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  • 1. RESEARCH REPORT ON “UNDERSTANDING RECESSION: CHANGE IN HRM TRENDS IN IT INDUSTRY” SUBMITTED TO KANPUR INSTITUTE OF MANAGEMENT STUDIES (AFFILIATED TO GAUTAM BUDDHA TECHNICAL UNIVERSITY, LUCKNOW) IN PARTIAL FULLFILMENT OF THE REQUIREMENTS FOR THE AWARD OF THE DEGREE OF MASTER OF BUSINESS ADMINISTRATION UNDER THE GUIDANCE OF ( ) SUBMITTED BY: ( ) ROLL NUMBER - MBA BATCH – ( ) ON (date ) 1
  • 2. CERTIFICATE (FROM PROJECT GUIDE) This is to certify that Roll number a student of MBA in Kanpur Institute of Management Studies, has carried out the Summer Training/mentoring Project work presented in this report titled “UNDERSTANDING RECESSION: CHANGE IN HRM TRENDS IN IT INDUSTRY” for the award of Master of Business Administration from Gautam Buddha Technical University/ Kanpur Institute of Management Studies for the academic batch 2010- 12, under my guidance. Name of the Project Guide (Ms. Ankita Bhandrai) Kanpur Institute of Management Studies, Unnao HOD (Head of Department) (Dr. Ankur Johari) Kanpur Institute of Management Studies, Unnao 2
  • 3. DECLARATION (FROM STUDENT) I, ( ), hereby declare that the project work entitled “UNDERSTANDING RECESSION: CHANGE IN HRM TRENDS IN IT INDUSTRY” submitted towards MBA Certificate is my original work and the dissertation has not formed the basis for award of any degree, associate ship, fellowship or any similar title to the best of my knowledge. Place: ( ) Date: Roll No.: MBA BATCH – ( ) Kanpur Institute of Management Studies, Unnao 3
  • 4. ACKNOWLEDGEMENT In preparing this report, I have been fortunate enough to have the support, assistance and encouragement of quite a few people. I would like to take this opportunity to express my deep sense of gratitude and profound indebtedness to Dr. P.N. Bajpai Hon. Director, KIMS, Kanpur who gave me an opportunity to do such a challenging job. I would also like to thank and acknowledge Dr. Ankur Johari HOD (MBA) at KIMS, Kanpur and Ms. Ankita Bhandari (My Project Guide) for his unflinching faith and wholehearted support extended to me. I would also like to thank all my friends and classmates for their help and support during completion of this project. I would like to express my special thanks to my friend Mr. Amritesh Sharma for his tremendous support and encouragement which made completion of this report possible. Whatever the shortcomings of this report, they are mine; whatever its strengths; it owes much to the generous contributions of all the above-mentioned people. 4
  • 5. LIST OF CONTENT S.No. Chapter Page No. 1. Executive Summary of the project 9 2. Reason for selection of this Research report 11 3. Objective of the Project 12 4. Suggestion for readers 13 5. Scope of the Project 14 6. Introduction 15 7. Information about I.T industry in India 16 8. Role of IT in Indian Economy 19 9. Impact of recession on Indian Economy 21 10. Impact of recession on world economy 24 11. Causes of recession 28 12. Advantage of I.T 32 13. Business process outsourcing IT 33 14. Top 15 IT Companies in India 34 15. Effect of recession on HRM 37 16. IT and Challenging role of HRM 45 5
  • 6. 17. Research methodology 59 18. Data analysis 61 19. Findings 67 20. Limitations 68 21. Conclusion 71 22. Questionnaire 72 23. Bibliography 74 6
  • 7. TABLE OF FIGURES S.No. Table Page No. 1. MZM Chart 25 2. Housing Table 26 3. BPO 20 4. Salary Component 51 5. Reimbursement Component 52 6. Other Benefit Component 52 7. Retail Component 53 8. Satisfaction level of employee 73 9. Accommodation table 53 10. Data Analysis Chart 62 7
  • 8. TABLE OF ABBREVIATIONS AND ACRONYMS S.No. Abbreviation or Acronyms Page No. 1. Money-zero-Maturity(MZM) 25 2. BPO(Business Process Outsourcing) 20 3. Information technology(IT) 09 4. KPO(knowledge Process Outsourcing) 20 5. UK(United kingdom) 19 6. US(United States) 63 7. CEO(Chief Executive Officer ) 21 8. TCS(Tata Consultancy Services) 37 9. IBM(Intercessional Business Machine) 38 10. IVR(Interactive Voice response) 48 11. HRM(Human Resource Management) 47 12. NCR(National Capital reason) 53 8
  • 9. EXECUTIVE SUMMARY OBJECTIVES:-  To study HRM Trends in IT sector.  To study the effect of recession in IT.  To study the effect of recession on employee wages and salary.  To study the salary and wages structure in IT.  To study the employees vision about the recession METHODOLOGY:- The methodology which I used for finding the data is personal and structured interview. First I structured questionnaire which is a formal list of questions framed so as to get the facts. I felt the employee should be taken into confidence and clearly told why the survey is being undertaken so that he/she would realize its relevance and give the desired information accurately SAMPLE:- It is very important part of research methodology. In this a point of population or a point of population or a subject form a set of units, which is provided by some processes or other, usually by deliberate selection with the object of investigating the properties of the parent population or set. The sample designs which I used are random sampling. A random sample gives every unit of the population a known and non-zero probability of being selected. 9
  • 10. FINDINGS  Gone are the days when IT sector used to take contract and provide service  Due to the recession, IT sector are compel to adopt risk sharing & gain sharing contract model  The outcome of such Model are more risky  Now companies are not spending money on variable-pay of their employees  Employees are forced by companies to spend more time on job as comparison to previous  Some companies are firing out their employees, now companies are emphasizing on offshore location rather than to onsite 10
  • 11. REASON BEHIND SELECTION OF THIS AREA OF RESEARCH The project UNDERSTANDING RECESSION: CHANGE IN HRM TRENDS IN IT INDUSTRY is a study which shows the changes in Human Resource trends in IT industries which has been very influencing after the recession period in last few years and now in these types of IT industries and had changed the traditional approaches to HR and other administrative functionalities. As IT industries are the most important factors of country’s economy and contribute a great value to it. The Human resource in these types of industries is of specialized type and needs a different kind of approach for management. So, it makes a solid reason to understand the causes and the effects of recession which drove the HR trends to a new level and had made a new benchmark for these processes and this is the reason which forced me to study this field and find some solutions to overcome these problems. 11
  • 12. OBJECTIVE The objective of this project is very clear as the name UNDERSTANDING RECESSION: CHANGE IN HRM TRENDS IN IT INDUSTRY suggest that this project is a study for understanding the recession during last years which has made several people to lose their jobs and several companies to closer and so many countries to down to their economy. For the above reasons this topic needs a deep study and understanding so as we can save ourselves form these types of problems in future and hence this study and report. 12
  • 13. SUGGESTION FOR READERS In the study of this research all the possible data and information has been collected form all the possible sources but none is perfect in this world and the second reason this study and report is done by a single person at her maximum extent collecting all possible data in such a sort time so it will not be considered as a shortcoming if some discrepancy is found and some typing or other formatting errors are there. So, it is suggested that, please do understand and make further study to relevant points if so happen as I had tried my level best in making this project and I am also ready to make any correction if suggested and required. 13
  • 14. SCOPE OF THE PROJECT Scope of this project is very vide as this is the project which gives an understanding about recession like situation which causes disasters effects on individuals, bodies and government as well. So it is required some kind of study which can find the reasons behind these problems and we can save ourselves if future by not making the same mistakes. That’s why we can say the scope of this project lies form individual person to an organization to a government and all others whoever wants to understand this problem. 14
  • 15. INTRODUCTION INTRODUCTION TO IT INDUSTRY India's economy grew at its slowest pace in 2007 in the third quarter as the Asian giant began to feel the full brunt of the deepening global downturn, official data showed Friday. The worse-than-expected 5.3 percent expansion in the three months to December, down from 8.9 percent a year earlier, spurred expectations the central bank will cut interest rates further to boost the flagging economy. The numbers were grim reading for the Congress-led government, which faces elections by May, and has been eager to spur the economy ahead of the polls. India's government has long said it needs double-digit growth if it is to drag hundreds of millions of its people out of grinding poverty. Growth in Asia's third-largest economy was sharply lower than the 7.6 percent expansion recorded in the second quarter and came in below analysts' forecasts of 6.1 percent. Agricultural production, which accounts for nearly 20 percent of gross domestic product and provides a living for two-thirds of Indians, contracted by 2.2 percent compared with 6.9 percent growth in the year-ago period. Manufacturing activity shrank by 0.2 percent, down from growth of 8.6 percent a year earlier amid flagging domestic and export demand. The government has predicted the economy, which grew by nine percent last year, will expand 7.1 percent this financial year to March, but economists said the latest data meant it would miss the target. Most economists expected full-year growth of 6.5 percent to 6.7 percent. 15
  • 16. The government said the winter wheat crop would be better than normal and various stimulus measures it has announced would help boost growth. But to meet the government's growth target, expansion would "have to accelerate substantially to 7.7 percent in the fourth quarter," noted Chandrajit Banerjee, director general of the Confederation of Indian Industry, calling for more rate cuts to stimulate the economy. With inflation at a 14-month low of 3.56 percent, the bank has ample room to cut rates, economists said. Earlier this week, the government cut excise duties to eight percent from 10 percent and lowered the service tax to 10 percent from 12 percent. It also prolonged a cut in value-added tax announced last December. "The full impact of the recession in other parts of the world, especially Europe and Asia, is yet to unfold" and the economy "may feel a further impact in coming months," acting finance minister Pranab Mukherjee said Tuesday. While the government hopes for seven percent growth in the next fiscal year, economists forecast 5.5 percent. The central bank has calculated the effect of the stimulus from higher government spending, tax cuts and interest rate reductions already amounts to around 80 billion dollars. But with India's fiscal deficit ballooning, the government cannot introduce any "big bang" stimulus packages like neighboring China, economists say, and must rely heavily on interest rate cuts to jumpstart the economy. The Indian slowdown will impact the smaller IT-ITES firms more," Hari Rajagopalachari, executive director at PricewaterhouseCoopers India, told ZDNet Asia in an e-mail interview. In fact, he added, it may lead to increased consolidation in the small and midsize industry segment. According to Milan Sheth, Ernst & Young India's partner of business advisory services and leader of technology and telecom verticals, the economic slowdown will most affect midsize IT-ITES companies. "Most small firms have very strong niches. It's the midsize firms that will be badly hit in the event of a portfolio rationalization by the American clients," Sheth told ZDNetAsia in a 16
