CHAPTER 2 REVIEW OF LITERATURE

 The review ofliterature gives an overview of situation that is pertaining in the IT/ITESindustry as far as India and Globe is concerned. It gives a complete picture onthe various aspects such as strengths, weakness, opportunities, threats etc.Along with the same, the same throws the light on employee attrition, retentionand employee satisfaction impact along with various factors associated with it. 2.

1 IT/ITES Industry:: Employee Attrition & Retention:- The IT/ITES industry operations in India havebeen the pioneer of outsourcing in the global business scenario. Foreigncompanies have been dependent on the Indian IT/ITES industry due to its Englishcapabilities & quality work carried out at low cost. In the past two decades,this industry has evolved into a formidable force with successful operationsconducted in various domains (Steve 2016). Propensity of leaving the job in this sectoris very high & chances to climb up the corporate ladder is bleak. Only afew very get promoted to the cadre of team leader & as soon as promotionsare announced the many of frustrated employees quit.(Shelly Singh & MituJyashankar, 2002). Philosophically, employee retention isimportant; in almost all cases, it is senseless to allow good people to leaveyour organization.

When they leave, they take with them intellectual property,relationships, investments (in both time & money), an occasional employeeor two, & a chunk of your future. Employee Retention Strategies helps organizationsprovide effective employee communication to improve commitment & enhanceworkforce support for key corporate initiatives.   Effective employee retention is a systematiceffort by employers to create & foster an environment that encouragescurrent employees to remain employed by having policies & practices inplace that address their diverse needs. A strong retention strategy becomes apowerful recruitment tool. Retention of key employees is critical to thelong-term health & success of any organization. It is a known fact thatretaining your best employees ensures customer satisfaction, increased productsales, satisfied colleagues & reporting staff, effective successionplanning & deeply imbedded organizational knowledge & learning.

 Employee retention matters as organizationalissues such as training time & investment; lost knowledge; insecureemployees & a costly candidate search are involved. Hence failing to retaina key employee is a costly proposition for an organization. Various estimates suggestthat losing a middle manager in most organizations costs up to five times ofhis salary.

 Intelligent employers always realize theimportance of retaining the best talent. Retaining talent has never been soimportant in the Indian scenario; however, things have changed in recent years.In prominent Indian metros at least, there is no dearth of opportunities forthe best in the business, or even for the second or the third best. Retentionof key employees & treating attrition troubles has never been so importantto companies. In an intensely competitive environment, where HR managers arepoaching from each other, organizations can either hold on to their employeestight or lose them to competition.

For gone are the days, when employees wouldstick to an employer for years for want of a better choice. Now, opportunitiesabound.   It is a fact that, retention of key employeesis critical to the long-term health & success of any organisation/s. Theperformance of employees is often linked directly to quality work, customersatisfaction, & increased productivity & even to the goodwill of acompany.  Whereas the same is often indirectly linkedto, satisfied colleagues & reporting staff, effective succession planning& deeply embedded organisational knowledge & learning. Employeeretention matters, as, organisational issues such as training time &investment, costly candidate search etc., are involved. Hence, failing toretain a key employee is a costly proposition for any organisation.

Variousestimates suggest that losing a middle manager in most organisations,translates to a loss of up to five times his salary. This might be worse forBPO companies where fresh talent is intensively trained & inducted &then further groomed to the successive stages. In this scenario, the loss of amiddle manager can often prove dear.

 Verma, Anju. & Pooja, Garg (2011), after doing a comparative study of work lifebalance among male & female employees working in IT/BPO companies,contended that causes of attrition are different in relation to the gender.Results shows that female employees’ feels more stressed because of work lifeimbalances & leaves job at the early stage of their career. Ramiya. Bhas(2008) advocated that the top reason for talent attrition is “ExternalEquity of Compensation”, He also stated that 27 percent of the employees intheir exit interviews mentioned compensation as primary reason whereas Limitedcareer opportunities & Role Stagnation are stated as another two reasonsfor low retention.

 Jeswani, Saket. & Souren, Sarkar. (2008), mentioned that Talent Engagement isnecessary to retain an employee as disengaged employee disturbs the system& multiply the dissatisfaction levels in organisation which results indecreased motivation, high talent turnover & diminished performance. Theymentioned that raising & maintaining employee engagement is in the hands ofan organisation & requires a perfect blend of time, effort, commitment& investment to craft a successful endeavour. D.Raina, Anupama (2006) by means of series of surveys, observations& interviews ascertained that employees’ attrition in higher between theage group of 20-25 years & within three months of joining, youngprofessional’s leaves the job because of slow career growth, poor relationswith seniors/ colleagues, health problems, work-life imbalance & for higherstudies. Smith (2001), argued that “money gets employees in thedoor, but it does not keep them there.” Writing from the employer’s perspective,Dibble (1999) included moneyin her discussion of financial incentive butshe had also argued that money is not always a fitting reward.

