RESEARCH REPORT

ON

“UNDERSTANDING RECESSION: CHANGE IN HRM TRENDS IN IT INDUSTRY”

SUBMITTED TOKANPUR 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)

Kanpur Institute of Management Studies, Unnao

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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

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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.

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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

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17. Research methodology 59

18. Data analysis 61

19. Findings 67

20. Limitations 68

21. Conclusion 71

22. Questionnaire 72

23. Bibliography 74

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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

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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

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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.

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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

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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.

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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.

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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.

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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.

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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.

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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

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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.

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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.

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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.

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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.

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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.

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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.

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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

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at tie-ups in China and other BRIC countries.

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.

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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.

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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).

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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.

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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.

 

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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.

35

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.

36

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.

37

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.

38

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.

39

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.

40

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”.

41

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.

42

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.

43

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”.

44

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

45

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

46

information that existed across the group, thus enabling seamless collaboration across

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

47

concept of pushing access to HR information and transactions out to workers has actually

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.

48

Later MSS phases may include online compensation planning and performance reviews

(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

49

courses or update performance goals online. There are indications that employees' support for

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.

50

STRUCTURE OVERVIEW

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.

51

REIMBURSEMENT COMPONENT :REIMBURSEMENT COMPONENT :

OTHER BENEFITS COMPONENTOTHER BENEFITS COMPONENT

52

RETIRAL COMPONENTSRETIRAL COMPONENTS

Company housing – Available only at Noida & NCR Company housing – Available only at Noida & NCR

Housing and free electricity units will be provided to the employees as per Housing 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 a In 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 case lower 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’s employee 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 will Free 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 the lapse. 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 and Employee 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.

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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..

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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

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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

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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.

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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.

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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.

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.

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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.

SAMPLING PLAN

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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.

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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.

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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.

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3. Which of the following industrial sector is suffering more due to recession?

A} I.T C} Retail

B} Real state D} Banking

87

82 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.

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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.

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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.

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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

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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.

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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

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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.

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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.

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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

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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

…………………………………………………………………………………………………

…………………………………………………………………………………………………

…………………………………………………………………………………………………

……………

73

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

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