HR PRACTICES-GROWING POWER OF INDIAN ECONOMY IN IT

SECTOR

ABSTRACT:

The study aimed to know brief about the Pre HR practices and also the recent innovations and
policies adopted in the HR which contributes to the Indian Economy and how India became
the growing power in the global economy. The Human Resources practices are changing
quickly. The Human Resource Development is mainly focused by increasing customer Demands,
technology, Intense competition and employee’s needs. HR plays a key role contributing towards
solving organizational issues and achieving relevant business results. The influence of Human
power in business is constantly increasing it’s because of the Industrial revolution era. The role
of machines and Automation is increasing. The technology helps to make the products simple
and cheaper. It reduces the involvement of human power to a great extent in a firms. In this study
we are focusing on the IT sectors in India regarding the HR practices and also the contribution of
IT sector in Indian Economy. The study identified the two sets of variables traditional HR
practices and the modern HR practices. This study focused in the IT sectors of India.
Because IT sectors are the growing sector in India and the contributions to the Economy in IT
sector is also rapidly increasing. So we are decided to select the IT sector for the further study.

Key words:

HR Practices, Indian Economy, Organizational culture, IT Organizations, Employee welfare.

Introduction:

History of Human Resources Management:

The involvement of Human Resources in production process has been changed at the era of
classical economists. In the factors of production the changes have occurred in the form of
change in the nomenclature and also in the functional roles. From labor to human resources,
from organization to management and from profit to stake holders are the new realities of e -
economy. The role of HR is significantly increasing due to the changing environment of the
functioning of the firms in the global economy. The global opportunities have brought the global
competition, where the cost and quality are the benchmarks for survival. Here the traditional
roles of factors of production are redefined to adapt to the changes taking place in the economy.
The role of HR is now most promising and decisive in this change led by technology, innovation,
better quality service and products. The causal factors for the development of new technology
and innovation are the human capital and capabilities embedded in HR.

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Definition:

According to Wendell French “Human Resource management is the systematic control of a

network of inters related processes affecting and involving all members of an organization”.

HRM represents the sum total of skills, knowledge and creative abilities of the people employed
by the organization to attain the objectives. In this sense, current HRM is evolved through
various phases and stages since industrial revolution.

Evolution:

The transformed role of HRM had the humble beginning during the Industrial revolution era.
Industrial revolution drastically changed the production and distribution process. From home
attached workshops production to factories employing laborer’s to work in the factory. In the
whole process tangible assets (Land, Building and Machinery) and capital dominated to form the
Industrial capitalism. By the beginning of the 19th century, capitalism and colonialism merged
together to form the consolidated corporations owning and managing industries.

At the end of World War II, the domination of management

as a distinguishing factor in the production and distribution process of wealth and economic
development was well established. This shift in the industrial production process and use of
technology to create market, automatically redefined the whole process of manufacturing and
marketing of goods and services by the industries. The spinoff of this process is the emergence
of Industrial Management with production and productivity focus resulting in scientific
management.

Scientific Management:

F.W. Taylor the father of scientific management who gives the practices and principles of
scientific management in Midvale Factory and Bethleham Steel Co. Regarding Shop
management and scientific management. Its supporters and antagonists the movement initiated
by F.W. Taylor called Taylorism. This idea made him popular in those days.

The scientific management is based on four principles. They are:

(i) Replacing the old rule of thumb method by scientific investigation on man’s work.
(ii) Scientific selection, training and development.
(iii) Co-operation.
(iv) Mental revolution on the part of workers and management.

Taylor’s experiment is based on time study and the completion of tasks by the workers which
was more mechanic by environment and oriented towards high productivity in work. These were
viewed by the workers. Taylor’s scientific management even invited opposition from
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management and general public. By focusing all these aspects Taylor’s contribution is
considered to be pioneering in the field of management.

Henry Lawrence Gantt was a close associate of Taylor who was influenced by the tenets of
scientific management. He is a mechanical engineer, the mechanistic and productivity issues of
scientific management appealed to him. Gantt improved upon the Taylor’s system of Wage
payment and incentives. He published his ideas in the article “A bonus system of rewarding lab
our” in the year 1902 and the book mainly consists of Works, Wages and Profits.

