care are estimated at
$47 billion, and by next year it is required by its contract to contribute more than $10 billion to the trust
set up in 2007.
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The company, which nearly ran out of money before receiving the first $9.4 billion of its $13.4 billion in
late December, is pressing the U.A.W. to accept stock for as much as 50 percent of its next contribution
to the trust, according to two people knowledgeable about the discussions.
Mr. Gettelfinger, for his part, is trying to protect one of the jewels of the U.A.W. contract, which is
essentially health care for life for anyone who worked on the assembly line and their surviving spouses.
G.M. has already canceled health care for more than 100,000 of its salaried retirees.
“The U.A.W. at this point understands that it can very well turn into the villain of this whole thing by
insisting that its workers receive health care benefits that few workers do,” said Gary N. Chaison, a labor
expert at Clark University in Worcester, Mass.
U.A.W. members are bracing for bad news, and worrying that their health care plan will be sacrificed to
keep G.M. from going bankrupt.
“Where does it all stop?” said Mike Green, president of U.A.W. Local No. 652, which represents
workers in Lansing, Mich. “It would be devastating. Our typical person works between 30 and 40 years.
They did their part. Why should they have it taken away with the sweep of a pen?”
1.2.5. City Employee Pay Is Outpacing Private Sector, Report Says
Bolstered in part by Mayor Michael R. Bloomberg’s spending, the average New York City employee
cost the city $107,000 a year in wages, health insurance, pension and other benefits in the 2008 fiscal
year, an increase of 63 percent since 2000, according to a new report.
City worker compensation grew twice as fast as that of employees in the private sector and elsewhere in
the public sector during the same period, the Citizens Budget Commission said in the report, which was
released on Thursday. The increase was driven by contractual raises that outpaced the inflation rate, and
by the rising cost of health insurance and pension benefits, said the commission, a business-backed
research group.
The group said those benefits have remained “exceptionally generous” under Mr. Bloomberg.
And with the city staring at a projected $7 billion deficit by 2011, fiscal watchdogs are intensifying their
calls for the Bloomberg administration to act more aggressively to control employee costs.
“These skyrocketing costs are stunning,” said Carol Kellermann, president of the Citizens Budget
Commission, “and they impose an enormous, and growing, burden on increasingly strained taxpayers.
Corrective action is essential and can no longer be delayed.”
Mr. Bloomberg has long defended giving healthy raises to the city’s workforce of 281,000 to attract the
best people and make city jobs competitive with those in the suburbs. Some critics contend that recent
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contracts he has negotiated with teachers and police officers, among others, are too generous, and have
been driven by Mr. Bloomberg’s political aims as he seeks warm relations with powerful unions.
Critics also say that Mr. Bloomberg has not been forceful enough addressing soaring health and pension
benefit costs. Those costs have jumped by 182 percent since 2000, according to the Citizens Budget
Commission, in contrast to a 52 percent increase for other state and local governments, and a 40 percent
increase for private industry.
Part of the reason that health benefits have jumped so much, the report said, is the city’s longstanding
practice, unchanged by Mr. Bloomberg, to pay 100 percent of health insurance premiums for employees
and their families, as well as for retirees and their spouses. The report noted that “Most other employers
require their workers to pay some share of the premium.”
Other factors are beyond the mayor’s control, according to the report, such as actuarial recalculations and
lower investment returns, as evidenced recently by the impact of the recession.
Still, Charles M. Brecher, the commission’s research director, said: “His record is mixed. On the pay
side, he started out doing a terrific job, based on productivity, but his performance has slipped. On fringe
benefits I don’t think he’s been aggressive enough to tackle the problems.”
Mr. Bloomberg has had some success, however, battling the Legislature’s seemingly endless desire to
sweeten pension benefits. Last month, Mr. Bloomberg developed the local component of an ambitious
plan unveiled by Gov. David A. Paterson seeking to reduce benefits for newly hired state and local
workers by creating a new pension category, which would require employees to work longer and retire
later to receive pension benefits, a move long opposed by the unions.
Indeed, the Citizens Budget Commission praises that proposal, and urges the State Legislature to pass it.
“I think the report is very clear,” said Marc LaVorgna, a Bloomberg spokesman. “It lays the blame at the
foot of pension costs. Costs for employees are always going to go up. That’s not irregular. But we have
been extraordinarily burdened by a pension system that we have no control over.”
The report recommends that the city do more to restructure health insurance costs by negotiating with the
Municipal Labor Committee. The administration hopes to save $200 million; the commission says
“larger savings should be pursued on a more urgent basis.”
Asked about spiraling health care costs, Mr. LaVorgna said: “Rapidly rising costs are not unique to New
York City government. That’s a national problem and there’s really not a local solution to what’s a
national health care problem.”
Over all, the report found that city employee pay rose to an average of $69,000 annually as of last June
30, up from $52,000 in 2000, an annual increase of 3.6 percent, while inflation rose an average of 3.2
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percent during the same period. Average benefits now cost almost $38,000 a year, up from $13,000 a
year.
1.3 Conceptualization
The project report is based on Human Resource. Various studies will be done to make a comparative
analysis of fringe benefits between public and private telecom service providers. It would include the
various reforms in policies of public and private telecom service providers.
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1.4 Focus of the Problem

Find out variances in fringe benefits provided by public and private telecom service providers.
 Fringe benefits affecting the performance of employees.
 Impact of fringe benefits on performance.
 Motivation level of employees affected.
 Work efficiency increased.
 Find out the attrition rate.
 Find out how the employees can become loyal.
 Productivity should be increased.
 Is there any conflict between the employees regarding to fringe benefits.
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1.5 Objectives of the Study

The main objective of the study is to find out gaps between fringe benefits provided by public and private
telecom service provider.
 Performance of employees is effected fringe benefits.
 To find out the motivation level of employees.
 Effect on efficiency because of Fringe benefits.
 Level of loyalty due o fringe benefits.
 To keep in line with the prevailing practices of offering benefits and services which are given by
similar concerns.
 To recruit and retain the best personnel
 To provide for the needs of employees and protect them against certain hazards of life,
particularly those which an individual cannot himself provide for
 To increase and improve employee morale and create a helpful and positive attitude on the part
of workers towards their employers
 To make the organization a dominant influence in the lives of its employees with a view to
gaining their loyalty and co-operation, encouraging them to greater productive efforts
 To improve and furnish the organizational image in the eyes of the public with a view to
improving its market position and bringing about product acceptance by it.
 To recognize the official trade union’s bargaining strength, for a strong trade union generally
constrains an employer to adopt a sound benefits and services programme for his employees.
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1.6 Hypotheses
 H0: There is gap between the fringe benefits provided by public and private telecom service
providers.
 H1: There is no gap between the fringe benefits provided by public and private telecom service
providers.
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2 Research Methodology
Research is an academic activity and the term is used in a technical sense. According to Clifford,
research comprises defining and redefining problems, formulating hypothesis or suggested solution,
collecting, organizing and evaluating data making deductions and reaching conclusion, and at least
carefully testing the conclusions to determine whether they fit the formulating hypothesis.
Research methodology is a way to systematically solve the research problem. It may be understood as a
science of studying how research is done scientifically. In it we study the various steps, the research
process that is generally adopted to study the research problem and basic logics behind them. The basic
steps in this research are shown in the chart below
2.1 Research Design

The formidable problem that follows the task of defining the research problem is the preparation of
design of the research project, popularly known as the research design. Decisions regarding what, where,
when, how much, by what means concerns an inquiry or a research study constitute a research design".
A research design is the arrangement of condition for collection and analysis of data in a manner that
aims to combine relevance to the research purpose with economy in procedure.
The research will be Exploratory in nature. Exploratory research studies are also termed as formulative
research studies. The main purpose of such studies is that of formulating a problem for more precise
investigation or to developing the working hypothesis from an operational point of view. The research
design was characterized by flexibility in order to be sensitive to the unexpected and to discover insight
not previously recognized.
2.2 Universe & Survey Population

