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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

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)
2

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 – ( )
3

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

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

17. Research methodology 59
18. Data analysis 61
19. Findings 67
20. Limitations 68
21. Conclusion 71
22. Questionnaire 72
23. Bibliography 74
6

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

 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

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

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

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

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

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

EFFECT OF RECESSION ON IT EMPLOYEES:
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.
43

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

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

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

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

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

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

(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

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

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

 REIMBURSEMENT COMPONENT :REIMBURSEMENT COMPONENT :
 OTHER BENEFITS COMPONENTOTHER BENEFITS COMPONENT
53

 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

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

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

• 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

• 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

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

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

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

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

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

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

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

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

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

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

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

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

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

CONCLUSIONS
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.
72

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

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

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

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