Frank Bunker Gilbreth the disciple of Taylor who conducts a research based on Motion Study
and Fatigue Study which is an elaboration of scientific management as proposed by F.W.Taylor.

Henry Fayol published the book “General Principles of Administration” in the year 1908. The
study is on various levels of organizations and about the Human relations in management.

Lyndal Fowners Urwick attempted to consolidate the earlier studies on Scientific Management,
and organization theory. His ideas and experiences gained through teaching and consultancy are
published in the form of “Scientific Principles and organization” in the year 1938. . The major
contribution is in the form of classical principles of organization, which are followed still now.

Elton Mayo contribution to consider Human relations and human element in management in the
book called “Human Problems of an industrial civilization” in the year 1933.

Elton Mayo’s colleague F.J. Roethlisberger extended the work of Elton Mayo. A Roethlisberger
study is based on the impact of informal organizations and its effect on the behavior of the
workers.

These peoples are the one who introduced several and new concepts in HR practices and policies
which are still followed in an organization.

Nature of HRM:

The statement is too simple to write but practically it fails to attain the essence of HRM.HR is
nothing but the study of application of management principles to the management of people in an
organization. The HRM is mainly consists of the following functions:

 It includes the people related functions like hiring, training and development,
compensation, performance review, industrial relations, health and safety, welfare.
 The main function of the HR is the combining of HR policies and practices with
organizational strategies.
 To attain the organization objectives the HR applies several management principles and
functions.
 The functions of HR is not only restricted to business establishments also its take care of
activities such as education, health care, recreation to the employees and other activities.

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  HR activities are not only done by the HR specialists. Line managers are also equally
responsible for carrying out the activities.

These are the nature and the scope of the HR functions in any organization. In the coming
papers we are mainly focusing on the main HR functions, their roles and responsibilities and
also about the contemporary HR practices and policies changing HR environment and its
impact on Indian Economy.

Functions of HRM:
Planning Staffing
Evaluating

Maintaining Developing
Relationships
FUNCTIONS OF HRM

Motivating
Maintaining

Managing
Change

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These are the some of the major functions of the HR. Planning is nothing but forecasting the
future HR needs. Staffing is recruiting the right people in the right job. Developing is improving
the skills and knowledge of the Employees. Motivating is inducing the employees to perform
well it may be monitory or non-monitory. And the other functions are managing change,
maintaining, and the maintaining relationships.

Strategic Human Resource Management:

It is the method of assigning business strategy with that of HR
practices to achieve the strategic goals of the organization. The objective of SHRM (Strategic
Human Resource Management) is to ensure that HR strategy is not a means but an end in itself
as far as business goals are concerned. The actual idea of SHRM is that companies must “fit”
their HR strategy within the overall structure of the Business objectives and hence ensure that
there is an arrangement between the HR practices and the strategic objectives of the
organization. The HR strategies and the Organizations Objectives should be inter-related to
achieve its Goals.
HR Policies and Procedures Manual:
The HR policies and procedures manual and employee handbook form the chief support of any
organization. These documents include all the details concerning the treatment to be given to the
employees in the organization and help the employees in recognizing the culture of the
organization. The HR policies and procedures manual is compiled first and thereafter the
employee handbook is prepared with the prevailing policies and procedures as laid down in the
earlier document.

Such documents shows the benefits to be provided to the employee, various policies practiced in
the organization and the standard of work maintained in the work place. In fact if there is any
issue from both the side of the employer or the employee, the HR policies and procedures
manual and employee handbook prove the necessary source of information in order to resolve
the issue.

The Management, Managers and supervisors can refer such data’s from particular while creating
various procedures and policies. These documents provide them the details regarding the
company policies and procedures to be adopted and followed. The employees can also refer
these documents to aware themselves with the organizational policies and procedures regarding
various aspects like leaves approval, Allowances benefits, Insurance plans, Anti-harassment
rules, anti-drugs rules, etc. The employee’s manual should include all the particular data,
applicable to the employment of the employees, in complete detail so as to ensure that employees
can obtain all the required information in time.

The HR policies and procedures manual should be prepared with the objectivity and
understandability so as to make the documents standard and consistent in nature, as well as free
from any complication. This is necessary to make ineffective any kind of differential approach

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practiced in the firms, and make sure smooth and conflict-free working conditions within the
organization.