Population:
A population is a group of individuals’ persons, objects, or items from which samples are taken for
measurement for example a population of presidents or professors, books or students.
Universe:
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 Employees of public and private sector telecom service provider
Sample: A sample is a finite part of a statistical population whose properties are studied to gain
information about the whole. When dealing with people, it can be defined as a set of respondents
(people) selected from a larger population for the purpose of a survey.
Sample Size: 60 Employees
2.3 Sample
Sampling:
Sampling is the act, process, or technique of selecting a suitable sample, or a representative part of a
population for the purpose of determining parameters or characteristics of the whole population.
The desirability of a sampling procedure depends on both its vulnerability to error and its cost. However,
economy and reliability are competing ends, because, to reduce error often requires an increased
expenditure of resources. Of the two types of statistical errors, only sampling error can be controlled by
exercising care in determining the method for choosing the sample.
Sampling Type: Convenient sampling

Sampling Unit: Individual
2.4 Collection of Data

Method of collecting data
 Primary data: The primary data should be collected through questionnaires.
 Secondary Data: These will be extracted from existing literature in magazines, Internet, books,
newspapers, etc.
2.5 Analysis Pattern

Analysis of data refers to the analyzing and interpreting the data collected. The data should be analyzed
with the help of charts, diagrams and tables.
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3 Organization of the Study
3.1 Modern growth
A large population, low telephony penetration levels, and a rise in consumers' income and spending
owing to strong economic growth have helped make India the fastest-growing telecom market in the
world. The first and largest operator is the state-owned incumbent BSNL, which is also the 7th largest
telecom company in the world in terms of its number of subscribers. BSNL was created by
corporatization of the erstwhile DTS (Department of Telecommunication Services), a government unit
responsible for provision of telephony services. Subsequently, after the telecommunication policies were
revised to allow private operators, companies such as Vodafone, Bharti Airtel, Tata Indicom, Idea
Cellular, Aircel and Loop Mobile have entered the space. see major operators in India. In 2008-09, rural
India outpaced urban India in mobile growth rate.
India's mobile phone market is the fastest growing in the world, with companies adding some 16.67
million new customers a month.
The total number of telephones in the country crossed the 543 million mark on Oct 2009.The overall tele-
density has increased to 44.85% in Oct 2009. In the wireless segment, 17.65 million subscribers have
been added in Nov 2009. The total wireless subscribers (GSM, CDMA & WLL (F)) base is more than
543.20 million now. The wireline segment subscriber base stood at 37.16 million with a decline of 0.13
million in Nov 2009.
3.2 History
Telecom in the real sense means transfer of information between two distant points in space. The popular
meaning of telecom always involves electrical signals and nowadays people exclude postal or any other
raw telecommunication methods from its meaning. Therefore, the history of Indian telecom can be
started with the introduction of telegraph.
3.1.1 Introduction of the telephone
In 1880, two telephone companies namely The Oriental Telephone Company Ltd. and The Anglo-Indian
Telephone Company Ltd. approached the Government of India to establish telephone exchanges in India.
The permission was refused on the grounds that the establishment of telephones was a Government
monopoly and that the Government itself would undertake the work. By 1881, the Government changed
its earlier decision and a licence was granted to the Oriental Telephone Company Limited of England for
opening telephone exchanges at Kolkata, Mumbai, Chennai (Madras) and Ahmedabad. 28 January 1882,
is a Red Letter Day in the history of telephone in India. On this day Major E. Baring, Member of the
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Governor General of India's Council declared open the Telephone Exchange in Kolkata, Chennai and
Mumbai. The exchange at Kolkata named "Central Exchange" was opened at third floor of the building
at 7, Council House Street. The Central Telephone Exchange had 93 number of subscribers. Bombay also
witnessed the opening of Telephone Exchange in 1882.
3.1.2 Further developments
• 1902 - First wireless telegraph station established between Saugor Islands and Sandheads.
• 1907 - First Central Battery of telephones introduced in Kanpur.
• 1913-1914 - First Automatic Exchange installed in Shimla.
• 23 July 1927 - Radio-telegraph system between the UK and India, with beam stations at Khadki
and Daund, inaugurated by Lord Irwin by exchanging greetings with the King of England.
• 1933 - Radiotelephone system inaugurated between the UK and India.
• 1953 - 12 channel carrier system introduced.
• 1960 - First subscriber trunk dialing route commissioned between Kanpur and Lucknow.
• 1975 - First PCM system commissioned between Mumbai City and Andheri telephone
exchanges.
• 1976 - First digital microwave junction introduced.
• 1979 - First optical fibre system for local junction commissioned at Pune.
• 1980 - First satellite earth station for domestic communications established at Secunderabad,
A.P..
• 1983 - First analog Stored Program Control exchange for trunk lines commissioned at Mumbai.
• 1984 - C-DOT established for indigenous development and production of digital exchanges.
• 1985 - First mobile telephone service started on non-commercial basis in Delhi.
While all the major cities and towns in the country were linked with telephones during the British period,
the total number of telephones in 1948 was only around 80,000. Even after independence, growth was
extremely slow. The telephone was a status symbol rather than being an instrument of utility. The
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number of telephones grew leisurely to 980,000 in 1971, 2.15 million in 1981 and 5.07 million in 1991,
the year economic reforms were initiated in the country.
While certain innovative steps were taken from time to time, as for example introduction of the telex
service in Mumbai in 1953 and commissioning of the first [subscriber trunk dialing] route between Delhi
and Kanpur in 1960, the first waves of change were set going by Sam Pitroda in the eighties. He brought
in a whiff of fresh air. The real transformation in scenario came with the announcement of the National
Telecom Policy in 1994.
3.2 Emergence as a major player
In 1975, the Department of Telecom (DoT) was separated from P&T. DoT was responsible for telecom
services in entire country until 1985 when Mahanagar Telephone Nigam Limited (MTNL) was carved
out of DoT to run the telecom services of Delhi and Mumbai. In 1990s the telecom sector was opened up
by the Government for private investment as a part of Liberalisation-Privatization-Globalization policy.
Therefore, it became necessary to separate the Government's policy wing from its operations wing. The
Government of India corporatised the operations wing of DoT on 01 October 2000 and named it as
Bharat Sanchar Nigam Limited (BSNL). Many private operators, such as Reliance Communications,
Tata Telecom, Vodafone, Loop Mobile, Airtel, Idea etc., successfully entered the high potential Indian
telecom market.
3.2.1 Liberalisation of telcommunications in India
The Indian government was composed of many factions (parties) which had different ideologies. Some
of them were willing to throw open the market to foreign players (the centrists) and others wanted the
government to regulate infrastructure and restrict the involvement of foreign players. Due to this political
background it was very difficult to bring about liberalization in telecommunications. When a bill was in
parliament a majority vote had to be passed, and such a majority was difficult to obtain, given to the
number of parties having different ideologies.
Liberalization started in 1981 when Prime Minister Indira Gandhi signed contracts with Alcatel CIT of
France to merge with the state owned Telecom Company (ITI), in an effort to set up 5,000,000 lines per
year. But soon the policy was let down because of political opposition. She invited Sam Pitroda a US
based NRI to set up a Center for Development of Telematics(C-DOT), however the plan failed due to
political reasons. During this period, after the assassination of Indira Gandhi, under the leadership of
Rajiv Gandhi, many public sector organizations were set up like the Department of Telecommunications
(DoT) , VSNL and MTNL. Many technological developments took place in this regime but still foreign
players were not allowed to participate in the telecommunications business.
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The demand for telephones was ever increasing. It was during this period that the P.N Rao led
government introduced the national telecommunications policy [NTP] in 1994 which brought changes in
the following areas: ownership, service and regulation of telecommunications infrastructure. They were