  • 17. phone interview. The economic slowdown in the United States has already had some impact on the Indian market. The rupee has been strengthening against the dollar for over a year now, causing worries for Indian exporters. The Indian stock markets also crashed due to the downturn, with the BSE Sensex dipping by nearly 13 per cent in just two trading sessions in January this year. It bounced back after the U.S. Federal Reserve cut interest rates. The BSE Sensex, or Bombay Stock Exchange Sensitive Index, comprises 30 of BSE's largest and most actively traded stocks. Manufacturers in some of the major sectors like textiles, metal and metal products, machinery and equipment, leather and chemicals have reportedly planned cuts in their productions ranging from 10-50 per cent between November 2007 and March 2009 due to fall in the demand in the wake of the global economic crisis. As a result, the growth of the manufacturing sector could further slow down in the coming months. The survey also revealed that downsizing of employment in the range of 10-30 per cent is expected in leather and leather products sector, followed by metal and metal products, textiles and jewellery in next few months. Falling demand in the EU, the US, Japan and other developed countries and a steep increase in raw material prices in last few months along with liquidity crunch have, in some way, hindered the growth of the leather sector. Likewise, the primary reason for the slowdown in the metal sector is falling demand for heavy vehicles, which has reduced the demand for metals. 17
  • 18. INFORMATION ABOUT IT INDUSTRY IN INDIA Just as the Gulf has its natural resources in crude oil and South Africa in diamonds, India's natural resource lie in its abundant technically skilled manpower. India is the world's second largest exporter of software (after the U.S.), and is the source of management and technical talent for over 40 per cent of new start-ups in Silicon Valley. Thanks to its large English- speaking scientific and higher education institutions, specialist computer institutes, and low costs of software talent, India has more software companies with ISO 9000 certification than any other country in the world. There is more than enough evidence of the superlative role that Indians play in the progress of the Net. The impact of India's success abroad is also being felt. The stars of the Indian Internet industry are the Web solutions and Web-ware companies, many of whom have made the transition from offshore turnkey and services companies to full-fledged e-commerce service providers and Web strategy consultants. IT heavyweights like Microsoft, Intel, Cisco and Compaq always feature India prominently in their itineraries. 18
  • 19. ROLE OF IT INDUSTRY IN INDIAN ECONOMY The contribution of India's IT industry to economic progress has been quite significant. The rapidly expanding socio-economic infrastructure has proved to be of great use in supporting the growth of Indian information technology industry. The flourishing Indian economy has helped the IT sector to maintain its competitiveness in the global market. The IT and IT enabled services industry in India has recorded a growth rate of 22.4% in the last fiscal year. The total revenue from this sector was valued at 2.46 trillion Indian rupees in the fiscal year 2007. Out of this figure, the domestic IT market in India accounted for 900 billion rupees. So, the IT sector in India has played a major role in drawing foreign funds into the domestic market. The growth and prosperity of India's IT industry depends on some crucial factors. These factors are as follows: • India is home to a large number of IT professionals, who have the necessary skill an expertise to meet the demands and expectations of the global IT industry. • The cost of skilled Indian workforce is reasonably low compared to the developed nations. This makes the Indian IT services highly cost efficient and this is also the reason as to why the IT enabled services like business process outsourcing and knowledge process outsourcing have expanded significantly in the Indian job market. • India has a huge pool of English-speaking IT professionals. This is why the English- speaking countries like the US and the UK depend on the Indian IT industry for outsourcing their business processes. 19
  • 20. The emergence of Indian information technology sector has brought about sea changes in the Indian job market. The IT sector of India offers a host of opportunities of employment. With IT biggies like Infosys, Cognizant, Wipro, Tata Consultancy Services, Accenture and several other IT firms operating in some of the major Indian cities, there is no dearth of job opportunities for the Indian software professionals. The IT enabled sector of India absorbs a large number of graduates from general stream in the BPO and KPO firms. All these have solved the unemployment problem of India to a great extent. The average purchasing power of the common people of India has improved substantially. The consumption spending has recorded an all-time high. The aggregate demand has increased as a result. All these have improved the gross production of goods and services in the Indian economy. So in conclusion it can be said that the growth of India's IT industry has been instrumental in facilitating the economic progress of India. 20
  • 21. IMPACT OF RECESSION ON INDIA Indian companies have major outsourcing deals from the US. India's exports to the US have also grown substantially over the years. The India economy is likely to lose between 1 to 2 percentage points in GDP growth in the next fiscal year. Indian companies with big tickets deals in the US would see their profit margins shrinking. The worries for exporters will grow as rupee strengthens further against the dollar. But experts note that the long-term prospects for India are stable. A weak dollar could bring more foreign money to Indian markets. Oil may get cheaper brining down inflation. A recession could bring down oil prices to $70. The whole of Asia would be hit by a recession as it depends on the US economy. Even though domestic demand and diversification of trade in the Asian region will partly counter any drop in the US demand, one simply can't escape a downturn in the world's largest economy. The US economy accounts for 30 per cent of the world's GDP. Says Sudip Bandyopadhyay, director and CEO, Reliance Money: "In the globalize world, complete decoupling is impossible. But India may remain relatively less affected by adverse global events." In fact, many small and medium companies have already started developing trade ties with China and European countries to ward off big losses. Manish Sonthalia, head, equity, Motilal Oswal Securities, says if the US economy contracts much more than anticipated, the whole world's GDP growth-which is estimated at 3.7 per cent by the IMF-will contract, and India would be no exception. The only silver lining is that the recession will happen slowly, probably in six months or so. As of now, IT and IT-enabled services, textiles, jewellery, handicrafts and leather segments will suffer losses because of their trade link. Certain sections of commodities could face sharp impact due to the volatile nature of these sectors. C.J. George, managing director, Geojit Financial Services, says profits of lots of re-export firms may be affected. Countries like China import commodities from India do some value-addition and then export them to the US. 21
  • 22. The IT sector will be the worst hit as 75 per cent of its revenues come from the US. Low demand for services may force most Indian Fortune 500 companies to slash their IT budgets. Zinnov Consulting, a research and offshore advisory, says that besides companies from ITeS and BPO, automotive components will be affected. During a full recession, US companies in health care, financial services and all consumer demand driven firms are likely to cut down on their spending. Among other sectors, manufacturing and financial institutions are moderately vulnerable. If the service sector takes a serious hit, India may have to revise its GDP to about 8 to 8.5 per cent or even less. Lokendra Tomar, senior vice-president, Integreon, a BPO firm, says the US recession is likely to have a dual impact on the outsourcing industry. Appreciating rupee along with poor performance of US companies (law firms, investment banks and media houses) will affect the bottom line of the oursourcing industry. Small BPOs, which are operating at a net margin of 7-8 per cent, will find it difficult to survive. According to Dharmakirti Joshi, director and principal economist of CRISIL, along and severe recession will seriously affect the portfolio and fixed investment flows. Corporates will also suffer from volatility in foreign exchange rates. The export sector will have to devise new strategies to enhance productivity. 22
  • 23. COUNTER STRATEGY: Karthik Ananth, senior consultant, business development, Zinnov, says there is already a shift in business strategies of corporate India. Large IT and BPO firms have started looking at other markets like Europe, and even the domestic market, to spread their risks and reduce the impact of the rising rupee. This can be best seen with Infosys setting up an India centric team. K. Ramachandran, head, advisory desk, BNP Paribas Private Banking, says Indian companies will have to adopt a multi-pronged strategy, which includes diversification of the export markets, improving internal efficiencies to maintain cost competitiveness in a tight export market situation and moving the product portfolio up in the value chain to impart resilience. The IT sector too is keen to defend its position. R.S. Rethinasamy, vice-president, Finance Aditi Technologies, says that in case of a full-blown US recession, the onsite staffing business will see a decline in sales and profit. "At the same time, it can increase the offshore work. Recessions at this juncture may not last for more than two to three years. Smart companies will continue to make investments so that they can be ahead of the competition when the US economy comes out of recession", he says. This means corporate India will have to spend a lot more to develop market and supply chain links in alternate markets like Asia and Europe. Experts say the export dependent sectors of the economy need to re-focus on local demand and income from non-dollar economies. The European, West Asian and the African countries may offer viable short-term alternatives to our export-dependent sectors. BPOs, for example, will have to re-negotiate with their clients and fix appropriate price for their services. Can India be a market option? Zinnov says IT firms can definitely find a market in India, but the deal sizes are likely to be small. India has a huge, small and medium enterprise base and it is the right time to tap this segment. As for automotive components, consumer electronics and mobile devices, they have already found a market in India and have also started looking at tie-ups in China and other BRIC countries. 23
