HUMAN RESOURCE CHALLENGES AND PRACTICES IN THE IT SECTOR

By
Dr. V. Krishna Mohan1
Dr. K.V. Siva Prasad2

Abstract
Information Technology (IT) Sector is a wealth and job creating industry, which has in just a few years,
grown to US $ 1 trillion, employing millions of professionals worldwide. The Indian software industry has
burgeoned, showing a nearly 50% compounded annual growth rate over the recent years. Being a
knowledge-based industry, a high intellectual capital lends competitive advantage to a firm.
The IT Sector in India is providing services to domestic as well as offshore clients due to the availability of
technically qualified Human Resource, especially English speaking competencies. However, there is
always a gap between the expectations of IT organizations on their employees performance levels and
employees expectations of monetary and non-monetary benefits from their employers. In this context, the
human resource management has come very challenging in the emerging environment. If core
competency of Indian IT Sector is cost-effective technically qualified human resource, it can be viewed as
competitive advantage. Needless to mention that the IT sectors performance is influenced by a set of
effective HRM practices
With a global explosion in market-opportunities in the IT sector, the shortage of technically qualified
human resource both in numbers and skills is a prime challenge for HR professionals. In this regard, the
related issues are varied across functions such as recruitment of world-class workforce and their
retention, compensation and career planning, technological obsolescence and employee turnover.
This paper explains some of the HR challenges and the practices in vogue in selected software firms.
It explains some of the challenges in motivation, delegation of authority, work culture, training, pay
compensation and attrition faced by HR managers and addresses certain solutions in facing such
challenges though every industry has a unique structure. It is observed that the lifetime employment in
one company was not on the agenda of most employees and the jobs will become short term. The IT
employees desire a continuous up-gradation of skills, and want work to be exciting and entertaining which
is a trend that requires designing work systems that fulfill such expectations. It is suggested that
Profitability and sustainability of company in long run cannot be ensured without adequate focus on HR
management practices. A market oriented approach to managing people is suggested to transform HR
from a maintenance job to a strategic partner in the firm.
Key Words: Information Technology Sector, HR Challenges, HR Practices, Profitability and Sustainability,
Lifetime Employment, Strategic Partner.

-----------------------------------------------------------------------------------------------------------------------Professor, DCMS, Andhra University Visakhapatnam (AP) 530003, email:vkmohan1958@gmail.com

Post-Doctoral Fellow, DCMS, Andhra University Visakhapatnam (AP) 530003, email: kandi.vsp@gmail.com

INTRODUCTION
Human Resource Management in India has changed in the last few decades. Increasing
globalization, economic liberation and emerging trends in information technology have created a
massive shift in the HRM domain in India. The current scenario in the IT sector India has the
largest pool of manpower, second only to the US. According to a study conducted by the National
Association of Software and Services Companies (NASSCOM)-quantity of skilled knowledge
workers in India seems to be a non-issue, and it would be so at least for another couple of years.
The arithmetic out of 1.22lakh engineering graduates qualifying every year in India, about 73,000
is software engineers from IITs and other RECs. Thus, around 73,000 fresh software engineers
are expected to be available annually. The total demand for software professionals during the next
couple of years is estimated at 1.40 lakh. Against this backdrop, India is expected to have a pool
of 1.46 lakh software engineers. Besides, quite a few Indian universities have started courses
leading to Masters in computer Applications with industry orientation and there are private
Training Institutes which offer high level software engineering courses.
Statement of the Problem:
According to an AIMA survey, 60% of the IT Companies have a written job description of all
levels of employees. The rest 40% either have a partly written job description or they do not have
anything written at all making it difficult for both the employee and the employer. Most CEOs
site lack of skilled professionals as one of the major hindrances to growth in the Indian Software
Industry. Reputed software companies might get people at the base level but getting somebody
with an experience of more than 4-6 yrs is a problem. The problem of retention was more
prevalent in the telecom, IT and the Services sector than manufacturing and traditional sector.
When asked about employee retention, the majority among HR professionals in IT field felt that
it was all about retaining good people in the company and creating such situations for the nonperforming employees that they quit on their own. It was felt that employee retention was a
collective responsibility of the HR department, top management and individual departments in an
ascending order with the HR Department having the maximum and individual department having
minimum accountability. Currently, Indian software exports consist largely of low-end software
development services. However, the leading Indian firms are making strong efforts to move up
the value chain by acquiring better software management capability and deeper knowledge of
business domains, and reducing costs and improving quality by developing superior
methodologies and tools. They are also trying to reduce their dependency on the US market by
expanding their market base to include Europe, Japan and Australasia.
Aim and Objective of the Paper:
The aim of this paper is to examine the role, importance and characteristics of software
professionals in IT Sector. It has the specific objective of analyzing HR Practices in selected