also successful in establishing joint ventures between state owned telecom companies and international
players. But still complete ownership of facilities was restricted only to the government owned
organizations. Foreign firms were eligible to 49% of the total stake. The multi-nationals were just
involved in technology transfer, and not policy making.[16]
During this period, the World Bank and ITU had advised the Indian Government to liberalize long
distance services in order to release the monopoly of the state owned DoT and VSNL; and to enable
competition in the long distance carrier business which would help reduce tariff's and better the economy
of the country. The Rao run government instead liberalized the local services, taking the opposite
political parties into confidence and assuring foreign involvement in the long distance business after 5
years. The country was divided into 20 telecommunication circles for basic telephony and 18 circles for
mobile services. These circles were divided into category A, B and C depending on the value of the
revenue in each circle. The government threw open the bids to one private company per circle along with
government owned DoT per circle. For cellular service two service providers were allowed per circle and
a 15 years license was given to each provider. During all these improvements, the government did face
oppositions from ITI, DoT, MTNL, VSNL and other labor unions, but they managed to keep away from
all the hurdles.
After 1995 the government set up TRAI (Telecom Regulatory Authority of India) which reduced the
interference of Government in deciding tariffs and policy making. The DoT opposed this. The political
powers changed in 1999 and the new government under the leadership of Atal Bihari Vajpayee was more
pro-reforms and introduced better liberalization policies. They split DoT in two- one policy maker and
the other service provider (DTS) which was later renamed as BSNL. The proposal of raising the stake of
foreign investors from 49% to 74% was rejected by the opposite political party and leftist thinkers.
Domestic business groups wanted the government to privatize VSNL. Finally in April 2002, the
government decided to cut its stake of 53% to 26% in VSNL and to throw it open for sale to private
enterprises. TATA finally took 25% stake in VSNL.
This was a gateway to many foreign investors to get entry into the Indian Telecom Markets. After March
2000, the government became more liberal in making policies and issuing licenses to private operators.
The government further reduced license fees for cellular service providers and increased the allowable
stake to 74% for foreign companies. Because of all these factors, the service fees finally reduced and the
call costs were cut greatly enabling every common middle class family in India to afford a cell phone.
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3.2.2 Growth of mobile technology
India has become one of the fastest-growing mobile markets in the world. The mobile services were
commercially launched in August 1995 in India. In the initial 5–6 years the average monthly subscribers
additions were around 0.05 to 0.1 million only and the total mobile subscribers base in December 2002
stood at 10.5 millions. However, after the number of proactive initiatives taken by regulator and licensor,
the monthly mobile subscriber additions increased to around 2 million per month in the year 2003-04 and
2004-05.
Although mobile telephones followed the New Telecom Policy 1994, growth was tardy in the early years
because of the high price of hand sets as well as the high tariff structure of mobile telephones. The New
Telecom Policy in 1999, the industry heralded several pro consumer initiatives. Mobile subscriber
additions started picking up. The number of mobile phones added throughout the country in 2003 was 16
million, followed by 22 million in 2004, 32 million in 2005 and 65 million in 2006. As of January 2009,
total mobile phone subscribers numbered 362 million, having added 15 million that month alone [18]. India
ranks second in mobile phone usage to China, with 506 million users as of November 2009.
India has opted for the use of both the GSM (global system for mobile communications) and CDMA
(code-division multiple access) technologies in the mobile sector. In addition to landline and mobile
phones, some of the companies also provide the WLL service.
The mobile tariffs in India have also become lowest in the world. A new mobile connection can be
activated with a monthly commitment of US$0.15 only. In 2005 alone 32 million handsets were sold in
India. The data reveals the real potential for growth of the Indian mobile market.
In March 2008 the total GSM and CDMA mobile subscriber base in the country was 375 million, which
represented a nearly 50% growth when compared with previous year.
In April 2008 the Indian Department of Telecom (DoT) has directed all mobile phone service users to
disconnect the usage of unbranded Chinese mobile phones that do not have International Mobile
Equipment Identity (IMEI) numbers, because they pose a serious security risk to the country. Mobile
network operators therefore planned to suspend the usage of around 30 million mobile phones (about 8 %
of all mobiles in the country) by 30 April.
3.3 Revenue and growth
The total revenue in the telecom service sector was Rs. 86,720 crore in 2005-06 as against Rs. 71, 674
crore in 2004-2005, registering a growth of 21%. The total investment in the telecom services sector
reached Rs. 200,660 crore in 2005-06, up from Rs. 178,831 crore in the previous fiscal.
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Telecommunication is the lifeline of the rapidly growing Information Technology industry. Internet
subscriber base has risen to 6.94 million in 2005- 2006. Out of this 1.35 million were broadband
connections. More than a billion people use the internet globally.
Under the Bharat Nirman Programme, the Government of India will ensure that 66,822 revenue villages
in the country, which have not yet been provided with a Village Public Telephone (VPT), will be
connected. However doubts have been raised about what it would mean for the poor in the country.
It is difficult to ascertain fully the employment potential of the telecom sector but the enormity of the
opportunities can be gauged from the fact that there were 3.7 million Public Call Offices in December
2005up from 2.3 million in December 2004.
The value added services (VAS) market within the mobile industry in India has the potential to grow
from $500 million in 2006 to a whopping $10 billion by 2009.
3.4 Telephone
On landlines, intra circle calls are considered local calls while inter circle are considered long distance
calls. Currently Government is working to integrate the whole country in one telecom circle. For long
distance calls, you dial the area code prefixed with a zero. For international calls, you would dial "00"
and the country code+area code+number. The country code for India is 91.
Until recently, only the PSU's BSNL and MTNL were allowed to provide Basic Phone Service through
copper wires in India. MTNL is operating in Delhi and Mumbai only and all other parts are covered by
BSNL. However private operators have now entered the fray, although their focus is largely on the
cellular business which is growing rapidly.
Telephony Subscribers (Wireless and Landline): 543.20 million (Nov 2009)
Cellphones: 506.04 million (Nov 2009)
Land Lines: 37.16 million (Nov 2009)
Yearly Cellphone Addition: 113.26 million (2007)
Monthly Cellphone Addition: 17.65 million (Nov 2009)
Teledensity: 46.32% (Nov 2009)
Projected teledensity: 626 million, 46% of population by 2010.
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3.4.1 Wireless telephones
The Mobile telecommunications system in India is the second largest in the world and it was thrown
open to private players in the 1990s. The country is divided into multiple zones, called circles (roughly
along state boundaries). Government and several private players run local and long distance telephone
services. Competition has caused prices to drop and calls across India are one of the cheapest in the
world. The rates are supposed to go down further with new measures to be taken by the Information
Ministry. The mobile service has seen phenomenal growth since 2000. In September 2004, the number of
mobile phone connections have crossed fixed-line connections. India primarily follows the GSM mobile
system, in the 900 MHz band. Recent operators also operate in the 1800 MHz band. The dominant
players are Airtel, Reliance Infocomm, Vodafone, Idea cellular and BSNL/MTNL. There are many
smaller players, with operations in only a few states. International roaming agreements exist between
most operators and many foreign carriers.
Main article: List of mobile network operators of India
The breakup of wireless subscriber base in India as of November 2009 is given below
Operator Subscriber base

Bharti Airtel 116,013,951
Reliance Communications 90,987,594
Vodafone Essar 88,607,607
BSNL 60,780,512
Idea Cellular 55,905,178
Tata Teleservices 53,992,973
Aircel 29,354,370
MTNL 4,819,430
Loop Mobile 2,595,454
MTS India 2,644,338
HFCL Infotel 342,749
All India 506,044,156
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The list of ten states (including the metros Mumbai, Kolkata and Chennai in their respective states) with
largest subscriber base as of September 2009 is given below
State Subscriber base Wireless density'"