  • 24. IMPACT OF RECESSION ON THE WORLD ECONOMY There is no dearth of information being offered in the mainstream press on the state of the economy. If anything, you'd have to go out of your way to avoid being hit by the current barrage of "everything is just fine" economic reporting and constant repetition of "the economy will continue expanding." But is this necessarily true? If not, how would we discover the true underlying state of the economy? Yet despite this obvious fact institutions dole out millions of dollar each year to pay their legions of economic forecasters to tell them what they see in the rearview mirror. At the same time, business leaders and everyday citizens base their buying and selling decisions on what these academicians see in their extremely limited crystal balls. The problem with looking at the economic indicators is that for the most part the data only show what has happened in the recent past and cannot be used to predict what is going to happen in the foreseeable future with consistent accuracy. Another tendency of the mainstream economist's approach is to be as optimistic as possible, especially when the economic data is mostly positive (as it has been of late). This is probably the biggest pitfall of mainstream economic analysis -- falling victim to the "sunshine and lollipops" syndrome. (This is all the more true when the economist is employed by a major financial establishment as the institutions are always trying to present the rosy picture for their clients and for the general public). So how can one analyze the economic indicators and at the same time avoid the basic pitfalls described above? First and foremost, by keeping in mind at all times the single most important truth of economics: the Fed controls the U.S. economy through its regulation of the money supply. And it is through the rate of change increase or decrease in money that the economy either rises or falls. All other considerations are germane in comparison to this one. 24
  • 25. The 12-mo. rate of change MZM chart (not shown -- above chart is plain MZM courtesy of BullandBearWise.com) shows a somewhat troubling and sharp pullback from the highs of 2001-2003. The Fed of course had been heavily pumping the money supply since 9/11 and that money kept the economy afloat during the 2000-2002 bear market at a time when it was sorely needed. But now that the financial markets have recovered from the 2002 lows and commodities prices have soared beyond the consensus, the Fed has responded by dramatically slowing down money growth. One respected analyst likens this to the doctor taking a patient off the respirator. But there is always the question of how the patient will respond if it is done too soon. We'll soon find out, probably by the fourth quarter, what the outcome will be to the economy. My guess is that we'll see slowdowns in several key areas, including the red-hot homebuilding sector. 25
  • 26. Speaking of homebuilding, below is the latest chart of U.S. housing starts, also courtesy of our friends at BullandBearWise.com. You'll note the very pronounced upward spike in new home starts recently, which was in reaction to the improving economic news from earlier this year. This is plainly a blow-off type move as the housing market is reacting too enthusiastically to what is essentially an after-the-fact situation. As we wrote in a commentary last week, many of the new condos and town houses now being built on spec will undoubtedly have a difficult time being sold if by later in the year the economy does show signs of slowing down. As Bert Dohmen has pointed out, buyers can rescind before construction is complete in most states which means many of these "pre-sales" can be cancelled. The extreme consumer and producer optimism reflected in the housing chart can also be seen in the charts of many key economic indicators, including factory orders. This exuberance is a delayed reaction to the recovery that began in late 2002 as it usually takes 2-3 years for public psychology to respond to shifts in the economy. Will this turn out to be a case of everyone getting too bullish and making major investments at the wrong time? An economic slowdown need not be severe in order to have a negative impact. From a momentum or rate of change standpoint, a slowdown will seem to be exaggerated by comparison of the extreme bullish recovery of the past two years (e.g., a car traveling at 90 mph suddenly forced to slow down to 55 mph -- a normal speed -- will seem very slow in comparison). 26
  • 27. Next we turn to the ultimate leading indicator for the economy, the stock market. As Charles Dow used to say, it's the "bloodless verdict of the market" that determines the waxing and waning of America's great financial system and economy. Yet how many mainstream economists take this into account when they perform their intricate analysis of the economy? The stock market is also largely influenced by the Fed through its money supply and securities lending operations and the currents that will eventually ripple through the economy first take their toll on the stock market. As Dow Theory states, the Dow Industrial and Transportation averages are the leading barometers for the business world. Already the effects of the rate of change slowdown in money supply are being felt in the equities market. You can see the overhead resistance since the 2000 broad market top is starting to weigh against the market once again as the Dow 30 index has failed so far to overcome its yearly high from four years ago. While the Wall Street press keeps hyping the fact that the market recently made a 3 1/2-year high, they conspicuously stop short of mentioning that the 4-year high is far more important from a historical standpoint. The stock market needs to make 4-year this optimism by buying second homes, buying extravagant luxury items, and in other ways when they may well come to regret these investment decisions in the months ahead. 27
  • 28. CAUSES OF REACESSION Dating back to 1997-98, the economies of various countries of Asia such as Thailand, Malaysia and Indonesia suffered major economic crisis due to huge investment in real estate. The money for investment came from not very renowned foreign sources and thus it led to crisis due to poor banking practices. Meanwhile Crony Capitalism (where a borrower is backed by the government. For example, a president’s son could open up a bank easily and attract borrowers to involve their money as it would be in safe hands due to official connections behind) came into being. With these crisis in existence, the Asian countries soon realized that there requires a need for Foreign Exchange Reserve also called Forex Reserve. Forex reserve deals with conversion of currencies between the countries and thus allows easy money flow. As a result, Asian countries started to buy a lot of reserves and the U.S. securities to build a good foreign exchange reserve from international banks. Thus, the countries made a tendency of saving as much money as possible and expenditure became much lesser. The global demand crumpled and led to an imbalance in the global economics. According to many illustrious economists, today high Forex has become one of the very important reasons for the current recession. If today recession has taken place, the Asians share the blame too. Let me explain it to you. After 1997-98 crises, the Asian economies started to buy the U.S. securities as mentioned above. This led to dispense of dollars into the U.S. The American economy got so flooded with dollars that it needed an outlet. The outlet came in form of a borrowing and spending splurge. The U.S. financial system works that whatever loans or schemes they offer, hides the flaws and risks with such erudition that a borrower is lured to buy them. The two main reasons that attracted the borrowers were low interests and huge funds that helped easy loans for people. With such attractive promises, people took more and more loans to build houses and invest money. Since there was surplus amount of money in the banks, all the terms were relaxed and the demarcation between the prime and subprime loans 28
  • 29. came at par. Banks merely looked for borrowers irrespective of their background, returning capacity and poor credit history. Borrowers were lured with incentives and bonus offers. The interest rates were also kept low initially and were meant to increase after the initial period. Despite of these borrowers continued to buy even those with a poor credit history called NINJA (No Income No Job No Assets). The house prices started to soar due to huge investments. The splurge proved a good time for all. The lenders and borrowers believed that the interest rates that would increase gradually or the soaring house prices will help in recovering of the loans. In case the borrower is unable to pay the interest, the houses could be sold off until the prices are soaring. Now begun the complication when the overbuilding of houses caused a decline in the prices thereby grasping the returning capacity of the borrowers. The borrowers had no money to repay the loans and meanwhile the interest rates continued to soar. The situation became worst when the loan amounts exceeded the total cost of the house and gave way to the current recession. Recession in economics means a general slowdown in economic activity in a country over a sustained period of time, or a business cycle contraction. During recessions, many macroeconomic indicators vary in a similar way. Production as measured by Gross Domestic Product (GDP), employment, investment spending, capacity utilization household incomes and business profits all fall during recessions. During recession subprime loans came under immense limelight and turned out to be an excellent option for the banks. Many big investors bought such loans from the original lenders thus helping lenders with fresh funds to rise again. These investors were not only from America but also from the other parts and as a result the phenomenon remained no more confined to the U.S. The limelight of the loans remained until the prices soared. But as soon as there saw a decline, loans became unbeneficial and dicey. 29