software firms, with a special emphasis on the human resources challenges being faced in the IT
sector in India in the recent past.
Review of Literature:
There is abundant literature available in the arena of human resources management. However,
the scope of the review is confined to most relevant aspects of human resource management
issues connected to managing higher level employees of an organisation in general and software
professionals in particular from the view point of challenges being faced in managing persons
with intellectual capital.
Motivation: One aspect of maximizing work performance will involve motivation. According to
Peter Drucker (2004) " The good ones among managers do not talk about their problems, but they
know how to make subordinates talk about their problems". The managers should make their
employees to speak about their issues and motivate them accordingly. As per Morley Steltner
(2006) "Good managers should avoid criticism and give feed back by inviting employees to
evaluate their feedback and ask follow up questions."
Delegation: Morley Steltner (2006) says "Delegation should not be confused with assigning
routine work to employees that falls within their normal jobs. True delegation involves giving
someone the responsibility and authority to do something that is part of Manager's job."
Empowerment of employees plays a major role in retention by an employee in an organization.
Employees should be delegated with adequate powers to carry out the works. Even for petty
works, when there is dependency it will make the employees to get annoyed. Malone (1997) says
'Empowerment of employees could help to enhance the continuity of employees in organizations'.
Prof Bruce L Katcher (2007) says 'Employees are not happy when they aren't free to make their
own decisions. They hate management for lack in trust '. Keller (1995) says 'Superiors
empowering subordinates by delegating responsibilities leads to subordinates satisfaction with
their leaders and this makes employees to be committed to the organization and chances of
quitting are minimal'. Therefore it is to be understood that when an employee is free to make a
decision, he will be more satisfied and committed towards the job and chances of turnover will
get minimized.
Work Culture: Certainly, the mismanagement of growth has contributed to the demise of most
companies mushroomed since last few years. There are many issues involved but the fact that
most managers come from a technological background is significant as is the difficulty of
growing and mastering a company beyond its entrepreneurial phase. Both of these are
exacerbated by the reluctance of software companies to buy in general management talent and
use non-executive directors. It is evident that the software companies are more susceptible to
stagnation and at an earlier stage than companies in other industries. This may be due to a gradual
decrease of dynamic qualities, loss of competitive edge, inability to adapt new technologies,
losing technical competence due to a promotion into managerial position etc. Couger (1988) says
"Workers who have a greater variety of tasks stay in the job and task chacteristics have been

found to be potential determinants of employees stay in the industry". Reiji Ohtaki Hugh
Bucknall (2005) says "The executive who is willing to move has become far more attractive.
Organizations need the flexibility to move talented people quickly to take on positions where
they needed.
Training & Development: W. David Rees and Christine porter (2008) says "Training and
development has become even more important as a result of recent developments such as the
accelerating rate of change and increased competitive pressures brought about by factors such as
globalization and increasing development and application of information technology. Training
and Development has always been an issue that organizations have to take seriously and if
organized effectively should be viewed as an essential investment and not an avoidable cost. The
return on investment involved should be such that as a result of training employees reach an
acceptable stand and of performance more quickly than would otherwise have been the case."
Snell,(2007) says "The organization is responsible for supplying information about its mission,
policies and plans for providing support for employee self assessment training and development."
Retention & Attrition: Employee retention has been a major concern for software industry in
the present scenario. Many researchers have analyzed cause of employee attrition. The managers
should read employees mind power with interest and offer new challenges. B.B Mahapatro,
(2010) said "One of the toughest challenges for the HR managers in the software industry is to
deal with HR audit the prevalent high attrition levels. Though there is an adequate supply of
resource staff at entry level, there are huge gaps in the middle and senior level management in the
industry. Further, the salary growth plan for each employee is not well defined. This situation has
resulted in increased levels of poaching and attrition between organizations. The industry average
attrition rate is 30-35 per cent and could range up to 60 per cent."
Pay & Rewards: The HAY Group - Thomas P. Flannery (1996), says senior leadership which
often remains focused on cutting costs and increasing profits. They look at pay as anything more
than a margin in terms of reducing expense. And HR compensation professionals often see pay
purely in terms of attracting and retaining talent. Monetary satisfaction is the one way of
retaining the employees. Griffith (2000) says 'Pay and pay-related variables have a modest effect
on turn over. There is relationship between pay, a person's performance and turnover.' Actually
the pay and pay related issues are indirectly proportional to employee turnover. More the
employee paid, less the rate of attrition. Hence it is the responsibility of an organization to make
employee satisfaction towards pay and perks to reduce attrition rate. Christian M. Ellis (2002)
says 'Measurement is the key to the success of incentive plans because it communicates the
importance of established organization goals. What gets measured and rewarded gets attention'.
Employee will be interested in job and committed to work if rewards based on performance are
given. It will be appreciated by the employee if their performance is noticed and rewarded by top
management.