In a survey thatshe had conducted, about one fourth of the respondents said thatthey changedtheir current jobs because they did not feel cherished or appreciated in theircurrent organization. Les Mckeown’s defined employee retention as, ‘A systematiceffort by employers to create & maintain an environment that encouragescurrent employees to remain employed by having policies & practices inplace that addresses their driver needs.’ As noted by Weinberg  “…anemployee survey covering topics such as compensation, benefits, safety, workrules, manager behavior, & teamwork” can have a dramatic effect inminimizing employee attrition. These types of surveys provide employees anoutlet for concerns & serve as a means for employers to identify areas inneed of change before they become a problem of greater proportions. He notesthat exit interviews given to employees upon resignation can also givecompanies insight into the concerns of workers. Even a simple acknowledgement of anemployee’s good work can be quite a motivator. Clarke highlights that “apat on the back or a word of praise after they have worked hard to deliver forthe company goes a long way toward building individual & group morale”. Paris(2002) agrees, stating that “ incentives provide the ‘golden handcuffs’that keep from getting away” According to Sengupta, S.

& Gupta, A. (2012), the IT/ITES/BPO industry inIndia is having the unparalleled velocity. The reason behind the same was thehigher attrition rate along with the higher growth of the industry.

However, inthe same study the various factors were studied which put emphasis on thevarious factors leading towards attrition and comparison of the same along withthe various demographic variables.  Also, Deepa(2012) noted that the IT/ITES/BPO employees’ reason for attrition is mainlydue to working conditions, lack of job satisfaction, stress and safetymeasures. To arrive at the same conclusion, the researcher took the interviewsof 250 respondents of the industry and various tools like Chi square, ANOVAetc. were used to interpret the data.

 Vibha Gupta (2013) stated that the IT/ITES/BPO industry is bearing heavy loss in terms ofcost because of the employee turnover which happens every year, and to preventand reduce the same, only Human Resource Department can make the difference bymaking and implementing various strategies on recruitment and retention.x` Aravinda Tulasi, Venkata Ravi Kumar (April 2014) gave the opinion that open communication,strengthen career development and career progression program, properrecruitment and hiring process etc. can help to reduce the attrition in aproper manner.  N.

Bharathi, P. Paramashivaiah (Feb 2015) suggested that employee integration,employee maintenance and employee satisfaction play a major role in retainingthe employee into the organization especially into BPOs and ITES Industry. Accordingto the Anantharaja,2011 thecompanies and corporates are now a days more and more dependent upon the humanresources and assets. According to the study conducted, the organization areemphasizing more and more on their employees and top performers.

Attrition is a continuous phenomenon, which prevails in the ITESIndustry today .Attrition rate is a burning issue for HR department because an organizationfaces problems like losing the talents and knowledge, cost related to training, recruitment etc.  It is an inevitable fact that employee attrition and retention aredependent on certain factors and also the same has a considerable impact toemployee satisfaction rate as well. Following are the reasons which areidentified for attrition in organization that can be derived from theliterature review. 1. Organizational Factors:-Ø Monotonous workØ Lack of variety of workØ  Non interest in the nature of workØ  Less interaction with end users. 2.

System Related Factors:-Ø  Policies and regulations of the companyØ  Lack of opportunityØ  Lack of career advancementØ  Unfair appraisal systemØ  Unfair promotional policiesØ  Lack of job security 3. Personal Factors:-Ø  RelocationØ  Better opportunityØ  Peer PressureØ  Changing the field          2.2 IT/ITES SCENE IN INDIA India has become the most promisingdestination for the various companies that wants to outsource its businessprocess. The IT/ITES/BPO Industry has started emphasizing on the strategicchoices to increase the profits by implementing the various quality improvementtechniques, cost reduction techniques, increasing shareholder’s value etc. (Shah and Sharma, 2007).