  • 30. Investors from all over the world who took loans faced major losses. These losses trickled down to other banks that were in chain with the international banks of America who formed the backbone of many banks. As the banks were left with no money, the major industries and companies worldwide that depended on loans from these banks for their activities faced closure. The recession became hazardous for the world market soon. The effects it had on India were: 1) Share markets were falling: If our share markets ever touched new heights, it was due to investments from international banks. Now that- due to recession banks- faced shortage of liquidity; they started to withdraw their investments from India. 2) The Indian currency got weakened against dollar: Before recession, banks continued to buy stock from India but now they are selling. The same stock thus converting Rupee into Dollars and weakening our currency. 3) Banks faced huge shortage of funds and soon collapsed: As banks kept giving loans and funds at reasonable terms. At the end of the day, they were left with nothing. Comparatively, India faced much lesser effects of this hazard. On the other hand, Iceland has become completely bankrupt and a country such as America is under a dreadful shock. World’s greatest banks suffered losses and thousands of people lost their jobs. Statistics say 4000 jobs cut at Motorola, 100 at Google, Louis Vuitton cancelled the idea of setting up a mega store in Tokyo, Chanel have put down 200 staff in Paris and many other huge 30
  • 31. companies have done the same. Banks are short of money and capacity to run huge stuff has become impossible. Recession is not something to deal with easily. Major economies and renowned economists are looking forward to solutions. Nobel Prize winner Paul Krugman said up to $5 trillion money can expedite recovery from recession and projects such as Freight rail could bring fast money. Many more solutions have been talked about but things will not recover soon. In case all turns out to be in vain, time is the greatest healer. Let’s wish time moves faster than ever expected and the wound gets healed soon. At the end I would like to share a phrase I read somewhere on net that says Recession is ‘Greed of some, woes of Billions’. 31
  • 32. ADVANTAGES OF IT An important aspect of business process outsourcing is its ability to free corporate executives from some of their day-to-day process management responsibilities. Once a process is successfully outsourced, they get more time to, explore new revenue streams, accelerate other projects, and focus on their customers. By outsourcing their back office operations to third world countries, companies have the following advantages:  Achieve cost reductions – this is made possible through process improvements, reengineering, and use of technologies that reduce and bring administrative and other costs under control.  Key in on company's main business – with the day-to-day back office operations taken care of, the management is free to impart more time to building the company's core businesses  Obtain outside expertise – Rather than recruiting and training personnel, IT ensures that domain experts from another company provide the needed guidance and skills.  Meet constantly changing customer demands – many IT vendors provide the management with flexible and scalable services to meet the customers’ changing requirements, and to support company acquisitions, consolidations, and joint ventures Achieving revenue increases – by outsourcing non-core processes, companies can focus on increasing their sales and market share, develop new products, expand into new markets, and enhance customer service and satisfactions. 32
  • 33. WHAT IS BUSINESS PROCESS OUTSOURCING (IT)? IT is the act of transferring some of an organization's repeated non-core and core business processes to an outside provider to achieve cost reductions while improving service quality. Because the processes are repeated and a long-term contract is used, outsourcing goes far beyond the use of consultants. If done well, IT results in increasing shareholder value. The main difference between IT and more traditional IT outsourcing is that IT offers companies a way of achieving transformational outcomes much more quickly. In a typical IT contract, a service provider takes over a specific corporate function. Effective IT encompasses much more than just changing who is responsible for performing the process. In IT, the outside provider not only takes on the responsibility to manage the function or business process, but also re-engineers the way the process has been traditionally done. The next generation of Business Process Outsourcing has emerged as a priority for businesses looking to better options in managing their application portfolios. The first wave offered low-cost, offshore development labor, but today firms are demanding new, less risky options for applications that are strategic, complex, or mission-critical, while still taking cost into consideration. Outsourcing has moved from a niche technology management tool to a mainstream strategic weapon. Business Process Outsourcing leverages process driven efficiencies in terms of organizational excellence, responsiveness & branding, financial efficiency and customer relationship. IT is emerging as a powerful and flexible approach that business leaders can use to achieve a wide range of tactical and strategic aims. The most common business process that gets outsourced is call centers. Call centers and Help Desks of many multi national and fortune 500 companies are being outsourced to low waged, English speaking countries such as Philippines and India. Countries like India with vast IT human resources are also attracting outsourcing from American IT/Technology companies to outsource their IT Help Desks. Many of these help desks are state of the art with latest Help Desk software and help desk hardware with technical savvy IT graduates behind them answering your questions. 33
  • 34. TOP 15 IT COMPANIES IN INDIA 34 1 WNS IT LTD 2 WIPRO IT 3 HCL TECHNOLOGY IT SERVICES 4 IBM DAKSH 5 EXL SERVICES 6 MPHASIS IT (FORMERLY MSOURCE) 7 INTELENET GLOBAL 8 ICICI ONESOURCE 9 GTL 10 PROGEON 11 24/7 CUSTOMER.COM 12 DATAMATICS TECHNOLOGIES 13 HINDUJA TMT 14 TRANSWORKS 15 TRACMAIL
  • 35. 35
  • 36. IT 2005-06 2006-07 2007-08 2008-09 E Exports ($bn) 2.5 3.6 5.2 7.3 Domestic ($bn) 0.2 0.3 0.6 0.8 Total employment 171,000 245,000 348,000 470,000  IT employee base has grown at a CAGR of 52.6 per cent, from 42,000 in 2005-06 to 348,000 in FY 2006-07.  As of March 2006, there were around 410 ITES-IT players in India, up from 285 in FY 2006-07.  Captive units continue to dominate the segment, accounting for over 65 per cent of the value of work off-shored to India.  The domestic market for IT also witnessed a significant increase in demand with the estimated value of work outsourced (by domestic clients) rising from $300 million in FY 2006-07 to $600 million in FY 2007-08.  Key drivers of growth in domestic demand for IT include the high degree of competition in the domestic telecom and BFSI verticals with companies laying increased emphasis on customer fulfillment and other CRM activities.  Integration of IT-IT contracts is becoming more common.  The IT companies are gaining significant traction in transaction processing, with more and more firms balancing voice and non-voice business portfolios to diversify revenue and raise seat utilization.  While the leading global services firms scramble to ramp-up offshore operations in India, Indian vendors are developing multi-location delivery capabilities. Apart from India, firms are setting up facilities in China, Eastern Europe, Ireland, and Philippines. Within the country they are expanding to tier-II cities such as Mysore, Nasik, Jaipur, Chandigarh and Trivandrum. 36
  • 37.  The year gone by was a period of significant market activity for the IT sector in India. Coupled with the growing stock of firms expanding their offshore initiatives in India, was the wave of consolidation as several large M&A deals were scripted in the industry like GECIS-Oak Hill/General Atlantic Partners, Daksh-IBM, e-serve-Citigroup, etc. Emerging opportunity areas for the IT sector:  The previous year witnessed a significant pickup in global interest for HR IT. Global potential for HR outsourcing in 2004 was estimated at $10.8 billion -- offshore-able potential estimated to be over $5 billion. Value of HR IT off shored to India in FY 2004- 05 was $165 million, up 120 per cent from $75 million in the previous year.  A new breed of high-end knowledge based IT called Knowledge Process Outsourcing emerged. This comprises of vendors providing higher-end research and analytic based services - in traditional service lines as well as new business areas.  Areas with significant latent potential for KPO include healthcare -pharmaceuticals and biotechnology, legal support - intellectual property research, design and development for automotive and aerospace industries, and animation and graphics in the entertainment sector.  F&A (Finance and Accounting) outsourcing is emerging as one of the fastest growing IT segments. While earlier, the majority of F&A outsourcing deals were focused on transaction processing; now customers want IT solutions providers to manage almost the entire business process.  Procurement outsourcing is an emerging area as more and more firms are seriously investigating this option. 37
  • 38. EFFECT OF RECESSION ON HUMAN RESOURCE MANAGEMENT (TRENDS) It can be studied under following headings:-  Slowdown in jobs in IT sector  Impact on employment  Effect on IT employees TRENDS (SLOWDOWN) IN JOBS IN IT SECTOR: Companies like Lehman Brothers, Merrill Lynch, AIG and Morgan Stanley, to name a few, have their captive research units, brokerage arms, investment banking arms in India employing several hundred thousand people in what is popularly known as I.Ts (Business Process Outsourcing) and KPOs (Knowledge Process Outsourcing). Lehman Brothers' Powai unit itself employed about 2,200 people most of whom will be rendered unemployed unless some other company buys out Lehman's India operations and keeps the wheels running. Now that the above-mentioned companies are finding it difficult to run their businesses in the US they have either sold out to other companies (Bank of America taking over Merrill Lynch) or to the US government (AIG buyout by the US government). Obviously, to maintain profits or to just cut even in the current scenario they will start downsizing their workforce wherever they can. Also, most of these American banking companies have outsourced their technology-related jobs to Indian companies like Satyam Computers, TCS and Infosys etc which might be affected in the near future. The Indian companies, however, maintain that it is an opportunity for them to expand as, in a bid to reduce costs, many US banks will outsource more work to India. 38
  • 39. Sectors like real estate, aviation, information technology have already started downsizing their employee strength. There are newspaper reports about DLF (because of the cash crunch) and Kingfisher (rise in aviation oil price and lesser number of flyers taking to the skies) reducing their staff strength by 300. Technology companies like TCS and IBM had removed more than 500 people each citing poor performance long before the Lehman Brother winds swept across India. 39