Stress & Strain: Firth (2007) says 'The experience of job related stress, the range factors that
lead to the same , lack of commitment in the industry play a major role for an employee to quit' .
Hudson says 'Employees who experience increased stress due to work/life conflict and decreased
perceptions of control over their work and non-work demands are less productive, less committed
to, and satisfied with, their organization and more likely to be absent or leave the organization'.
The managers of software organizations should be able to recognize the symptoms stress and
place successful techniques in managing stress. J.A. Fuller (2003) says 'A constant diet of even
low-level stressful events has the potential to cause workers to experience gradually increasing
levels of strain over time'. Such increasing levels of negative emotions will impact in work. HR
focus implies 'Over achievers can experience burnout when unrealistic work goals are
unattainable'.
Characteristics of Indian Software Professionals:
The review of the literature study revealed that the Indian software professionals exhibit the
following occupational characteristics in common:
i.
ii.

iii.
iv.

v.

Having invested heavily in gaining relevant knowledge over time, the knowledge acquired
by them becomes their self-concept.
They seek new knowledge on a continuous basis to experience a sense of growth in their
careers. Hence, they seek to work on new technologies, new platforms and with new
organisations to enrich their learning and career prospects. They place their professional
growth higher than organisational loyalty.
They tend to be highly analytical and expect a clear rationale in everything they do or the
organisation does.
They tend to be high achievers and expect periodical and tangible feedback and rewards.
They value performance-based rewards. Equity is an important consideration for them in
reward management.
They value autonomy, professionalism and innovativeness.

Human Resource Challenges in the IT Sector:

1) Motivation: The most widely reported motivator of software professionals is the ability to
identify with the task. This means that the task should have clear goals, be interesting to the
individual, be clearly defined and be linked into the wider set of activities. Some of the other
factors that can motivate the employees in software industry are, Employee
participation/involvement/working with Others Support from senior management support,
teambuilding and communication Opportunity for advancement, promotion prospect, career
planning Sense of belonging/supportive relationships. Scope for increased pay and benefits
Recognition for a high quality job done Opportunity to specialize in technically challenging work
Flexibility in work times, work location Empowerment/responsibility, Trust/respect

2) Delegation: The work structure of the software industry show the software teams are globally
distributed in software development projects. Virtual teams are an important work structure in
global software development. The distributed team structure enables access to a diverse set of
expertise which is often not available in one location. This distributed structure requires the best
leader delegation to sub-teams and trust between sub-teams. Leader delegation related to
teamwork process that improves team members' motivation and satisfaction with the leader.
Cultural distance and geographical distance impair trust development between members across
sub-teams is greater challenge to be tackled. Temporal distance causes conflicts related to
excessive overtime and meeting scheduling. Trust in sub-teams is critical to improving
motivation in a global software project There exists language differences among software team
members posing additional challenge for the HR managers for evolving delegation strategies to
improve team members' trust and their motivation.
3) Work Culture: The work culture of software industry is different from other traditional
industries in many ways. The software industry follows a 'global corporate culture' where lacks of
bureaucracy, openness, flexibility and employee empowerments are the key ideologies. Mobility
is particularly important whether the small size of single operations limit both carrier
opportunities and available talent pool. Treating all operations within the region as a single
executive resource pool creates economies of scale and opportunities of advancement
4) Training and Development: Employees form the basis of the software industry. Training &
developing employees to keep them abreast thus forms a major challenge. Most of the top
software companies have their own training facility wherein the training to fresh employees
given for three to six months. Thus, training programs form a huge part of the cost. As software
industry found to be competitive employing of skilled talent has come up as the most critical
challenge as the fight for best talent is greater than ever. Further Training & Developing Potential
Leaders & Engaging employees come up as the other two top concerns requiring dedicated
efforts
5) Retention and Attrition: It is always more profitable by retaining employees than acquiring
new employees. Managers have to build an effective employee retention system as shown in the
Management has to understand 'why employees leave' and identify the high risk of attrition by
accurately predicting attrition rate. Most of the employees have given better pay as the topmost
reason to leave points to increasing presence of MNCs with better pay scales in the industry.
Better utilization of current skills is one of the top attrition reasons. Employees also leave
organizations for personal reasons like marriage, relocation etc. Before many employees leave,
they become disengaged; this in turn makes the employee uncommitted, marginally productive,
absenteeism and in extreme cases working against the interest of the organization. If root causes
of the employee disengagement are correctly found out, the root causes can be eradicated by ontarget solution which in turn increases the performance of employee in right positive direction.