Maharashtra 58,789,949 51.96
Uttar Pradesh 57,033,513 26.32
Tamil Nadu 45,449,460 63.66
Andhra Pradesh 37,126,048 42.58
West Bengal 32,540,049 34.28
Karnataka 28,867,734 46.76
Rajasthan 27,742,395 39.09
Gujarat 27,475,585 45.49
Bihar 27,434,896 25.04
Madhya Pradesh 24,923,739 33.09
All India 471,726,205 37.71
Wireless density was calculated using projected population of states from the natural growth rates of
1991-2001 and population of 2001 census.
3.4.2 Landlines
Landline service in India is primarily run by BSNL/MTNL and Reliance Infocomm though there are
several other private players too, such as Touchtel and Tata Teleservices. Landlines are facing stiff
competition from mobile telephones. The competition has forced the landline services to become more
efficient. The landline network quality has improved and landline connections are now usually available
on demand, even in high density urban areas. The breakup of wireline subscriber base in India as of
September 2009 is given below.
Operator Subscriber base

BSNL 28,446,969
MTNL 3,514,454
Bharti Airtel 2,928,254
Reliance Communications 1,152,237
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Tata Teleservices 1,003,261

HFCL Infotel 165,978
Teleservices Ltd 95,181
All India 37,306,334
The list of eight states (including the metros Mumbai, Kolkata and Chennai in their respective states)
with largest subscriber base as of September 2009 is given below.
State Subscriber base

Maharashtra 5,996,912
Tamil Nadu 3,620,729
Kerala 3,534,211
Uttar Pradesh 2,803,049
Karnataka 2,751,296
Delhi 2,632,225
West Bengal 2,490,253
Andhra Pradesh 2,477,755
3.5 Internet
The total subscriber base for internet in India is 13.54 million.
The number of broadband connections in India has seen a continuous growth since the beginning of
2006. At the end of November 2009, total broadband connections in the country have reached 7.57
million.
BSNL, Tata Teleservices, Airtel, Reliance Communications, Sify, MTNL, STPI, Netcom, Railtel,
GAILTEL, You Telecom, Spice and Hathway are some of the major ISPs in India. TRAI has defined
broadband as 256 kbit/s or higher. However, many ISPs advertise their service as broadband but don't
offer the suggested speeds. Broadband in India is more expensive as compared to Western Europe/United
Kingdom and United States.
After economic liberalization in 1992, many private ISPs have entered the market, many with their own
local loop and gateway infrastructures. The telecom services market is regulated by TRAI. ADSL
providers include:
• Tata Communications Ltd. (VSNL)
• MTNL/BSNL
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• Bharti Telecom (Airtel, Bharti Televentures)
• Reliance Infocomm
Because of the increase in ISPs and the quality of service Qos, It became cheaper to call India from
around the world. Many Indians today, studying or living all around the world, are using calling cards to
India to speak with their families back home. It used to be much more expensive prior to 2002.
3.5.1 Broadband
The current definition of Broadband in India is speeds of 256 kbit/s. TRAI on July 2009 has recommened
raising this limit to 2 Mbps. As of September 2009, India has 7.21 million broadband users. Although,
India ranks one of the lowest provider of broadband speed as compared to other countries like Japan,
South Korea or France. In the fixed line arena, BSNL and MTNL are the incumbents in their respective
areas of operation and continue to enjoy the dominant service provider status in the domain of fixed line
services. For example BSNL controls 79% of fixed line share in the country.
On the other hand, in the mobile telephony space, Airtel controls 21.4% subscriber base followed by
Reliance with 20.3%, BSNL with 18.6%, Vodafone with 14.7% subscriber base (as per June 2005 data).
Airtel and BSNL have launched 8 Mbit/s & Reliance Communication offers 10 Mb/s broadband internet
services in selected areas recently . For home users , the maximum speed for unlimited downloads is 2
Mbit/s , available for USD 60 (roughly , without taxes) per month.
3.6 Broadcasting
Radio broadcast stations: AM 153, FM 91, shortwave 68 (1998)
Radios: 116 million (1997)
Television terrestrial broadcast stations: 562 (of which 82 stations have 1 kW or greater power and
480 stations have less than 1 kW of power) (1997)
Televisions: 110 million (2006)
In India, only the government owned Doordarshan (Door = Distant = Tele, Darshan = Vision) is allowed
to broadcast terrestrial television signals. It initially had one major National channel (DD National) and a
Metro channel in some of the larger cities (also known as DD Metro).
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Satellite/Cable television took off during the first Gulf War with CNN. There are no regulations against
ownership of satellite dish antennas, or operation of cable television systems, which led to an explosion
of viewership and channels, led by the Star TV group and Zee TV. Initially restricted to music and
entertainment channels, viewership grew, giving rise to several channels in regional languages and many
in the national language, Hindi. The main news channels available were CNN and BBC World. In the
late 1990s, many current affairs and news channels sprouted, becoming immensely popular because of
the alternative viewpoint they offered compared to Doordarshan. Some of the notable ones are Aaj Tak
(means Till Today, run by the India Today group) and STAR News, CNN-IBN, Times Now, initially run
by the NDTV group and their lead anchor, Prannoy Roy (NDTV now has its own channels, NDTV 24x7,
NDTV Profit, NDTV India and NDTV Imagine).New Delhi TeleVision.
3.7 Next generation networks
In the Next Generation Networks, multiple access networks can connect customers to a core network
based on IP technology. These access networks include fibre optics or coaxial cable networks connected
to fixed locations or customers connected through wi-fi as well as to 3G networks connected to mobile
users. As a result, in the future, it would be impossible to identify whether the next generation network is
a fixed or mobile network and the wireless access broadband would be used both for fixed and mobile
services. It would then be futile to differentiate between fixed and mobile networks – both fixed and
mobile users will access services through a single core network.
Indian telecom networks are not so intensive as developed country’s telecom networks and India's
teledensity is low only in rural areas. 670,000 route kilometers (419,000 miles) of optical fibres has been
laid in India by the major operators, even in remote areas and the process continues. BSNL alone, has
laid optical fibre to 30,000 Telephone Exchanges out of their 36 Exchanges. Keeping in mind the
viability of providing services in rural areas, an attractive solution appears to be one which offers
multiple service facility at low costs. A rural network based on the extensive optical fibre network, using
Internet Protocol and offering a variety of services and the availability of open platforms for service
development, viz. the Next Generation Network, appears to be an attractive proposition. Fibre network
can be easily converted to Next Generation network and then used for delivering multiple services at
cheap cost.
3.8 Mobile Number Portability (MNP)
Number portability: TRAI announced the rules and regulations to be followed for the Mobile Number
Portability in their draft release on 23 September 2009. Mobile Number Portability (MNP) allows users
to retain their numbers, while shifting to a different service provider provided they follow the guidelines
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set by TRAI. Users are expected to holding the mobile number with a given provider for at least 90 days,
before they decide to move to the other provider.
As per news reports, Government of India decided to implement MNP from December 31st, 2009 in
Metros & category ‘A’ service areas and by March 20th, 2010 in rest of the country.
3.9 International
• Nine satellite earth stations - 8 Intelsat (Indian Ocean) and 1 Inmarsat (Indian Ocean region).
• Nine gateway exchanges operating from Mumbai, New Delhi, Kolkata, Chennai, Jalandhar,
Kanpur, Gandhinagar, Hyderabad and Ernakulam.
3.9.1 Submarine cables
• LOCOM linking Chennai to Penang, Malaysia
• India-UAEcable linking Mumbai to Al Fujayrah, UAE.
• SEA-ME-WE 2, SEA-ME-WE 3, SEA-ME-WE 4 - (South East Asia-Middle East-Western

Europe) with landing sites at Cochin and Mumbai.
• Fiber-Optic Link Around the Globe (FLAG) with a landing site at Mumbai (2000).
• I-ME-WE with two landing sites at Mumbai (2009).
4 Data Analysis & Interpretation
4.1 Questionnaire Analysis