  • 40. IMPACT ON EMPLOYMENT: The global slowdown in economic growth is expected to lead to significantly higher levels of unemployment. In major developed countries and export-oriented developing countries, unemployment is already on the rise as activities in finance, construction, automotive, manufacturing for export, tourism; services and real estate slow notably. The IT estimated that the number of unemployed could rise by 20 million, reaching 210 million women and men by the end of 2009. The ranks of the working poor living on less than one dollar a day could swell by 40 million, while those on less than two dollars a day could increase by over 100 million.5 although comprehensive data are still not available, the following are some indications of the severity of the unemployment situation in many countries. In the United States, the latest Government statistics indicate a total job loss of 2.6 million During 2008, bringing the unemployment rate to 7.2 per cent in December 2008, the highest since January 1993. The number of persons unemployed for 27 weeks or more increased by 1.3 million in 2008. During the same period, the number of part-time workers who would like to work full-time also grew by 3.4 million. 21. In IT, an estimated 7,000 factories closed in the southern special economic zone of Shengzhen and Guangdong Province alone during 2008. Millions of laid-off migrant workers have returned home to the countryside. This is likely to result in reduced future remittances that have contributed to reducing poverty in rural areas while also adding pressure on rural unemployment and underemployment. The implication of job losses occurring in the immediate short term must be viewed in a long-term context. The current crisis is following a period of robust global economic growth, which some had described as “jobless growth”, where job creation has not been sufficient to meet the demand for work by a growing global labour force. Contractions in economic activities can be expected to worsen labour market conditions for workers, who have been facing increasing economic insecurity even during the economic boom. 40
  • 41. Slowing or even negative economic growth, together with volatile prices, will put great downward pressure on workers’ real wages. ILO is predicting that wages in 2009 will likely decline by half of a percentage point in industrial countries while growing by about 1 per cent globally. While the economic downturn has taken a considerable toll on employment around the world, some social groups have been particularly affected. Today’s youth bare the brunt of the unemployment problem. Even in times of relative economic prosperity, young people are already three times more likely to be unemployed than adults. In times of economic crisis, the youth employment predicament multiplies. Young people tend to be the last in and the first out, having not had the time to build long- standing relationships with their employers. Owing to their relative lack of work experience, contacts and job-search expertise, many youth will have difficulty finding new employment once they have been laid off. At the other end of the age spectrum, older persons also face similar challenges in remaining in, or re-entering the labour market. Owing to their age, they face additional difficulties as many of them in developed countries have seen the value of their assets, including their retirement funds, pensions, savings and houses, decline drastically. At a time when food prices and health-care costs have increased, older persons will have to stretch their dwindling resources even further. For older persons in developing countries, most of whom are not covered under social security or other income schemes and many of whom remain in the labour market, their ability to sustain their livelihood, to compete for jobs and gain access to micro credit to sustain their own businesses will be further constrained. Furthermore, many of these older persons depend on younger family members for financial support. The loss of employment in urban areas and the expected decline in remittances will affect the well-being of the older household members left in rural areas. 41
  • 42. Employment is an important channel through which the financial crisis is likely to affect indigenous peoples, who represent historically one of the poorest and most excluded social sectors in society. Similarly, migrant workers will face particular difficulties during a global economic downturn. In addition to higher unemployment and exclusion from social protection in host countries, they are likely to face heightened discrimination and rising xenophobia in difficult economic times. Evidence from past crises shows that economic recessions put a disproportionate burden on women, as women tend to have lower unemployment and social security benefits. In times of crises, women also take on additional responsibilities to provide non-market substitutes for market goods that their families are no longer able to afford. The review of the implementation of the Beijing Platform for Action in 2000 indicated that the economic and financial crises in Latin America, South Asia and Eastern Europe had hit the most vulnerable social groups hardest, and that women in particular had ended up with larger burdens of unpaid work. Women were especially affected by the resulting loss of jobs in the public sector and incurred increased responsibility for household care giving. During the Asian financial crisis in 1998, women were found to be disproportionately affected in the labour market. While both men and women were laid off, women were fired first as men were traditionally considered to be “breadwinners”. 42
  • 43. EFFECT OF RECESSION ON IT EMPLOYEES: The global slowdown in economic growth is expected to lead to significantly higher levels of unemployment. In major developed countries and export-oriented developing countries, unemployment is already on the rise as activities in finance, construction, automotive, manufacturing for export, tourism; services and real estate slow notably. The IT SECTOR COMPANIES (ILO) estimated that the number of unemployed could rise by 20 million, reaching 210 million women and men by the end of 2009. The ranks of the working poor living on less than one dollar a day could swell by 40 million, while those on less than two dollars a day could increase by over 100 million. Although comprehensive data are still not available, the following are some indications of the severity of the unemployment situation in many countries. In the India, the latest Government statistics indicate a total job loss of 2.6 million during 2008, bringing the unemployment rate to 7.2 per cent in December 2008, the highest since January 1993. The number of persons unemployed for 27 weeks or more increased by 1.3 million in 2008. During the same period, the number of part-time workers who would like to work full-time also grew by 3.4 million. 21. In IT SECTOR COMPANIES, an estimated 7,000 factories closed in the southern special economic zone of Shengzhen and Guangdong Province alone during 2008. Millions of laid- off migrant workers have returned home to the countryside. This is likely to result in reduced future remittances that have contributed to reducing poverty in rural areas while also adding pressure on rural unemployment and underemployment. The implication of job losses occurring in the immediate short term must be viewed in a long-term context. The current crisis is following a period of robust global economic growth, which some had described as “jobless growth”, where job creation has not been sufficient to meet the demand for work by a growing global labour force. Contractions in economic activities can be expected to worsen labour market conditions for workers, who have been facing increasing economic insecurity even during the economic boom. 43
  • 44. Slowing or even negative economic growth, together with volatile prices, will put great downward pressure on workers’ real wages. ILO is predicting that wages in 2009 will likely decline by half of a percentage point in industrial countries while growing by about 1 per cent globally. While the economic downturn has taken a considerable toll on employment around the world, some social groups have been particularly affected. Today’s youth bare the brunt of the unemployment problem. Even in times of relative economic prosperity, young people are already three times more likely to be unemployed than adults. In times of economic crisis, the youth employment predicament multiplies. Young people tend to be the last in and the first out, having not had the time to build long- standing relationships with their employers. Owing to their relative lack of work experience, contacts and job-search expertise, many youth will have difficulty finding new employment once they have been laid off. At the other end of the age spectrum, older persons also face similar challenges in remaining in, or re-entering the labour market. Owing to their age, they face additional difficulties as many of them in developed countries have seen the value of their assets, including their retirement funds, pensions, savings and houses, decline drastically. At a time when food prices and health-care costs have increased, older persons will have to stretch their dwindling resources even further. For older persons in developing countries, most of whom are not covered under social security or other income schemes and many of whom remain in the labour market, their ability to sustain their livelihood, to compete for jobs and gain access to microcredit to sustain their own businesses will be further constrained. Furthermore, many of these older persons depend on younger family members for financial support. The loss of employment in urban areas and the expected decline in remittances will affect the well-being of the older household members left in rural areas. 44
  • 45. Employment is an important channel through which the financial crisis is likely to affect indigenous peoples, who represent historically one of the poorest and most excluded social sectors in society. Similarly, migrant workers will face particular difficulties during a global economic downturn. In addition to higher unemployment and exclusion from social protection in host countries, they are likely to face heightened discrimination and rising xenophobia in difficult economic times. Evidence from past crises shows that economic recessions put a disproportionate burden on women, as women tend to have lower unemployment and social security benefits. In times of crises, women also take on additional responsibilities to provide non-market substitutes for market goods that their families are no longer able to afford. The review of the implementation of the Beijing Platform for Action in 2000 indicated that the economic and financial crises in Latin America, South Asia and Eastern Europe had hit the most vulnerable social groups hardest, and that women in particular had ended up with larger burdens of unpaid work. Women were especially affected by the resulting loss of jobs in the public sector and incurred increased responsibility for household care giving. During the Asian financial crisis in 1998, women were found to be disproportionately affected in the labour market. While both men and women were laid off, women were fired first as men were traditionally considered to be “breadwinners”. 45