Junior management (JM) level faces highest level of attrition. Better pay in other software
companies is the foremost reason for the employee to leave the organizations. Many employees
wants to pursue further studies in India and abroad looking for improves skill sets. Improved
work life balance is another area which is slowly but steadily gaining momentum as employees
seek to consciously decrease levels of stress at the workplace.
6) Global Perspective-Technological Change: Current globalised market requires HR
professionals of all industries to have a global perspective to cater the needs of managing
resources in optimal way. Due to global talent crunch, they are bound to look beyond traditional
ways of hiring and retaining resources. This necessitates knowing what companies need, what
kind of skill set required and their experience level to justify the requirement.
7) Culture of Sharing and Learning as a Team: Business can only be successful if leaders and
their teams are collaborating between themselves. They are learning and sharing the knowledge
to grow as a single team instead of different business units. HR professionals play a key role
here, during short listing candidates they look for mind-set who can adjust within company
environment, bring positive attitude, and potentially become a leader.
8) Protect Resources from Exploitation: In this competitive market, searching for a talent
within limited budgets is a challenging and time consuming task. HR professionals expected to
utilize one resource on multiple projects. While focusing on ROI, HR professionals ensure that
resources are cross-trained on different skill sets and can do multitasking without being
exhausted. They also define the process and matrix to track the training results for improvement
in training materials. The success of above multitasking strategy depends on how better HR
professionals analyse the resource pool, requirement and perception of management related to
employee benefits. In India, many small and midsize companies take undue advantage of this
strategy. Companies take employees for granted and make them work for extra hours with no
basic benefits such as cabs, over times, bonuses etc. and when questioned they give lame reasons
about monetary loss, performance issues, etc.
9) Pay & Rewards: According to the Economic survey 2012 -13, during the last year the overall
pay increments in software sector remained relatively low. Majority of the software companies
have given increments to all their employees in the range of 10-12%, across all levels - Junior,
Middle, Senior & Top Management. Top Management increments across organizations have been
the lowest. The reason for this low rate of increment can be attributed to the Economic slowdown
in the West. The industry Median for annual Increment is 11% (50 th) and it is lower when
compared to the previous year. This is due to the uncertain market sentiment.
10) Stress & Strain: Most of the employees in the software industry work on definite time line,
which naturally induces stress. It is understood that when there is stress in the job, naturally
commitment towards the work will get reduced. This arouses the tendency of the employee to
quit and seek comfortable job. Low spirits and short temperedness are some indicators of stress.

Lesser stressful work for long period also sometimes induces distress and makes the employee to
think of moving out. Whenever software industry gets downsized, work pressure will be more on
remaining employees because of more work expected to be performed by them, with fewer subordinates. This will lead increase trend of attrition.
11) Work-Life Balance: The software development is intellectual work and mentally challenging
task. When they are engrossed in work, software professionals lose track of time and would
prefer to continue working rather than interrupting their mental process. They thrive and look
forward to intellectually challenging problems. Coupled with this occupational characteristic,
they also need to meet tight deadlines, often unrealistically agreed to by marketing managers to
win a contract. It is common for Indian software professionals to spend 12 to 14 hours a day
working on projects. Combined with inefficient transport and other infrastructure, they tend to
spend very little time with the family. Over time, they tend to merge their personal identity with
their role identity. The vacuum created by lack of non-work life activities apart from work leads
to emptiness within and annoyance with the organisation.

CONCLUSION:
The dynamic nature of human resources in software industry, increasing annual growth and lack
of any set rules and regulations, it is obvious that the managers of Human resources in Indian
software industry face new challenges. Organizations continue to grow and diversify their
business prospects, which lead to additional human chain. The increasing pressure of clients, cost
limits, productivity issues etc. demands high levels of talent in managing the manpower. In
addition, Indian companies those have workforce globally present and compensation benefits that
are varying across industries leading to High attrition levels. The focus should not be only on to
attract, motivate and retain key 'knowledge workers', but also on how to reinvent careers when
the loyalty of the employees is to their 'brain ware' rather than to the organization. With lifetime
employment in one company not on the agenda of most employees, jobs will become short term.
Today's high-tech employees desire a continuous up-gradation of skills, and want work to be
exciting and entertaining a trend that requires designing work systems that fulfill such
expectations. As employees gain greater expertise and control over their careers, they would
reinvest their gain back into their work. HR practitioners must also play a proactive role in IT
industry. Profitability and sustainability of company in long run cannot be ensured without
focusing on HR management practices. Having a market-driven approach to managing people can
transform key human resources of an organisation from a maintenance job to a strategic partner
in business.
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