1. What is the criterion of allocating different benefits between different levels of employees?
Basis BSNL Airtel

On the basis of grades 30 15
On the basis of basic salary 0 15
At the option of employees 0 0
Any other (specify) 0 0
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Interpretation: While going through data analysis it is found that in BSNL criterion of allocating
different benefits between different levels of employees is on the basis of graides, and in Bhartia Airtel
it’s depends on the basis of the grades and on the basis of basic salary.
2. How do you segregate and apportion the various fringe benefits between different grades and
designations of employees?
Basis BSNL Airtel

Same benefits for all grades and designations of employees 30 13
Different benefits for different grades and designations of 0 3
employees
Increase the benefits according to increase in grade pay 0 14
and designations of employees
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Interpretation: While going through data analysis it is found that out of 30 employees of BSNL all of
segregate and apportion the various fringe benefits between different grades and designations of
employees is based on Same benefits for all grades and designations of employees, and in Bhartia Airtel
out of 30, 14 sayes it’s based on Increase the benefits according to increase in grade pay and designations
of employees, 13 sayes that it’s based on Same benefits for all grades and designations of employees.
3. Which of the following Fringe Benefits (taxable in the hands of employee) are given in your
organisation?
Basis BSNL Airtel

Facility of interest-free or concessional housing loan 30 23
Facility of interest-free or concessional car loan 30 20
Facility of interest-free or concessional education loan 30 4
Facility of interest-free or concessional personal loan 30 10
Use of movable assets(motor car, other assets) 8 0
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Interpretation: While going through data analysis it is found that out of 30 employees of BSNL sayes
that company can provide them Facility of interest-free or concessional housing loan, Facility of interest-
free or concessional car loan, Facility of interest-free or concessional education loan, Facility of interest-
free or concessional personal loan.
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Interpretation: While going through data analysis it is found that out of 30 employees of Bhartia Airtel
sayes that company can provide some of them facility of interest-free or concessional housing loan, less
no of employees can facilitate with facility of interest-free or concessional car loan, Facility of interest-
free or concessional education loan, facility of interest-free or concessional personal loan.
4. Benefits are provided in _______________ form.
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Basis BSNL Airtel

Monetary 30 30
Non- Monetary 0 0
Interpretation: While going through data analysis it is found that out of 60 employees of
Bhartia Airtel and BSNL says that they are benefitted by monetary benefitted.
5. Benefits form what percentage of the total CTC package?
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Basis BSNL Airtel

5-10 12 4
10-15 5 10
15-20 8 13
20-25 3 1
25-30 2 2
Interpretation: While going through data analysis it is found that out of 30 employees of
Bhartia Airtel 13 employees says Benefits form what percentage of the total CTC package is 15-
20, 10 says that its 10-15 and out of 30 employees of BSNL 12 says that it’s 5-10, 8 employees
says it’s 15-20.
6. Your organisation provide a CTC package which is ___________
Basis BSNL Airtel

Heavy on basic salary and other allowances 23 1
Heavy on reimbursements and fringe benefits 5 20
As per the negotiation by the employee 2 9
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Interpretation: While going through data analysis it is found that organisation provide a CTC
package out of 30 employees of BSNL 23 employees says Heavy on basic salary and other
allowances, others says it’s heavy on reimbursements and fringe benefits.
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Interpretation: While going through data analysis it is found that organisation provide a CTC package
out of 30 employees of Bhartia Airtel 20 says it’s based on heavy on reimbursements and fringe benefits,
or 9 employees sys that it’s depends on As per the negotiation by the employee.
7. Abolition of Fringe Benefit Tax with effect from assessment year 2010-11 will benefit
Basis BSNL Airtel

The Company 0 30
The Employees 30 0
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Interpretation: While going through data analysis it is found that Abolition of Fringe Benefit Tax
with effect from assessment year 2010-11 will benefit out of 30 employees of Bhartia Airtel 30 says
The Company and 30 employees of the BSNL says that it,s by emplouees.
8. What will be the effect of providing more benefits to employees after the abolition of Fringe
Benefit Tax?
Basis BSNL Airtel

Tax liability will increase and Net Take-Home-Pay 30 2
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decrease
Tax liability will decrease and Net Take-Home-Pay 0 28
increase
Interpretation: While going through data analysis it is found that will be the effect of providing
more benefits to employees after the abolition of Fringe Benefit Tax out of 30 employees of Bhartia
Airtel 28 says tax liability will decrease and Net Take-Home-Pay increase, and 2 says tax liability
will increase and Net Take-Home-Pay decrease. and 30 employees of the BSNL says that it’s tax
liability will increase and Net Take-Home-Pay decrease
9. Who bears the liability of paying Fringe benefits Tax in your organisation?
Basis BSNL Airtel

The employer 0 0
The employee 30 0
The employer but recover from employee 0 30
Partially the employer and partially the employee 0 0
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Interpretation: While going through data analysis it is found that bears the liability of paying
Fringe benefits Tax in your organisation out of 30 employees of Bhartia Airtel 30 says the employer
but recover from employee. and 30 employees of the BSNL says that it’s the employee.
Rate on a scale of 1 to 5, 1 meaning “Not preferable” and 5 meaning “preferable”
10. Will the employees prefer more fringe benefits to more basic salary and allowances in the same
CTC package in this period of rising prices, cost of living and tax liability ( after the abolition
of Fringe Benefit Tax)?
Basis BSNL Airtel

1 0 1
2 2 1
3 11 9
4 14 10
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5 5 8
Interpretation: While going through data analysis it is found that out of 30 employees of BSNL 14
employees says 4, 11 says 3,5 says 5.
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Interpretation: While going through data analysis it is found that out of 30 employees of Bhartia
Airtel 10 says 3, 9 says 3 and 8 says 5.
11. Will the organisation prefer giving more fringe benefits to more basic salary and allowances
within the same CTC package to the employees during this time of economic downturn (after
the abolition of Fringe Benefit Tax)?
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Basis BSNL Airtel

1 0 0
2 3 1
3 10 8
4 13 9
5 5 12
Interpretation: While going through data analysis it is found that out of 30 employees of BSNL 13
says 4, 10 says 3 and 5 says 5.
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Interpretation: While going through data analysis it is found that out of 30 employees of Bhartia
Airtel 12 says 5, 10 says 4 and 8 says 3.
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4.2 SWOT Analysis
4.2.1 Strengths
 Fringe benefits motivated the employees.
 Fringe benefits play crucial role in the increasing the performance of employees.
 The employees will perform their work with best of their abilities.
 The fringe benefits play a vital role in achieving the organizational objectives.
 Fringe benefits increase the efficiency of employees.
 Fringe benefits enhance the leadership quality of employees.
 Fringe benefits helpful in increasing the productivity.
 Fringe benefits are increasing the attrition rate.

