Human Resource Management Challenges Software Industry Business Essay Example

companies include Sun Microsystems, Oracle, HP Enterprise Services (HP), Novell, Red Hat and Symantec. Google stands out as the foremost software company in terms of growth beyond internet search. However,Micrsoft holds dominance when it comes to revenue within the software industry.

India also has a major presence with Tier-1,Tier-2,and Tier-3 companies categorized based on revenue and number of employees. Tier-1 companies like Accenture (ACN), HP Enterprise Services (HPE), and IBM generate over US$1 billion in revenue and have more than 50k employees.In contrast, Tier-2 companies like TCS, Tech Mahindra Limited, Infosys Technologies Limited, Patni Computer Systems Limited, Wipro Technologies Limited, Mahindra Satyam Computer Services Limited, HCL Technologies Limited, and Larsen & Toubro InfoTech Limited have revenues over US$100 million and between 10,000 and 50,000 employees. These well-established Indian companies fall into this category. Companies with lower revenues than Tier-2 are categorized as Grade 3.

The literature review emphasizes the importance of motivation in maximizing work performance. According to Peter Drucker (2004), effective managers involve their subordinates in discussions rather than solving problems themselves. Morley Steltner (2006) also highlights the significance of providing feedback instead of criticism by encouraging employees to evaluate their own performance and ask follow-up questions. Delegation is another crucial topic discussed in the literature. Steltner (2006) explains that true delegation involves granting someone both responsibility and authority for tasks within a manager's role. This empowerment fosters employee loyalty within an organization.

Malone (1997) advocates for employee empowerment to improve continuity among employees. According to Prof Bruce L Katcher (2007), employees become dissatisfied when they cannot make decisions and lack trust in management.
According to Keller (1995), assigning responsibilities to subsidiary companies brings satisfaction to leaders, resulting

in employee commitment and lower turnover rates. Allowing employees autonomy in decision-making enhances job satisfaction and loyalty. The downfall of many companies can be attributed to their work culture, which includes a high number of managers with a technological background, difficulties in transitioning beyond the entrepreneurial stage, reluctance in hiring general management talent, and dependence on non-executive managers within software companies.

Software companies are particularly vulnerable to early-stage stagnation compared to other industries due to a decline in dynamic qualities, loss of competitive advantage, challenges in adapting to new technologies, and diminishing technical expertise as employees move into managerial positions. Additionally, Couger (1988) suggests that workers who engage in various tasks tend to have longer job tenures. The nature of tasks plays a crucial role in determining employee retention within the industry as noted by Reiji Ohtaki Hugh Bucknall (2005).

Executives who demonstrate willingness to travel are seen as more attractive. Organizations need flexibility when relocating talented individuals for necessary positions.According to Rees and Porter (2008), training and development have become increasingly important due to globalization, rapid change, and competitive pressures caused by advancements in information technology. They emphasize the importance of organizations viewing training as an investment rather than a cost. Snell (2007) suggests that the return on investment should result in employees reaching acceptable performance levels faster. To support self-assessment, training, and development, organizations must provide information about their mission, policies, and programs. Retention and attrition are major concerns in the software industry, leading to extensive research into its causes. Managers should pay attention to employees' mindset and offer new challenges to retain them. Mahapatro (2010) highlights the challenge faced by HR directors in the

package industry with high employee turnover rates. While there may be enough staff at entry level positions, middle and senior-level management positions experience significant gaps. Additionally, employees lack a clear salary growth plan which leads to increased poaching and turnover between organizations.The industry experiences turnover rates ranging from 30-35% on average, but it can even reach as high as 60%. According to Thomas P. Flannery (1996) from The HAY Group, industry leaders focus on cutting costs and increasing profits, viewing pay as a way to reduce expenses. However, HR compensation professionals recognize that pay plays a critical role in attracting and retaining talent, making it an important tool for employee retention. Griffeth (2000) agrees and suggests that while pay only has a modest impact on turnover rates, there is a connection between performance and turnover - higher pay potentially reduces turnover. Therefore, organizations should prioritize employees' satisfaction with their pay and fringe benefits to decrease turnover rates. Christian M. Ellis (2002) emphasizes the significance of measuring incentive programs as they highlight organizational goals; what gets measured and rewarded receives attention. Performance-based rewards lead to increased interest and commitment from employees towards their work. Employees value recognition and rewards from top management for their performance.According to Firth (2007), job-related stress factors, such as lack of commitment in the industry, can lead to employee turnover. Hudson also suggests that employees who experience work-life conflict and feel a lack of control over their work and personal demands are less productive, committed, and satisfied with their organization. These employees are also more likely to be absent or leave the organization. In software organizations, it is crucial for managers to

recognize signs of stress and implement effective stress management techniques. Fuller (2003) adds that even small stressful events can gradually increase strain levels in workers, impacting their work performance. HR emphasizes that high achievers may experience burnout when they have unattainable work goals.