Organizations can appoint an HR Consulting Firms for the preparation of both or either of the
HR policies and procedures manual and the employee handbook. An HR Consultant peoples can
helps the organization in:

 To develop a new HR policies and procedures manual employee handbook for the
organization.
 Revise certain aspects of the documents or completely revise the handbook.
 Check whether the documents are concerned with the changing legal rules and
regulations, and if necessary make the several changes.
 Audit the existing handbook to make true that the given details provided are relevant to
the current industry/market scenario.

The duty of the HR Consultant can include covering just one of the document or both as per the
need of the administration, the Consultant may be asked to either work upon the entire document
or cover just a few policies.

The HR Consultant should keep in mind the following important factors while comparing the HR
procedures and policies manual:

 Organizational culture
 Legal rules and regulations
 Market trends

While preparing an employee handbook, the Consultant should consider the following:

 HR policies and practices of the organization.

 Existing rules and regulations related to the employees in the organization.
 Legal laws and regulations.
 Industry standards.

An HR expert, may also guide and train the administration and managers in implementing the
policies and procedures properly. Further, the Consultant can also train the employees in
complying with the details as laid down in these two major documents of the organization.

Thus, by helping the organization with the preparation and updating of the HR policies and
procedures handbook of the firms, an HR Consulting Firm focus in creating an environment in
the company which is equally, balanced and free from conflicts.

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HRM Must Change for the future Robotics Revolution:

The Automation and Robotics change:

Many experienced people have forecasted that the robotics revolution and automation trends are
the future in all sectors and why it is time for organizations to prepare for the application of the
Robots and AI.

In a current situation nearly 60% of the jobs of the would be lost because of these automation
and robotics, It is necessary in the branch of HRM must prepare for the massive job losses due to
the Robotics. And there’s the necessity to re-skill and retrain the employees behavior to face
such situation. It is no longer if, when robots start taking away jobs and hence, it is necessary to
the HR Managers to change accordingly.

Managing Downsizing and Termination of Workers

To start with, losing one’s job is always painful and traumatic and with the added aspect of
automation, it is very much possible for the employees who have been downsized to feel
depressed and unwanted.

Indeed, the fact that automation is like a “slap in the face” for older workers who are unable or
even unwilling to learn new skills means that HR personals would have a tough time in handling
involuntary exits.

The term involuntary exit refers to the downsizing and hiring of workers wherein they are made
to leave or exit the company against their will. The least that the HR Managers can do in these
circumstances is to offer office facilities for the laid-off workers to find other jobs as well as
negotiate a generous severance package for them.

In addition, the HR Managers must also prepare themselves for some tough bargaining by the
workers who might even sue the organization for firing workers on flimsy pretexts. Indeed, this
is what is happening in India right now where IT (Information Technology) industry employees
are being fired in the hundreds and thousands, and some of whom have gone to court to protest
the layoffs.

Retraining the Workforce

Apart from that, firing workers is not the only problem that the HR Managers have to contend
with.

They also have to envisage a scenario wherein top performers and the best employees in the
organization are re-skilled and retrained instead of being let go.

In other words, if the employees are valuable to the organization and hence, firing them is the
last option, the key challenge in this case is to upgrade their skills and enhance their performance
through value addition.

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Thus, it becomes incumbent upon the HR Managers to devise retraining and re-skilling programs
so that employees move up the value chain.

In this context, it is worthwhile to note that retraining and re-skilling of employees can be done
through customized training programs where the HR Managers have to take a call in conjunction
with the Immediate Managers to identify the employees as well as design training programs
based on the need analysis and the identification of gaps between current skills and required
skills.

It is this aspect that calls for adroit and adept personal and professional skills for the HR
Managers to respond to automation and robotics revolutions.

The Field of HRM would Change in Fundamental Ways

Another aspect of the coming robotics revolution is the fact that the HR Profession would change
in fundamental ways wherein the HR Managers would have to prepare to manage robots instead
of human beings.

While this might sound like science fiction, if robots replace workers on the factory floor, how
do the HR Managers respond or react when they have to manage machines? This is a question
that does not have satisfactory answers at this point, and we can only hope that some
management expert or thought leader would come up with a solution to this.

Moreover, automation and robotics also lead to changes in the way the HR Function works, and
with the downsizing of rank and file employees, there is also a chance that the HR Staff would
be made redundant since routine processes can be automated, and robots replace the personnel.