 According to Neale (2004), In 2003 India accounted for 75% of the offshoredelivery value which was expected to rise by 55% in the next five years. TheIndian IT/BPO industry had recorded the overall growth of 28% in the year 2006-07.According to the NAASCOM, therevenues coming from the IT/ITES/BPO segment shot up from $ 39.6 Billion(2006-07) to $52 Billion (2007-08).SWOT Analysis:: Indian IT/ITES Industry The SWOT analysis will be helpful to us toknow the strengths, weakness, opportunity and threats prevailing in the IT/ITESindustry.    Strengths:-  (A) Availability of manpower with good spoken English:-  In India, around 3573 listed engineeringcolleges (www.

indicareer.com/engineeringcolleges-in-india.html) and342 listed MBA colleges are prevailing. Apart from that, there around more than493 Indian Universities enter into the job market every year which produces thehighly qualified graduates and post graduates every year. This youth is quitefamiliar and well versed with US and UK ascent.  According to Raul (2004),  India is the country which has the largestEnglish speaking mass next to USA. Hence, this mass is a very good pool ofpotential candidates as far as the Indian IT/ITES Industry is concerned. (B) Availability of manpower according to time zone differences:-  The IT/ITES operations in India are quite stable incomparison with other developing countries.

The recent study estimated that Indian call centers would touch atop growth rate of around 65 percent in future against the rate of 42 percentas in 2007.   The survey reports of the Cyber Media’s Data Quest domestic callcenter held in 2007-2008 also mentioned that the domestic call centers mustfetch a revenue margin of Rs 85 billions in 2008-2009, which is furtherexpected to grow up to 110 billion in subsequent years. The appropriatetime-zone differences of 12 hours for the USA and five hours for UK help thesecompanies to serve better for their Western clients in late night shifts (Babu and Jayabal, 2004). (C) Availability of Low CostManpower:-   According to the study of NASSCOM,the IT/ITES  industry in India savesconsiderable amount of cost for the companies in terms of Manpower.According to the mentioned table, it is verywell stated that the manpower which is available in India compared to the othercountries is highly qualified, well skilled and easily available which helpsthe organizations to foster the productivity in the fastest possible manner.   Country Cost of employees p.

a. (US$) Qualification Full time/Part Time IT Skills (rating out of 10) Availability of skilled labor (rating out of 10) USA 19,000 Undergraduate and school pass outs Part Time 8.77 8.04 Australia 17,000 Undergraduates Part Time 8.27 7.78 Philippines 9050 Graduates and under graduates Full Time/Part Time 7.

71 8.25 India 2000 (tier II cities) to 7500 (tier I and II cities) Mostly graduates Full Time 8.72 7.57  (A Comparative Analysis of quality and cost of manpower) Source:- Raul (2004) and Princewaterhouse Cooper (2005)  (D) Employee Loyalty:-  The employee loyalty is very high as compared to the othercountries. (Sharma, 2004). Apartfrom the same, the students who are employed at the call centers/BPO/ IT/ITESfeel comfortable to work for the night shift. The time zone which is there isalso appropriate because with USA it is 12 hours and with UK it is 5 hours. (Babu and Jayabal,2004)  Weakness:-  (A) Scarcity of specialized resources:- The Indian youth is yet not consideringthe IT/ITES industry as the long term destination for work.

There are variousreasons for the same like lack of long term career prospects, work shiftproblems, mismatch of the expectations etc. (Business Standards, 2005). The youth still prefers the industrieslike manufacturing, banking, pharmaceuticals, service, law, academics etc. (B) Mismatch of Academics and Industry:- The semi urban and rural areas of India hasnot implemented the systems which should be at par with the industryrequirement. According to Mitra (2008),the same is happening because of the professional crunch of the facultiesprevailing in the education industry. If India, strengthens the educationaltraining programme then skilled professionals would be increased.

      Opportunities:-  (A) Potential youth from smaller cities:-  The uniongovernment has come up with “BharatNirman Project” under which inthe year 2005 the 47554 crores of rz were allocated to develop the semi urbanand rural area. The work is in progress and that is the reason most of theIT/ITES vendors are now focusing on the rural area. (Tripathy,2005). Also, the youth from smaller cities can beutilized more into the domestic BPO operations. The same can be helpful becauseof the low salary structure, low cost of training and business developmentexpenses. (International Business Times,2008) (B) Allocation of fund into Higher Education:- The Indian government has taken certain stepsto uplift the education system under “Bharat Nirman” project.