In terms of the Indian market's current tendencies, there are challenges in managing growth and controlling inflation amidst an uncertain global environment. Due to recent global economic issues like the Eurozone crisis and rising commodity prices, there was a slowdown in the Indian economy during the financial year 2011-2012. The Reserve Bank of India (RBI) implemented tight monetary policy which mainly affected industrial growth. As a result, the projected GDP growth rate for 2011-12 was 6.9%. However, there is an estimated GDP growth rate of 7.6% for 2012-13.According to the Economic report 2011-12, WPI inflation for all commodities decreased to 6.6% from March 2011 to January 2012. Despite facing economic downturns in Western markets and struggling with personnel retention and bridging the gap between supply and demand for trained individuals, the software industry can achieve success by establishing clear goals that are connected to other activities. Employee motivation can be fostered through participation, collaboration, support from senior management, teambuilding, communication opportunities, promotion possibilities with career planning options, a sense of belonging within supportive relationships, increased wages and benefits opportunities, recognition for quality work accomplishments specialization in technically challenging tasks flexibility in work times/locations empowerment/responsibility trust/respect factors.

The software industry has a unique work structure characterized by globally distributed software teams. Virtual teams play a significant role in this structure as they provide access to diverse expertise that may not be available in one location.

Effective leaders must delegate tasks appropriately to ensure the success of these teams and build trust among sub-teams.The development of trust among team members in global software projects is hindered by challenges arising from cultural and geographical differences, as well as temporal distance. These challenges include difficulties with coordinating meetings and excessive overtime. Trust between sub-teams plays a crucial role in enhancing motivation within these projects. However, HR directors face additional obstacles when trying to develop delegation schemes that promote trust and motivation due to language differences among team members.

Unlike traditional industries, the software industry has a unique work culture that emphasizes a global corporate culture valuing flexibility, openness, and empowering employees. Mobility is highly valued in this industry due to size restrictions and limited talent pools. By considering all operations within a region as one resource pool, economies of scale can be achieved and opportunities for advancement can be created.

Training and development are essential in the software industry, with leading companies providing their own training facilities for new hires. These programs typically last three to six months but significantly contribute to overall costs. In the package industry, competition for skilled talent is intense, which highlights the importance of training and developing potential leaders.Managers need to prioritize retaining employees rather than recruiting new ones by establishing effective retention systems. This requires understanding why employees leave and accurately predicting attrition rates. Higher pay, especially from multinational corporations with more favorable salary scales, is often cited as a significant reason for leaving. Another common cause of attrition is the underutilization of current skills. Personal reasons such as marriage or relocation also prompt employees to leave organizations.

Employee disengagement

serves as a warning sign that they may soon leave, resulting in decreased commitment, productivity issues, attendance problems, and even working against the organization's interests in extreme cases. Identifying the root causes of detachment allows targeted solutions to be implemented to eliminate these factors and enhance employee performance.

This year has seen a high turnover rate at the Junior Management (JM) level in software companies due to better salaries offered by other organizations. Many employees also aspire to pursue further studies both in India and abroad to enhance their skill sets. Additionally, desire for an improved work-life balance contributes to employee detachment as individuals actively strive to reduce stress levels at work.

According to the Economic Report 2012-13, salary increases in the software sector have remained relatively low.Most software companies have granted salary increases ranging from 10-12% for all levels of employees, including Junior, Middle, Senior, and Top Management. However, due to economic downturns in Western countries, Top Management has received the lowest increase. The industry median for annual increment stands at 11%, which is lower compared to the previous year due to market uncertainties.

Stress is a significant issue among software industry employees who frequently face tight deadlines. The text discusses the impact of downsizing in the software industry, leading to increased work pressure for remaining employees. As a result, turnover rates also rise. It emphasizes the need for Human Resource managers in India's software industry to find strategic solutions due to the ever-changing nature of the business.

The paper highlights that top management's involvement is crucial in implementing strategies that add value to the organization. It suggests employee retention as one strategy that can be enhanced through

employee motivation for improved organizational effectiveness. When one's occupation becomes highly demanding, it naturally leads to decreased commitment towards work. Consequently, employees start seeking more comfortable job alternatives.

Signs of stress include low spirits and short temperaments. Prolonged exposure to less stressful work conditions can also lead to injuries and prompt employees' contemplation about leaving their current positions.