Indeed, given that technology has already made many HR Staff redundant means that the next
wave of automation wherein robots takes the place of nonessential personnel means that there is
a need to rethink the very concept of an HR Professional.

The key point to note in all this is that just like computerization made the workers migrate to
higher value adding activities, robotics, and automation would also ensure that lower value-
adding activities are automated.

Thus, the central challenge for any professional or organization is how to move up the value
chain, and this is where the field of HRM can answer these questions by formulating new
theories and revisiting existing theories. After all, capitalism is built around value addition, and
we contend that sooner or later, the teething problems associated with automation and robotics
would be resolved.

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Preparing for the Fourth Industrial Revolution

The scope of HRM has been on an evolutionary path since the manufacturing era and the
services era. Thus, it is clear that there needs to be another evolutionary leap to deal with the
challenges of automation and robotics so that there is a win-win situation for all stakeholders and
not only employers. The fact that the search for profits means that employers would always find
the most cost-effective ways to get work done should serve as a signpost to the future for HR
Professionals.

To conclude, HR Managers must prepare for not only job losses and retraining but also a
fundamental change in the way their profession operates to compete in the coming Fourth
Industrial Revolution.

IT Sector:
The information sector in India holds the country into the new developing Economy or to
compete with the Global Economy. The increase level attained by the overall level of economy
in the late 1990s to a great extent can be by the IT sector, well supported by a liberalized policy
with reduction in telecommunication cost and import duties on hardware and software.
Perceptible is the transformation happened in the period of Liberalization. In today India is the
world leader in information technology and business outsourcing. Correspondingly, the
Industry’s contribution to India’s GDP has grown significantly over a period of time.
The IT field has been increasing at an annual rate of 28% per annum since 2001. Indian IT
companies have been world-wide established their superiority in terms of cost advantage,
availability of skilled manpower and the quality of services. They have been enhancing their
global service delivery capabilities through a combination of organic and inorganic growth
initiatives. The strong demand for electronic hardware and software in India has been fuelled by
a variety of drivers including the high growth rate of the economy, emergence of a vast domestic
market catering to the new generation of young consumers, a thriving middleclass populace with
increasing disposable incomes and a relatively low-cost work force having advanced technical
skills.
The Indian IT sector has also built a strong reputation for its high standards of software
development ability, service quality and information security in the foreign market- which has
been acknowledged globally and has helped enhance buyer confidence. The industry continues
its drive to set global benchmarks in quality and information security through a combination of
provider and industry-level initiatives and strengthening the overall frameworks, creating greater
awareness and facilitating wider adoption of standards and best practices. The number of people
employed in this sector has been consistently growing over the period of time. According the
NASSCOM, the total number of employees in 2001 were about 430,114 and in 2009 the number
has increased to 1,996,000. With such a large number of employees working, it is essential for
the right kind of HR practices to be in place. There many big software companies both at the
local and the global level doing extremely well. They are constantly in the need of the right kind
of people with the right kind of skill. Due to this there is a constant job hopping among the
employees thus leading to a high rate of attrition. With people moving out, the intellectual capital

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of the organization reduces. There is need to harness this knowledge which is available within
the organization.
Proper HR practices will aid the IT sector in this process. Each organization does have a set of
HR practices, but each of them needs to understand what is best for their employees and their
organization. With benchmarking the HR practices across various IT organizations, it will help
them to compare their practices with that of the others’. It will also further assist them in
adopting the best practices in the current work environment and thus retaining the best talent by
utilizing the results of the above study. Thus from the above it can be ascertained that since the
IT industry is growing geometrically, the number of people working in the sector are also on the
rise. The IT organizations are predominantly responsible for bringing in many innovative HR
practices. Each organization has umpteen numbers of practices which are sometimes not known
if they are best or not. An elaborative attempt has not been made in the IT sector to study the HR
practices. In India, the IT software and services industry has grown rapidly over the last decade.
In 2005, it comprised about 650,000 employees and the prediction for the next five years, was
that this number is expected to triple, to over 2 million persons (Karnik, 2005).
IT sector in Indian Economy:
The role of the IT sector in the economic development of India. India has established its brand
equity in the global IT market and is today looked upon as an IT super power. The country's
flourishing IT industry has helped to move it from a rural and agriculture-based economy to a
knowledge-based economy.  India is an industry consisting of two major components: IT
services and business process outsourcing (BPO). The sector has increased its contribution to
India's GDP from 1.2% in 1998 to 7.7% in 2017.According to NASSCOM, the sector aggregated
revenues of US$160 billion in 2017,with export revenue standing at US$99 billion and domestic
revenue at US$48 billion, growing by over 13%. The United States accounts for two-thirds of
India's IT services exports.