 Fringe benefits are making loyal to employees towards the company.
 High rate of fringe benefits decrease the rate of conflicts between the employees and employers
regarding to fringe benefits.
 Fringe benefits prevailing practices of offering benefits and services which are given by similar
concerns.
 Fringe benefits helpful in recruit and retain the best personnel.
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4.2.2 Weaknesses
 Fringe benefits are the main reason of increasing the rate of conflict in organization.
 Less no of benefits increase dissatisfaction level of employees.
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4.2.3 Opportunities
 To create and improve sound industrial relations
 To boost up employee morale.
 To motivate the employees by identifying and satisfying their unsatisfied needs.
 To provide qualitative work environment and work life.
 To provide security to the employees against social risks like old age benefits and maternity
benefits.
 To protect the health of the employees and to provide safety to the employees against accidents.
 To promote employees welfare by providing welfare measures like recreation facilities.
 To create a sense of belongingness among employees and to retain them. Hence, fringe benefits
are called golden hand-cuffs.
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4.2.4 Threats
 If competitors provide better benefits to there employees than experienced employees can skip
towards the competitor company.
 Any conflicts arise due to the benefits than industrial relations are not so good.
 Due to benefits employees can be demotivatied.
 Decrees the motivation level of employees
 Decrees the loyalty of employees due to fringe benefits.
 Productivity should be decreased.
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4.3 Case Study Analysis
Abstract:
The announcement came as s jolt not only to TCS employees but also to the entire Indian IT industry.
The company came in for severe criticism and it was accused of not being transparent with respect to
EVA calculation. However, some analysts felt that the pay cuts were a result of the macroeconomic
challenges that the Indian IT companies were facing rapid appreciation of the rupee against the US
dollar and the recession in the US economy (USA was the largest market for the Indian IT companies)
Issues:
» Analyze TCS' HR practices with respect to its policy related to compensation of its employees.
» Discuss various concepts related to compensation management.
» Discuss the importance of variable compensation in light of its ability to motivate employees and
enhance organizational productivity.
» Discuss the pros and cons of the EVA-based compensation management system and also analyze EVA
as a performance measurement tool.
» Understand the rationale behind the cut in the compensation of the employees at TCS.
» Understand how macroeconomic variables could affect a company's HR policies.
» Appreciate the importance of HR goals and strategies in the success of an organization
Contents:
Key Words:
Compensation management, EVA, Variable compensation, Fixed pay, Wage inflation, Human resource,
Employee Stock Options, Performance appraisal, Employee morale, Incentives, HR policies,
Recruitment, Employee satisfaction, Employee attrition, Retrenchment, Retaining, Employee training,
Career development, Tata Consultancy Services, Satyam Computers, Wipro, Infosys, Information
technology
"There's no ceiling on the bonus. It can be equal to the fixed portion of the salary, providing the cell has
shown that kind of EVA growth. It is not just compensation, we wish our employees to also get a feeling
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of ownership for their own unit, and its performance. We want each employee to feel as if they are
running their business. They have to think like entrepreneurs and know the cost attached to their
business and how will they add value to the investment."1
- S. Ramadorai, CEO and Managing Director, Tata Consultancy Services Ltd., in 2000, Regarding
its Economic Value Added (EVA)-based Compensation Management System.
"We undertake a review of variable pay every quarter and this time, we decided to make an
adjustment."2
- S. Padmanabhan, Global Human Resources Head and Executive Director, Tata Consultancy
Services Ltd, in February 2008.
"This wage cut is a reflection of the caution. It reinforces the management view of macroeconomic
challenges."3
- Harit Shah, Research Analyst, Angel Broking4, in February 2008.
Squeezing the Employee Pay Packets
During the fourth quarter of financial year (FY) 2007-2008, Tata Consultancy Services Limited (TCS),
the largest Information Technology (IT) Company in India announced its plans to cut 1.5 percent of the
variable component of employees' compensation.
It clarified, however, that there would not be any changes in the perquisites of its employees. The rapid
appreciation of the Indian Rupee against the US dollar over the previous year and the imminent recession
in the US economy, which was the biggest market for the Indian IT companies, had put a lot of pressure
on Indian IT companies. The announcement came soon after TCS found it unable to achieve its
Economic Value Added (EVA) target for the third quarter of the FY 2007-2008. The unprecedented
move by TCS caught the entire IT Industry by surprise.
The EVA payment made in advance for the third quarter was to be deducted from the variable salaries in
the fourth quarter. The variable component of the salaries of the TCS employees constituted 30 percent
of their total compensation, and even went up to 40-50 percent in the case of senior management. The
decision came as a shock to many employees and the media gave wide coverage to TCS' decision.
The employees' fears were compounded when TCS showed some 500 of its employees the door in
February 2008 on performance grounds.
Established in 1968, TCS was the market leader among the Indian IT industry as of 2008. Its revenues
for the third quarter of the FY 2007-2008 increased by 5.04 percent to Indian Rupees (Rs.) 59.24 billion
and net profit rose by 6.72 percent to Rs. 13.31 billion.5
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In the wake of the appreciating rupee and signs of recession in the US economy, TCS decided to cut
salaries since the company's margins were severely impacted. According to S Mahalingam
(Mahalingam), Chief Financial Officer (CFO), TCS, "Fundamentally the business operates on sound
principles...
Background Note
TCS was established in 1968 with its headquarters in Mumbai. It was formed as a division of Tata Sons
Limited (TSL), one of India's largest business conglomerates, and was called 'Tata Computer Center.' F
C Kohli (Kohli) was appointed as the first General Manager in 1969.
Soon after, the division was renamed Tata Consultancy Services (TCS). During its early days, TCS, with
a staff of 10 consultants and 200 operators, undertook IT consulting assignments with other Tata Group
companies. For instance, it managed the punch card operations of Tata Iron and Steel Company
(TISCO)...
The HR Policies
TCS gave utmost importance to its human resource function. The company viewed its employees as
assets, which had to be utilized efficiently. The TCS senior management constantly kept track of the vast
intellectual assets, their skill sets, the status of projects on which they were working, and the number of
people available for being placed in other projects...
Performance-Linked Salary Structure
Despite being rated as one of the top IT employers in India, however, TCS had drawn criticism for its
compensation structure.
According to the employees the salaries were not on a par with the industry standards. TCS was also
under pressure to follow the Employee Stock Options (ESOP) schemes followed by its competitors.
ESOPs had emerged as one of the most powerful tools for retaining employees...
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TCS Announces Pay Cuts
In January 2008, the management of TCS gave a jolt to its employees by announcing its plans to cut 1.5
percent of the variable component of the total compensation of its employees. The reason cited for this
was the company's inability to meet the EVA target for the third quarter of the FY 2007-2008...
The Reasons
TCS cited several reasons for cutting down employee salaries. The major reason for the unprecedented
cut in variable pay was its inability to meet the EVA target for the third quarter of the FY 2007-2008.
The rise of the rupee against the US dollar was another major concern for TCS. The rupee had
appreciated by 12 percent against the US dollar, building tremendous pressure on the company's margins
and revenues. (Refer to Exhibit IV to see how Indian Rupees rose against the dollar; and Exhibit V for
how IT/ITES companies have reacted to the rupee rise)...
The Debate
TCS' move to cut employee salaries received severe criticism from some quarters. TCS' reputation as one
of the topmost IT employers in India took a beating as its decision to cut salaries shocked many of its
employees. Many employees even opined that TCS could have cut down on some of its other expenses
instead of cutting the compensation of its employees...
Outlook
Despite TCS' claim that it would make salary adjustments in the next quarter, the employees remained
divided and expected this trend to continue. A TCS employee said, "Though the official word is that the
situation will be reviewed by March end, we are preparing for a regime wherein we continue with a
pruned salary."
Further, the pay hikes of employees in the Indian IT industry were poised to become moderate with
pressure building on export earnings of Indian IT companies due to the rising rupee and signs of a
slowdown in the technology spend in the US due to recession...
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4.3.1 Summary
challenges that the Indian IT companies were facing rapid appreciation of the rupee against the US dollar
and the recession in the US economy (USA was the largest market for the Indian IT companies)
Analyze TCS' HR practices with respect to its policy related to compensation of its employees.
Discuss various concepts related to compensation management.
Discuss the importance of variable compensation in light of its ability to motivate employees and
enhance organizational productivity.
Discuss the pros and cons of the EVA-based compensation management system and also analyze EVA as
a performance measurement tool.
Understand the rationale behind the cut in the compensation of the employees at TCS.
Understand how macroeconomic variables could affect a company's HR policies.
Appreciate the importance of HR goals and strategies in the success of an organization
the largest Information Technology (IT) company in India announced its plans to cut 1.5 percent of the
variable component of employees' compensation. It clarified, however, that there would not be any
changes in the perquisites of its employees. The rapid appreciation of the Indian Rupee against the US
dollar over the previous year and the imminent recession in the US economy, which was the biggest
market for the Indian IT companies, had put a lot of pressure on Indian IT companies.
The announcement came soon after TCS found it unable to achieve its Economic Value Added (EVA)
target for the third quarter of the FY 2007-2008. The unprecedented move by TCS caught the entire IT
Industry by surprise.
The EVA payment made in advance for the third quarter was to be deducted from the variable salaries in
the fourth quarter. The variable component of the salaries of the TCS employees constituted 30 percent
of their total compensation, and even went up to 40-50 percent in the case of senior management. The
decision came as a shock to many employees and the media gave wide coverage to TCS' decision.
February 2008 on performance grounds.TCS gave utmost importance to its human resource function. The
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company viewed its employees as assets, which had to be utilized efficiently. The TCS senior
management constantly kept track of the vast intellectual assets, their skill sets, the status of projects on
which they were working, and the number of people available for being placed in other projects...
The major reason for the unprecedented cut in variable pay was its inability to meet the EVA target for
the third quarter of the FY 2007-2008. The rise of the rupee against the US dollar was another major
concern for TCS. The rupee had appreciated by 12 percent against the US dollar, building tremendous
pressure on the company's margins and revenues.
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4.3.2 Fact Analysis
 Analyze TCS' HR practices with respect to its policy related to compensation of its employees.
 Discuss various concepts related to compensation management.
 Discuss the importance of variable compensation in light of its ability to motivate employees
and enhance organizational productivity.
 Discuss the pros and cons of the EVA-based compensation management system and also
analyze EVA as a performance measurement tool.
 Understand the rationale behind the cut in the compensation of the employees at TCS.
 Understand how macroeconomic variables could affect a company's HR policies.
 Appreciate the importance of HR goals and strategies in the success of an organization
 Compensation management, EVA, Variable compensation, Fixed pay, Wage inflation, Human
resource, Employee Stock Options, Performance appraisal, Employee morale, Incentives, HR
policies, Recruitment, Employee satisfaction, Employee attrition, Retrenchment, Retaining,
Employee training, Career development, Tata Consultancy Services, Satyam Computers, Wipro,
Infosys, Information technology.
 Information Technology (IT) company in India announced its plans to cut 1.5 percent of the
 The EVA payment made in advance for the third quarter was to be deducted from the variable
salaries in the fourth quarter.
 The variable component of the salaries of the TCS employees constituted 30 percent of their
total compensation, and even went up to 40-50 percent in the case of senior management.
 The decision came as a shock to many employees and the media gave wide coverage to TCS'
decision.
 TCS gave utmost importance to its human resource function.
 The company viewed its employees as assets, which had to be utilized efficiently.
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4.3.3 Problem Solving – Primary Issues & Secondary Issues
 Analyze TCS' HR practices with respect to its policy related to compensation of its employees.
 Discuss various concepts related to compensation management.
 Discuss the importance of variable compensation in light of its ability to motivate employees
and enhance organizational productivity.
 Discuss the pros and cons of the EVA-based compensation management system and also
analyze EVA as a performance measurement tool.
 Understand the rationale behind the cut in the compensation of the employees at TCS.
 Understand how macroeconomic variables could affect a company's HR policies.
 Appreciate the importance of HR goals and strategies in the success of an organization.
 Information Technology (IT) company in India announced its plans to cut 1.5 percent of the
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4.3.4 Recommendations and Suggestions