  • 46. IT AND CHALLENGING ROLE OF HRM In today's competitive business environment, company workforces are in a continual state of flux - skillsets and job requirements as well as the regulatory environment change at such a rapid pace that the staff needs of tomorrow are very different to those of today. HR has therefore become a huge investment for medium and large companies across industries, with people-related costs averaging over 60 percent of total corporate expenditures. The leading firms have been taking steps to ensure that they extract maximum value from their HR investments, introducing models that go beyond basic HR functionality to embrace new ways of improving the quality, efficiency and productivity of their workforces. These businesses recognize that, to be fully effective, HR programs require new processes, supported by leading technologies. For these companies, the siloed HR department, focusing predominantly on basic administrative, record-keeping and transactional duties, is a thing of the past. Businesses now realize that a strong foundation of information about individuals is a highly valuable organizational resource that can be used to drive efficiencies throughout the business. Of course, "People are our greatest asset" is a mantra that companies have been chanting for years. Yet it is only relatively recently that businesses have started putting HR systems in place that support this philosophy. As a result, the information that sits inside the HR department is being made available for effective use throughout the wider organization, helping companies align their workforces with long-term business objectives. The backdrop to the introduction of these new systems is the uncertain business conditions that followed the economic downturn. This situation has resulted in a relentless drive for cost control, which affects the HR department as much as any other. HR now has to demonstrate that it can develop and deliver programs as efficiently as possible, providing greater value at a lower cost. The current economic environment has also forced firms to become more nimble. The time to evaluate before taking action has decreased dramatically; organizations now have months or quarters instead of years to modify and execute business plans to take advantage of opportunities. As a result, increasing workforce flexibility and responsiveness is a key objective for HR departments in leading companies. These competitive conditions have led 46
  • 47. stakeholders throughout enterprises to demand an end to the siloed nature of employee data and quicker, more frequent access to information that can help all levels of leadership make better business decisions. According to the Chartered Management Institute, 80 percent of a company's worth is tied to the value of its employees, yet there has traditionally been limited access to such workforce data outside the HR department. Managers have lacked visibility into even the most basic characteristics of their workforces, yet alone been able to answer more detailed questions about areas such as staff certification and training levels. Yet with increased access to information on their employees, organizations can incorporate processes for leveraging worker skills across the enterprise, which in turn allows them to be more flexible. Firms with an in-depth view of employee competencies across regions or markets can immediately locate "best-fit" candidates, identify and resolve skill shortages, and re-allocate resources in response to changing conditions. In doing so, they often avoid expensive layoff/rehire cycles that sap morale, productivity, and profits. Take Trintech, a provider of transaction management and payment infrastructure solutions to financial institutions, payment processors, enterprise retailers and network operators. The company found itself unable to optimize its human assets as its rapid growth and business acquisitions had resulted in a number of disparate human resources packages being used across global sites. From the central HR system at its headquarters in Dublin, Ireland, Trintech had no direct access to personnel information from its regional offices. Data had to be transferred manually between the different systems, a costly and time consuming operation. A few years ago, the company decided to replace its legacy HR systems with the Oracle Human Resources Management System (HRMS), a single, Web-enabled solution accessible by all its global human resources departments. Oracle HRMS has provided Trintech with vastly enhanced reporting capabilities and business intelligence, while improving the accuracy of information and reducing duplication. The system has eliminated the silos of information that existed across the group, thus enabling seamless collaboration across 47
  • 48. business units. The company's managers can view relevant data about teams from any location and therefore make faster, more informed decisions. As a result, HR staff has time for valuable strategic activities such as ensuring the company has the necessary skills to meet its future needs. Once companies have this kind of in-depth, accurate view of their workforce, they may find that they are less dependent on "quick-fix" solutions to solve problems relating to employee or skill shortages. In recent years, businesses have become dependent on non-permanent staff to cope with short term staffing short-falls. Yet finding, hiring and managing temporary workers, who can constitute up to 40 percent of a company's employees, requires significant organizational resources. A contingent workforce is the number one commodity spends for many companies - as a result, the perceived cost savings behind deploying temporary labor in the first place are often cancelled out. With access to detailed, timely information about their current workforce capabilities, a company looking to fill a role might discover that there is already someone with the necessary skills within the organization, or an employee who requires minimal training to fulfill the role. Access to centralized workforce data through a core HRMS system not only enables companies to measure and leverage their workforce capabilities, it also allow them to manage risk by monitoring and recording compliance with statutory, regulatory, and industry requirements relating to their employees. A myriad of government regulations must be addressed by today's businesses, and many include severe penalties for non-compliance. Statutes vary dramatically by country; some examples include EEO/Affirmative Action and Worker's Compensation in the US, Statutory Sick Pay in the UK, Minimum Training Hours in France, and Working Time Directives in the European Union. While managing compliance has become an additional responsibility of the modern HR department, technology has ensured that the traditional administrative and transactional elements of HR have been minimized. Progressive organizations have introduced automated workforce management processes to reduce the cost and cycle time of HR processes, with the additional aim of improving user satisfaction. One example of this is Employee Self-Service (ESS), which has been rapidly climbing up the corporate agenda over the last few years. The concept of pushing access to HR information and transactions out to workers has actually 48
  • 49. been around since the mid-1980s with the deployment of interactive voice response (IVR) systems. It progressed to the delivery of initial Web-based ESS modules in 1996 and 1997, and ESS is now a mature product offering for most core HRMS applications. Automating HR transactions and giving employees online access to central systems offers companies the opportunity to achieve two often-conflicting goals - improving HR service levels while cutting costs. Previously, even something as straightforward as changing an employee's home address was done through a paper form or e-mail, requiring information to be re-entered into a central system by an HR administrator. More complex transactions, such as transferring an individual from one office or region to another, would involve extensive paperwork, management resource and support. By automating these processes and allowing employees to serve themselves, much of this overhead can be eradicated. The efficiency benefits of ESS are well documented; for example, The Cedar Group's "Workforce Technologies Survey" indicates an average 43 percent reduction in transaction cycle time in 2003 and 2004. Adoption is steadily increasing, spreading from the Global 2000 (e.g., $1 billion revenues and above) to mid-sized companies. While ESS activity was initially focused on providing access to HR policies and procedures, sophisticated self-service transactions are now commonplace. For example, according to META Group, the most popular ESS application is benefits enrollment, utilized by 65 percent of respondents. Increasing the depth and breadth of ESS functionality remains a primary goal for many firms. Participants in the META Group study listed ESS as the area of strongest interest for investment over the next three years, particularly medium and large- sized organizations. Another key area for workforce automation is Manager Self-Service (MSS) described by the META study as the "next frontier" for many organizations. MSS includes multiple components, which are often deployed in phases. Typical phase one deployments include access to reports and the ability to view subordinate worker data and organizational hierarchy information. Later MSS phases may include online compensation planning and performance reviews 49
  • 50. (sometimes including guidance on how to accurately and consistently describe levels of performance). Organizations are now using MSS to enable the manager to perform work events online (e.g., signing off holidays, transfers, promotions, hires, terminations). According to The Cedar Group survey, use of MSS is positively linked to business results. One of the critical enabling technologies of this HR process automation is workflow, which removes the need for traditional paper-based approvals by replacing paper forms with electronic notification, reminders, routing, and approval. Robust workflow serves as the foundation for HR process improvement, as it delivers substantial cycle-time reduction and enables the linking together of multiple applications into a cohesive set of capabilities. Trintech, for example, receives automated email alerts using Oracle Workflow technology when an employee's contract is due for renewal or a probation period expires. The automated notification typically includes a direct link to the item requiring attention, so the manager does not have to spend time locating the application, signing in, or searching for the relevant record. As with any technology implementation, companies may encounter cultural resistance in implementing employee and manager self-service. Some industry commentators have argued that the industry hasn't done itself any favors by creating the term "employee self-service", since it implies that employees are taking on work that was previously someone else's responsibility. Additional concerns include HR administrators fearing that self-service will make their roles redundant, or managers worrying about losing control over approval processes. Winning buy-in by highlighting the benefits to employees above corporate cost saving is therefore crucial. Some employees are persuaded by speed - the ability to book holiday time online, for example, or the fact that expenses are paid more quickly because the approval process is automated. Others will welcome the convenience of being able to browse benefit information from home. Self-service functionality also empowers employees to take more control over their own career paths, by providing them with the ability to enroll in training courses or update performance goals online. There are indications that employees' support for 50