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Review of literature:

Edwin Flippo Defines- Human Resource Management as “planning, organizing, directing,

controlling of procurement, development, compensation, integration, maintenance and separation
of human resources to the end that individual, organizational and social objectives are achieved.”

Motivational theorist Henri Fayol put forth an argument that management in their everyday
routine carries our five major functions. They are Planning, Organizing, Commanding,
Coordinating, and controlling.

HR practices can be defined as any practice that involves enhancing competencies, commitment
and culture. The practice can be seen or understood to take a form of a process, an activity, a
norm, a rule, an accepted or expected habit or even a policy. Superior HR practices do indeed
make a difference with respect to the employee performance and thus improve the overall
business effectiveness. Good HR practices are those that contribute to one or more of the three
C’s: Competencies, Commitment and Culture. They need to be identified and implemented cost-
effectively, reviewing and revising them from time to time to enhance their effectiveness and
appropriateness (Rao, 1999).

HR practices include: Manpower planning, recruitment and selection, orientation, training &
development, performance appraisal, career planning, fringe benefits, reward and recognition,
safety, health and environment policy, welfare benefits both within the statutory borders and
beyond, suggestions scheme, promotion and transfers and exit policy. The effect of conditions
like low wages, reduced leave, long work duration and cold work environment made the job
unpleasant as observed by Sharan (1980). It is essential to improve all the above given conditions
to enhance the satisfaction level. Bhushan (1968) also supported them by stating that high wages
are responsible for higher job satisfaction. .

Although HRM practices can raise workers’ job satisfaction, if internal equity widens, then non-
union members may experience reduced job satisfaction. IT organizations deal with issues
mainly pertaining to highly educated employees (Baruch & Rosenstein, 1992). The IT industry
faces numerous challenges of managing their human resources. While referring to the work force
in the information technology organizations, Ferratt et al (2005) observed that human capital in
the information technology organizations is to be as a strategic resource and its effective
management represents an organizational capability. Lester etal (2002) has identified thirty two
areas in the field of HRM relevant to the IT sector. Few of them are:

• Opportunities for Promotion and advancement,

• Trust and respect,

• Open and honest communication,

• Fair treatment,

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• Challenges and interesting work,

• Competitive salary and so on.

Objectives of the Study:

 To study HR practices followed in the IT sector.

 To identify the best HR practices that results in organization’s growth.
 To analyze the impact of HR practices of the IT sector on India’s economy.

 To study HR practices in the IT sector:

The main objective of the study is to identify the HR practices and policies adopted in
the IT sector. The good HR practices help to increase the Employees efficiency. The HR practice
includes the compensation benefits, Allowances given to the Employees, Maternity and paternity
leave and the holidays given to the Employees. The current trends in Indian IT sector include the
acceptance of Emerging technologies, increased customer-centricity, the focus on new markets,
and also adopting the new business models. The behavior and the necessity or needs of the
Employees is increasing the management also be capable to satisfy the Employee needs. For
customer satisfaction the management adopting several innovative HR practices for the welfare
of the Employees.

 To identify the best HR practices that results in organization growth:

Another objective of the study is to identify the best HR practices that are suitable for
the organizations growth. Mainly there are both Traditional and Modern HR practices which
should be followed by the firms. The traditional HR policies consist of HR planning, recruitment
and selection, training, employee relation, training and development. The modern HR practices
consist of welfare of the employees.

 To analyze the impact of HR practices of IT sector on Indian Economy:

Adopting the good HR practices will increase the employees’ engagement towards the
work. It will increase the productivity which helps to increase the economy. The contribution of
Indian IT sector is rapidly growing when compared to other sectors. It helps the IT sector to
compete in the international market. And India became the super power in the global IT market.
The growth rate is about 22.4% in the last fiscal year.