 Compensation provided should be according to talents.
 To adopt the strategy those helpful in coping out with the recession.
 Provide enough incentives to the employees so that they are motivated and helps in coping out
the situation.
 Gives the specific reason during the lay offs.
 Fringe benefits are aligned with performance of employees.
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4.3.5 Conclusion
challenges that the Indian IT companies were facing rapid appreciation of the rupee against the US dollar
and the recession in the US economy (USA was the largest market for the Indian IT companies)
the largest Information Technology (IT) Company in India announced its plans to cut 1.5 percent of the
variable component of employees' compensation. It clarified, however, that there would not be any
changes in the perquisites of its employees. The rapid appreciation of the Indian Rupee against the US
dollar over the previous year and the imminent recession in the US economy, which was the biggest
market for the Indian IT companies, had put a lot of pressure on Indian IT companies.
February 2008 on performance grounds.TCS gave utmost importance to its human resource function. The
company viewed its employees as assets, which had to be utilized efficiently. The TCS senior
management constantly kept track of the vast intellectual assets, their skill sets, the status of projects on
which they were working, and the number of people available for being placed in other projects.
The major reason for the unprecedented cut in variable pay was its inability to meet the EVA target for
the third quarter of the FY 2007-2008. The rise of the rupee against the US dollar was another major
concern for TCS. The rupee had appreciated by 12 percent against the US dollar, building tremendous
pressure on the company's margins and revenues.
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4.4 PESTE Analysis
4.4.1 Political/Legal Environment

 Antitrust Regulations
 Environmental
 Protection Laws
 Tax Laws
 Special Incentives
 Foreign Trade Regulations
 Attitudes toward foreign Companies
 Laws on hiring and promotion
 Stability of government
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4.4.2 Economic Environment

 GDP trends
 Interest Rates
 Money Supply
 Inflation Rates
 Unemployment levels
 Price control
 Devaluation / Revaluation
 Cost
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4.4.3 Socio-Cultural Environment

 Lifestyle Changes
 Career expectation
 Consumer activism
 Rate of family formation
 Growth rate of population
 Age distribution of population
 Regional shift in population
 Life expectation
 Birth rates
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4.4.4 Technological Environment

 Total Government spending for Research & Development
 Total Industry spending for Research & Development
 Focus of Technological efforts
 Patent Protection
 New Products
 Technology transfer from lab to marketplace
 Productivity improvements through automation
 Internet availability
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5 Limitations of the Study

 Limited time available for getting the questionnaires filled from the respondents.
 As a result of this it was not possible to get full information about the respondents.
 As starting of New Year and ending of financial year some time people are less interested in
filling up questionnaires.
 Non-cooperative approach and rude behavior of the respondents.
 If the respondents answer does not falls between amongst the options given then it will turn up to
be a biased answer.
 Contacting potential respondents and if they were not using internet services then moving on to.
 Other respondents were very time consuming.
 Perception differentiation of employees.
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6 Conclusion
 Increase in direct pay only adds to one’s taxable income but most benefits are not taxed.
 Employees prefer indirect remuneration as it distorts salary structures and are often more easy to
explain to shareholders as the social responsibility of the company.
 Employees joins and stays with an organization which guarantees attractive fringe benefits.
 Fringe benefits build up good corporate image.
 It also seeks to enhance employee morale, remain cost effective, and introduce changes without
much resistance.
 It should be computable in terms of money.
 The amount of benefit is not pre-determined.
 No contract, indicating when the sum is payable, should exist.
 Fringe benefits should be attached with performance level of employees.
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7 Suggestions & Recommendations

 Organizations offer benefits to match or outstrip those offered by the competitors.
 To predecided the calculation method of fringe benefits.
 To use the same method for same grade.
 To use the fringe benefits as a motivational tool.
 How to ascertain competitors benefit package?
 Market survey
 These surveys provide data on the various benefits offered, their coverage,
eligibility and cost.
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8 Bibliography
• en.wikipedia.org/wiki/telecomsector
• www.answers.com/topic/telecomsector
• .wikipedia.org/wiki/telecom
• http://voicendata.ciol.com/content/speak/109121701.asp
• http://www.avashya.com/articles/104391/telecom-service-providers-must-ensure-a-
high-uptim/
• http://oneclick.indiatimes.com/article/0d9iaJR6nGgmw/quotes?q=Airtel
• www.hr.com/ - United States
• beakware.com/resources/default.php
• www.humanresourcesiq.comen
• wikipedia.org/wiki/Human_resources
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• Research Methodology – C.R.Kothari
• Human Resource Management – K.Aswathapa
9 Annexure
Comparative Analysis of Fringe Benefits Between Public And Private
Telecom Service Provider
Name: _____________________________________________________
Designation: _______________________________________________
Organization’s Name: ________________________________________
1. What is the criterion of allocating different benefits between different levels of employees?
A. On the basis of grades