  • 51. self-service is largely positive; The Cedar Group survey indicates 50 percent improvement in employee satisfaction. Better decision-making, significant employee benefits, increased efficiencies and reduced costs all create a compelling argument for implementing HRMS systems. For the HR department, these technologies provide the potential to break away from its administrative quagmire to become a front-line function embracing more strategic responsibilities that positively impact the success of the enterprise. Once time-intensive processes are streamlined, HR professionals are freed up to focus on achieving full workforce optimization, a key source of competitive advantage and, ultimately, profitability, as it means resources can be aligned with the company's business goals and used strategically. STRUCTURE OVERVIEW 51
  • 52. The Salary is an overview of the prevailing compensation & benefits structure and their associated level wise entitlements included in the employees CTC (Cost To Company). Basically employee compensation includes 4 broad heads.  SALARY COMPONENTSSALARY COMPONENTS  Employees covered under bonus will be eligible for utility allowance @ 15% of basicEmployees covered under bonus will be eligible for utility allowance @ 15% of basic salary.salary.  Employees covered under superannuation will not be eligible for utility allowance.Employees covered under superannuation will not be eligible for utility allowance.  Employees in level 6-8 of Nanjangud will not be eligible for utility allowance.Employees in level 6-8 of Nanjangud will not be eligible for utility allowance. 52
  • 53.  REIMBURSEMENT COMPONENT :REIMBURSEMENT COMPONENT :  OTHER BENEFITS COMPONENTOTHER BENEFITS COMPONENT 53
  • 54.  RETIRAL COMPONENTSRETIRAL COMPONENTS Company housing – Available only at Noida & NCRCompany housing – Available only at Noida & NCR  Housing and free electricity units will be provided to the employees as perHousing and free electricity units will be provided to the employees as per entitlement.entitlement.  In case of non-availability of the entitled house, the employee may reside in aIn case of non-availability of the entitled house, the employee may reside in a lower category flat till the time an appropriate accommodation is available. “In caselower category flat till the time an appropriate accommodation is available. “In case employee is a bachelor or is traveling for short duration, the old bachelor’semployee is a bachelor or is traveling for short duration, the old bachelor’s accommodation is allotted.”accommodation is allotted.”  Free electricity units may be accumulated within the post which they willFree electricity units may be accumulated within the post which they will lapse. Usage of electricity over and above the free units will be borne by thelapse. Usage of electricity over and above the free units will be borne by the employee.employee.  Employee must maintain the original building structure, the fixtures andEmployee must maintain the original building structure, the fixtures and internal fittings provided along with the company house.internal fittings provided along with the company house. 54
  • 55. All houses come with basic fittings including geysers, electrical points, internet, intercom etc.All houses come with basic fittings including geysers, electrical points, internet, intercom etc. Brokerage amount is paid only once during the tenure of the employees in the location.Brokerage amount is paid only once during the tenure of the employees in the location.  Employees, who do not avail the company leased accommodation, will not beEmployees, who do not avail the company leased accommodation, will not be reimbursed advance & security.reimbursed advance & security.  The leave will be between the company and the landlord for all companyThe leave will be between the company and the landlord for all company leased accommodation agreements.leased accommodation agreements.  In case the rent amount is higher than 50% of the basic salary, the differenceIn case the rent amount is higher than 50% of the basic salary, the difference will be borne by the employee and deducted from the monthly salary.will be borne by the employee and deducted from the monthly salary.  In case the rent amount is lower than 50% of the basic salary, the differenceIn case the rent amount is lower than 50% of the basic salary, the difference will be added to the taxable salary of the employee as HRA.will be added to the taxable salary of the employee as HRA.  The advance and security is re-coverable from the executive at the time ofThe advance and security is re-coverable from the executive at the time of separation /transfer from the location.separation /transfer from the location.  In case of increased leave entitlement, the employee may move to a higherIn case of increased leave entitlement, the employee may move to a higher lease accommodation or add the increased amount to the monthly salary as HRA.lease accommodation or add the increased amount to the monthly salary as HRA.  In case of transfer, the employee must settle all accounts of theIn case of transfer, the employee must settle all accounts of the accommodation and furnish a no. dues certificate from landlord.accommodation and furnish a no. dues certificate from landlord.  All deductions from the advance/security and expenses related to repair ,All deductions from the advance/security and expenses related to repair , maintenance and upkeep of the accommodation will be borne by the employee.maintenance and upkeep of the accommodation will be borne by the employee.  In case the landlord has a financial claims at the end of the lease (societyIn case the landlord has a financial claims at the end of the lease (society charges, damages) etc over and above the employee entitlement, it will be borne bycharges, damages) etc over and above the employee entitlement, it will be borne by the employee and may be recoverable at the time of separation /transfer.the employee and may be recoverable at the time of separation /transfer. DOCUMENTS REQUIRED  Lease agreementLease agreement  Accommodation allotment letterAccommodation allotment letter.. 55
  • 56. Remuneration provided by IT companies to Employees • Group Medi-claim Insurance Scheme: This insurance scheme is to provide adequate insurance coverage of employees for expenses related to hospitalization due to illness, disease or injury or pregnancy in case of female employees or spouse of male employees. All employees and their dependent family members are eligible. Dependent family members include spouse, non-earning parents and children above three months • Personal Accident Insurance Scheme: This scheme is to provide adequate insurance coverage for Hospitalization expenses arising out of injuries sustained in an accident. This covers total / partial disablement / death due to accident and due to accidents. • Subsidized Food and Transportation: The organizations provide transportation facility to all the employees from home till office at subsidized rates. The lunch provided is also subsidized. • Company Leased Accommodation: Some of the companies provide shared accommodation for all the out station employees, in fact some of the IT SECTOR COMPANIES companies also undertakes to pay electricity/water bills as well as the Society charges for the shared accommodation. The purpose is to provide to the employees to lead a more comfortable work life balance. • Recreation, Cafeteria, ATM and Concierge facilities: The recreation facilities include pool tables, chess tables and coffee bars. Companies also have well equipped gyms, personal trainers and showers at facilities. • Corporate Credit Card: The main purpose of the corporate credit card is enable the timely and efficient payment of official expenses which the employees undertake for purposes such as travel related expenses like Hotel bills, Air tickets etc 56
  • 57. • Cellular Phone / Laptop: Cellular phone and / or Laptop are provided to the employees on the basis of business need. The employee is responsible for the maintenance and safeguarding of the asset. • Personal Health Care (Regular medical check-ups): Some of the IT SECTOR COMPANIES'S provides the facility for extensive health check-up. For employees with above 40 years of age, the medical check-up can be done once a year. • Loans: Many IT SECTOR COMPANIES provide loan facility on three different occasions: Employees are provided with financial assistance in case of a medical emergency. Employees are also provided with financial assistance at the time of their wedding. And, the new recruits are provided with interest free loans to assist them in their initial settlement at the work location. • Educational Benefits: Many IT SECTOR COMPANIES have this policy to develop the personality and knowledge level of their employees and hence reimburse the expenses incurred towards tuition fees, examination fees, and purchase of books subject, for pursuing MBA, and/or other management qualification at India's top most Business Schools. • Performance based incentives: In many IT SECTOR COMPANIES they have plans for, performance based incentive scheme. The parameters for calculation are process performance i.e. speed, accuracy and productivity of each process. The Pay for Performance can be as much as 22% of the salary. • Flexi-time: The main objective of the flextime policy is to provide opportunity to employees to work with flexible work schedules and set out conditions for availing this provision. Flexible work schedules are initiated by employees and approved by management to meet business commitments while supporting employee personal life needs .The factors on which Flexi time is allowed to an employee include: Child or Parent care, Health situation, Maternity, Formal education program 57
  • 58. • Flexible Salary Benefits: Its main objective is to provide flexibility to the employees to plan a tax-effective compensation structure by balancing the monthly net income, yearly benefits and income tax payable. It is applicable of all the employees of the organization. The Salary consists of Basic, DA and Conveyance Allowance. The Flexible Benefit Plan consists of: House Rent Allowance, Leave Travel Assistance, Medical Reimbursement, Special Allowance. • Regular Get together and other cultural programs: The companies organizes cultural program as and when possible but most of the times, once in a quarter, in which all the employees are given an opportunity to display their talents in dramatics, singing, acting, dancing etc. Apart from that the organizations also conduct various sports programs such as Cricket, football, etc and regularly play matches with the teams of other organizations and colleges. • Wedding Day Gift: Employee is given a gift voucher of Rs. 2000/- to Rs. 7000/- based on their level in the organization. • Employee Referral Scheme: In several companies employee referral scheme is implemented to encourage employees to refer friends and relatives for employment in the organization. 58