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Research Methodology:

In this paper we are using the Secondary Data sources other than focusing on the Primary
sources of Data. Because the validated data’s are already existing in the secondary sources.
Secondary data’s are the data’s which already exist. For collecting the data we use the secondary
sources like, Data through journals, articles, several periodicals, financial data, census, and the
surveys conducted by the government and private sectors. And also the use of some online
data’s. In this study we are using only the validating data’s for our research.

The research paper is mainly focused on the Applied Research methods. The goal of our research
is to find out the best HR practices suitable to any organizations. In applied research the causal
research methodology also used. Because in our study there are two variables traditional and
modern HR practices our study is based on the effect of one variable on the other .The
longitudinal study can also be applied in our research that is there’s a geographical location.
Because our study is only focused on the HR practices in India and also we are selecting the IT
sectors in India for our study.

Limitations to the Study:

This study aims to analyses the HR practices in IT sector and its contribution to the Indian
Economy. We are not focusing on the HR practices of the other sectors. And we are conducting
studies for IT sectors in India. We also mainly focusing on Bangalore based IT companies.

Findings:

The study is focused on the HR practices and the growing power of Indian Economy. In this
study there are two variables used for the further studies that are Traditional and modern HR
practices and approaches. By combining both the variables we should try to find out the strategy
should be adopted by any organizations. The study is based on the IT sectors and the growing
power of the Indian economy.

Traditional Approach:

The traditional approaches of HRM mainly includes the functional activities like  human
resource planning, job analysis, recruitment and selection, maintaining employee relations,
performance appraisals, compensation management, and training and development. The
traditional approach toward human resource management also focuses on establishing policies,
procedures, contracts and guidelines, and attempts to drive employee performance and achieve
organizational goals by making employees adhere to such carefully crafted documents.
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Modern HR Practices:

The companies adopted a several innovative HR practices for the welfare of the Employees
which includes mandatory leaves, weekends off, variable pay, company provided transport, fun
and entertainment activities, handsome bonuses as well as subsidized food and other aspects.

Innovative HR practices adopted in India:

There are many innovative HR practices adopted in the Indian organizations, Some of them are
mentioned below;

 Interview through video.

  Managerial Games

 Mandatory Rests.

 Vacation.

 Employee health.

 Giving time off for volunteering.

 Customizing the position for the talent.

 Job titles.

 Two-way mentoring.

Major Findings:

1. The Traditional HR practices are the formal structure of an organization.

2. In Traditional HR practices there’s no focus on the Employee welfare.
3. The modern HR practices are mainly based on the Employee welfare.
4. The Employees are motivated by the modern HR practices there by the results are
increasing.
5. The Employees engagement increases the profits of the company.
6. The Employees Engagement increases the Income of the country.

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Suggestions and Recommendation:

Based on the depth study and the findings of the research we are suggesting the Modern methods
of HR practices for the organizations. This increases more benefits to the firms when comparing
to the Traditional approach. In modern approach the employees are more Engagement in their
jobs. So we are suggesting modern HR practices.

Conclusion:

This chapter highlighted the state of people-management policies and practices in India and their
cause in the country’s historical background, environmental framework, institutions, contexts
and styles. As based on our studies and the information’s available we are concluding that the
modern HR practices are better when comparing to the traditional approach and contributing
more to the economic development of the country. Each and every organizations must be capable
of withstand with the changes in the environment to be sustainable. The other important factor
affecting the HRM policies is the deceleration in the employment growth in the organized sector
and the massive under-employment in a labor surplus economy. This increases the power of
employers, and enables them to shape their HR strategies towards cost reduction. So according to
our research study we suggesting the firms to adopt the Modern HR practices.

References:

1. “THE HRD MISSIONARY” by T V Rao

2. “Human Resource Management Principles and Practice” by P G Aquinas

3. “Human Resource Management” by R Wayne Moindy

4. “Human Resource Development” by Jon M Werner and Randy L DeSimone

5. “Human Resource Development” by Mankind

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6. “Human Resource Management in India” by Debi Saini and Pawan Bhudhwar

7. “Impact of Organizational Values, Compassion, and Well-being on Industrial Disputes”

by Wendrilla Biswas and Debarun Chakraborty

8. “Analysis of HR practices in IT sector” by Subha Muralidhar and S K Gopal

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