B. On the basis of basic salary
C. At the option of employees*
D. Any other (specify)
__________________________________________________________________
2. How do you segregate and apportion the various fringe benefits between different grades and
designations of employees?
A. Same benefits for all grades and designations of employees
B. Different benefits for different grades and designations of employees
C. Increase the benefits according to increase in grade pay and designations
of employees
3. Which of the following Fringe Benefits are given to employees in your organisation?
A. Conveyance, tour, travel (including foreign travel) for official purpose
B. Facility of hotel ,boarding and lodging for official purpose
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C. Expenses on personal holiday

D. Transport facility to employee’s kids
E. Expenditure on employee’s welfare
F. Medical expenses < Rs. 15000
G. Medical expenses at hospital maintained by employer
H. Contribution by the employer to an approved superannuation fund
I. Employee Stock Option
J. Expenses on entertainment for official or personal purpose incurred by the employer
K. Use of telephone(including mobile phone) other than expenditure on leased telephone lines
L. Repair, running (including fuel) and maintenance of motor car or aircrafts including
depreciation thereon
M. Expenditure on conference (excluding participation fee)
N. Reimbursement of periodicals
O. Prepaid meal card
P. Expenditure on food or beverages outside office
Q. Expenses on festival celebration
R. Use of health club or similar facilities
S. Gifts in kind/article
T. Credit card
U. Scholarships
4. Which of the following Fringe Benefits (taxable in the hands of employee) are given in your
organisation?
A. Facility of interest-free or concessional housing loan
B. Facility of interest-free or concessional car loan
C. Facility of interest-free or concessional education loan
D. Facility of interest-free or concessional personal loan
E. Use of movable assets(motor car, other assets)
F. Any other (specify)
5. Which other fringe benefits or reimbursements apart from above mentioned benefits are provided in
your organisation? Please specify.
6. Benefits are provided in _______________ form.

A. Monetary
B. Non – monetary
SBIM 71
7. Benefits form what percentage of the total CTC package?
A. 5 – 10
B. 10 – 15
C. 15 – 20
D. 20 – 25
E. 25 – 30
8. Your organisation provide a CTC package which is ___________
A. Heavy on basic salary and other allowances
B. Heavy on reimbursements and fringe benefits
C. As per the negotiation by the employee
9. Abolition of Fringe Benefit Tax with effect from assessment year 2010-11 will benefit
A. The Company
B. The Employees
10. Which of the following options will your organisation exercise after the abolition of Fringe Benefit
Tax with effect from assessment year 2010-11?
A. Continue with same structure of CTC package
B. Restructure CTC package by increasing the amount of Fringe Benefits within the same
package
C. Restructure CTC package by introducing new benefits within the same package
D. Restructure CTC package by increasing the amount of existing benefits as well as
introducing new benefits within the same package
E. Opt for salary increments
F. Any other
11. If the answer to Q.14 is A, what will be the effect on tax liability of employees?
A. Net tax liability will increase
B. Net tax liability will decrease
C. No significant effect
12. If the answer to Q.14 is B, what are the expected benefits on which has a scope of increase in their
amounts? Please Specify.
SBIM 72
13. If the answer to Q.14 is C, what are the expected benefits apart from the existing benefits which your
organisation is likely to provide? Please Specify.
14. What will be the effect of providing more benefits to employees after the abolition of Fringe Benefit
Tax?
A. Tax liability will increase and Net Take-Home-Pay decrease
B. Tax liability will decrease and Net Take-Home-Pay increase
15. Who bears the liability of paying Fringe benefits Tax in your organisation?
A. The employer(entirely)
B. The employee
C. The employer but recover from employee
D. Partially the employer and partially the employee
Rate on a scale of 1 to 5, 1 meaning “Not preferable” and 5 meaning “preferable”
16. Will the employees prefer more fringe benefits to more basic salary and allowances in the same CTC
package in this period of rising prices, cost of living and tax liability ( after the abolition of Fringe
Benefit Tax)?
A. 1
B. 2
C. 3
D. 4
E. 5
17. Will the organisation prefer giving more fringe benefits to more basic salary and allowances within
the same CTC package to the employees during this time of economic downturn (after the abolition
of Fringe Benefit Tax)?
A. 1
B. 2
C. 3
D. 4
SBIM 73
E. 5
SBIM 74

Comparative Analysis of Fringe Benefits Provided by Public and Private Sector Telecom Service Provider

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Comparative Analysis of Fringe Benefits Provided by Public and Private Sector Telecom Service Provider

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Comparative Analysis of Fringe

Benefits between Public and Private

Project Report submitted in partial fulfillment for award of the

Signature of Project Mentor Signature of Candidate

1.2.2 TRAI ASSESSES THE LIFETIME VALIDITY OFFERS OF SERVICE PROVIDERS.

7 SUGGESTIONS & RECOMMENDATIONS....................................................................................68

WWW.HR.COM/ - UNITED STATES................................................................................................69

RESEARCH METHODOLOGY – C.R.KOTHARI...........................................................................70

HUMAN RESOURCE MANAGEMENT – K.ASWATHAPA..........................................................70

Fringe Benefit – meaning:

• Any privilege, service, facility or amenity, directly or indirectly provided to employee by an

• Any reimbursement for any purpose.

• Contribution to approved superannuation fund

OBJECTIVES OF FRINGE BENEFITS:

The important objectives of fringe benefits are:

1. To create and improve sound industrial relations

2. To boost up employee morale.

3. To motivate the employees by identifying and satisfying their unsatisfied needs.

4. To provide qualitative work environment and work life.

7. To promote employees welfare by providing welfare measures like recreation facilities.

9. To meet requirements of various legislations relating to fringe benefits.

NEED FOR EXTENDING FRINGE BENEFITS

3. EPLOYER’S PREFERENCE:-fringe benefits motivate the employees for better contribution to

4. AS A SOCIAL SECURITY:-Fringe benefits provide social security to employees against

5. TO IMPROVE HUMAN RELATIONS:-Human relations are maintained when employers are

TYPES OF FRINGE BENEFITS:

CLASSIFICATION OF FRINGE BENEFITS

3. EMPLOYEE SECURITY:-Provided with the benefits of confirmation of the employee

1.1 Significance of the Study

• Performance of employees will be increased after getting the fringe benefits.

• Motivation level should be high after getting benefits.

• Efficiency of employees should be increased.

• Enhance the leadership quality should be there.

• Productivity should be increased.

1.2 Review of Existing Literature

1.2.1 The Cost of Staying Home Sick

What are your green initiatives?

1.2.5. City Employee Pay Is Outpacing Private Sector, Report Says

1.4 Focus of the Problem

1.5 Objectives of the Study

2.1 Research Design

2.2 Universe & Survey Population

 Employees of public and private sector telecom service provider

Sample Size: 60 Employees

Sampling Type: Convenient sampling

2.4 Collection of Data

2.5 Analysis Pattern

3 Organization of the Study

3.1 Modern growth

3.1.1 Introduction of the telephone

3.1.2 Further developments

• 1907 - First Central Battery of telephones introduced in Kanpur.

• 1913-1914 - First Automatic Exchange installed in Shimla.

• 1933 - Radiotelephone system inaugurated between the UK and India.

• 1953 - 12 channel carrier system introduced.

• 1976 - First digital microwave junction introduced.

• 1985 - First mobile telephone service started on non-commercial basis in Delhi.

3.2 Emergence as a major player

3.2.1 Liberalisation of telcommunications in India

3.2.2 Growth of mobile technology

3.3 Revenue and growth

Telephony Subscribers (Wireless and Landline): 543.20 million (Nov 2009)

Cellphones: 506.04 million (Nov 2009)

Land Lines: 37.16 million (Nov 2009)