  • 59. OBJECTIVE OF THE STUDY  To study HRM Trends in IT sector.  To study the effect of recession in IT.  To study the effect of recession on employee wages and salary.  To study the salary and wages structure in IT.  To study the employees vision about the recession. 59
  • 60. RESEARCH METHODOLOGY Research Methodology is the way to systematically solve the research problem. It may be understood as a science of how research is done scientifically. Here there are various steps that are generally adopted by a researcher in studying the research problem along with the logic behind them. RESEARCH DESIGN It is the frame work or plan for the study, used as a guide in collecting & analyzing the data. It is a blue print that is followed in completing a study. It ensures that study will be relevant to the problem & will use economic procedures. The research design in marketing research can be classified into three categories, namely: • Exploratory research • Descriptive research • Casual research • This project had been moved mainly through descriptive research design. In this descriptive research, the help of cross-sectional analysis has been taken in which the no. of characteristics of elements of sample number has been measured once. DATA SOURCE Various sources of information can be broadly divided in two categories:  Primary source  Secondary source Secondary data are those data were collected for some other purpose & already exist within the organization. In this research work both primary & secondary sources of data has been taken in to the consideration. 60
  • 61. In case of this study, the secondary sources have been collected from the various websites, journals, old records, books etc. Primary data was collected by the survey conducted by interviewing of the sample with the help of questionnaire. RESEARCH APPROACHES Various methods can be adapted for collecting the data. Among them four are most used methods:- • Survey Research • Observational Research • Experimental Research • Focus Group Research Here, survey methods had been used, because surveys are best suited for descriptive research. Survey are undertaken to learn about employees knowledge, beliefs, preferences. RESEARCH INSTRUMENT • Questionnaire • Customer Perception • Mechanical Devices Because of its flexibility, the questionnaire is by far the most common instrument used to collect primary data. It needs to be carefully developed, tested & debugged before they are administrated on a large scale. In this study questionnaire was used for the research purpose. A questionnaire consists of a set of questions presented to respondents. While preparing the Questionnaire care had been taken for choosing the questionnaire & their form, Wording & Sequences. Close-end question specified all possible answer & provided answers that where easier to interpret & tabulate. Open end questions allowed the respondents to answer in their own words & revealed more about how the respondents think. 61
  • 62. SAMPLING PLAN After deciding for research approach & instrument sampling plan was designed. This called for three decisions:- 1. Sample size: How many people are surveyed? Large sample gives more reliable results than the small sample. However, it is not necessary to sample entire target population or even a substantial portion to get reliable results. Sample of less than 1% of population can often provide good reliability, with creditable sampling procedure. Here the sample size is 100. 2. Sampling Procedure: How should respondents is chosen? To obtain a representative sample, a probality sample of the population was drawn. Probality sampled allowed the calculation of confidence limits for sampling errors. Simple random sample was taken where every member of population had an equal chance of selection. 62
  • 63. DATA ANALYSIS 1. Are you aware of the impact of recession on Indian economy? A} Yes B} No 97 3 0 20 40 60 80 100 120 yes no From the above graph we can see that people were aware of the impact of recession in India. 63
  • 64. 2. Which of the following country is the origin of the recession? A} united kingdom B} united states C} china 94 4 2 0 10 20 30 40 50 60 70 80 90 100 united states united kingdom china From the above graph we can see that people blamed United States for the origin of recession. 64
  • 65. 3. Which of the following industrial sector is suffering more due to recession? A} I.T C} Retail B} Real state D} Banking 87 8 2 3 0 10 20 30 40 50 60 70 80 90 100 I.T Real state Retail Banking From the above graph we can see that people believed I.T sector was most affected due to recession. 65
  • 66. 4. Are the employees getting less facility by I.T Company? A} yes B} no 73 27 0 10 20 30 40 50 60 70 80 yes no From the above graph we can see that people believed I.T sector was providing less facility to its employees. 66
  • 67. 5. Extent of satisfaction level of employees during recession? A} less B} moderate C} more 37 61 2 0 10 20 30 40 50 60 70 less moderate more From the graph we can see that employees of I.T sector were moderately satisfied with the level of satisfaction provided to them. 67
  • 68. FINDINGS  Gone are the days when IT sector used to take contract and provide service  Due to the recession, IT sector are compel to adopt risk sharing & gain sharing contract model  The outcome of such Model are more risky  Now companies are not spending money on variable-pay of their employees  Employees are forced by companies to spend more time on job as comparison to previous  Some companies are firing out their employees  Now companies are emphasizing on offshore location rather than to onsite location  The employee based cost program are implemented by companies to reduce the expenses  Clients of IT companies are spending less money for their project and wants service as earlier  Now IT giants companies are emphasizing on Indian market  Employees are getting less facilities by company  Employees are working in threat of firing out 68
  • 69. LIMITATIONS  Time is short for deep research.  Study is limited with the some unit of IT companies.  Employees give no answer of some question, he can not say about management.  The learners are passive instead of active participants. The lecture method violates the principle of learning by doing. It is a one way communication. There is no feedback from the audience.  Survey was done on human beings who may lead to personal bias. 69
  • 70. SUGGESTIONS • Companies should focus on cost cutting rather than job cutting • Companies should implement cost control program • To develop proper strategy to overcome such problems • To make strong relationship with their clients • Now companies should emphasize on Indian market • Performance appraisal of employees should on regular basis • Companies should fire out under performance employees 70
  • 71. SUGESSIONS ACCORDING TO MY PERCEPTION • Tax cuts are generally the first step any government takes during slump. • Government should hike its spending to create more jobs and boost the manufacturing sectors in the country. • Government should try to increase the export against the initial export. • The way out for builders is to reduce the unrealistic prices of property to bring back the buyers into the market. And thus raise finances for the incomplete projects that they are developing. • The falling rupees against the dollar will bring a boost in the export industry. Though the buyers in the west might become scarce. • The oil prices decline will also have a positive impact on the importers. 71
  • 72. CONCLUSIONS The global slowdown in economic growth is expected to lead to significantly higher levels of unemployment. In major developed countries and export-oriented developing countries, unemployment is already on the rise as activities in finance, construction, automotive, manufacturing for export, tourism; services and real estate slow notably. The IT sector companies estimated that the number of unemployed could rise by 20 million, reaching 210 million women and men by the end of 2009. The ranks of the working poor living on less than one dollar a day could swell by 40 million, while those on less than two dollars a day could increase by over 100 million.5 Although comprehensive data are still not available, the following are some indications of the severity of the unemployment situation in many countries. In the India, the latest Government statistics indicate a total job loss of 2.6 million during 2008, bringing the unemployment rate to 7.2 per cent in December 2008, the highest since January 1993. The number of persons unemployed for 27 weeks or more increased by 1.3 million in 2008. During the same period, the number of part-time workers who would like to work full-time also grew by 3.4 million. 21. In IT SECTOR COMPANIES, an estimated 7,000 factories closed in the southern special economic zone of Shengzhen and Guangdong Province alone during 2008. Millions of laid- off migrant workers have returned home to the countryside. This is likely to result in reduced future remittances that have contributed to reducing poverty in rural areas while also adding pressure on rural unemployment and underemployment. The implication of job losses occurring in the immediate short term must be viewed in a long-term context. The current crisis is following a period of robust global economic growth, which some had described as “jobless growth”, where job creation has not been sufficient to meet the demand for work by a growing global labour force. Contractions in economic activities can be expected to worsen labour market conditions for workers, who have been facing increasing economic insecurity even during the economic boom. 72
  • 73. QUESTIONAIRE NAME ………………………… ADDRESS ………………………… QUALIFICATION ………………………… 1. Are you aware of impact of recession on Indian Economy? a. Yes b. No 2. Which of the following country is the origin of the recession? a. United Kingdom b. United States c. China 3. Which of the following industrial sector is suffering more due to Recession? a. IT b. Real estate c. Retail d. Banking 73
  • 74. 4. Can you ranked the industries sectors, which suffer a lot? a. Banking b. IT c. Real estate d. Insurance 5. Are you aware of Recession on IT Industry? a. Yes b. No 6. Employees are getting less facility by IT company? a. Yes b. No 7. Is IT Company are firing out their employees? a. Yes b. No 8. Extent of satisfaction level of employees during recession? a. Less b. Moderate c. More Any suggestions ………………………………………………………………………………………………… ………………………………………………………………………………………………… ………………………………………………………………………………………………… …………… 74
  • 75. BIBLIOGRAPHY BOOKS  Robbins P. Stephens, Organizational Behavior, Prentice Hall, 7th Edition, Chapter 16, pages 636-641.  Koontz Harold & Weihrich Heinz, Essentials of Management, Mc Graw Hill, 5th Edition, Chapter 11, pages 217-245.  Decenzo A. David & Robbins P. Stephen, Personnel/HR Management, Prentice Hall, 3rd Edition, Chapters 6,7 & 8, pages 117-209.  C.R.Kothari, “Research Methodology", New Age International Publishers, 2007. MAGAZINES  Today  Today’s traveller  Business Today NEWS PAPERS  Times of India  IT SECTOR COMPANIES  Economic Times WEB SITE  www.hcl.com  www.tcs.com  www.google.com 75