The government isinvesting to uplift the education system from “Sarva Shiksha Abhiyan” to upgradation of IITs, IIMs, NITs, and other state government universities. Threats:-  (A) Job hopping trend:- Till 2004-05 the cost effective business model worked for IndianIT/ITES/BPO industry. According to Raul (2004),the availability of skilled labor with least cost has been the driving forcebehind the growth of the industry. But, at the same time, there are certainissues which are also associated with this industry as far as the threats areconcerned that is unforeseen future, health hazards, smoking, unethical issues,etc. (Sharma 2004; Parikh 2005) (B) Trade Restrictions in India:- According to Raul (2004), thecountries like China, South Africa, Malaysia, Ireland , Taiwan etc. aremost  tax friendly countries foroperations compared to India. Also, China is coming up with  a huge threat and competitor for the industryoperations of India.  (C) Resistance of Job shiftingfrom developed country to India:- In the beginningof 21st century, the British Union had started campaigns for the offshore activities into countries life India and China (Raul, 2004).

The same has affected the Indian IT/ITES industryheavily and hence, the unemployment has started to begun with respect to thesame. The impact had risen when the white house also resisted the job shiftingto the off shore countries. (Haniffa2003, Iqbal 2005). This has impacted India as a country the most withrespect to BPO industry as the main outsourcing destination for USA to fulfillthe need for IT and IT enabled service. (Mehra,2005) (D) Political instability andTerrorism:- There are number of politicalinstabilities and terrorism attacks which India has encountered like The MumbaiBomb Blast, Terror attack on Hotel Taj etc.

Also, the political lobby hasfrequent policy changes, operational strategic choices and decisions etc. Thesefactors impact the industry operations adversely. Hence, the MNCs hesitate toexpand their operations as far as India is concerned.                 2.3 IT/ITES Industry:: EmployeeSatisfaction According to Luthans (1998), job satisfaction or employee satisfaction is anemotional response to a job situation which can only be concluded, often determined by how well outcomesmeet or exceed expectations. While the IT-ITES industries are similar to alarger extent, yet there are certain intrinsic differences in the level ofpeople interface, the competence level and professional demands of the employees. The IT sector is specificallymore knowledge-oriented, may be 24X7,flexible, and requires relatively more creative solutions to the businessissues.

However On the other hands, the ITES sector is more service-oriented,may be 24X7, rigid, stressful and relatively monotonous and repetitive. According to Singh etal., 1994; Singh, 2000; Weatherly and Tansik, 1993, The ITESprofessionals majority times suffer from job burnout, or job dissatisfactiondue to various reasons. Research over the past decade has shown that the coresymptoms of burnout are emotional exhaustion and depersonalization (Bakker et al., 2002; Leiter andSchaufeli, 1996). Apart, there are various variables and determinants associated asfar as the employee satisfaction in this industry is concerned, which can beexplained as follows.

 Ø Gender & Age:- The age and sex has its direct implication as far as theemployee satisfaction is concerned. According to Clark,1997 compared to men, women are having lower expectationsfrom job and hence it results into the higher job satisfaction. Also, accordingto the studies, younger workers are consistently less satisfied with their jobsthan older workers (Hall, 1994; Schultz,1973). Younger workers might have objectively poorer jobs than olderemployees but they also have higher expectations for their jobs that may leadto lower job satisfaction (Hall, 1994). Theemployees of the IT/ ITES industries are having various ages and genders ofemployees into the system which has a major impact on employee satisfaction.

 Ø Salary:- Salary is a vital job-relatedcharacteristic and also affects employees’ liking towards a job, their jobsatisfaction level and results into their commitment to the organization (Sionget al.,2006; Grebner et al. , 2003;Sharma and Jyoti, 2006; Kazemzadeh and Bashiri, 2005).Salary and promotionsare related to company policies, which in turn affect employees’attitudetowards work (Sharma and Jyoti, 2006). Ø Career Succession Planning:- It is anothercritical job-related characteristic which highly affects employees’satisfaction and their willingness to stay with the organization(Siong et al., 2006; Addaeet al., 2006) Ø Company Policies:- Policies matterto organizations and employees in a similar way; they will shape employees’perceptions of fairness and justice, and hence, their commitment to theorganization (Morris and Sherman, 1981).

It is also noted organizational policy and work environment increasesorganizational commitment which in turn leads to employee commitment andsatisfaction (Kamal and Hanif, 2009). Ø Rewards & Recognition:- Rewards andRecognition often affect employee satisfaction and motivation at workplace. Itgets converted into an ingredient of self-esteem and hence affects employeeself-fulfillment (Russell and Thite,2008; Sengupta and Gupta, 2008; Mishra, 2007; Kazemzadeh and Bashiri, 2005;Sharma and Jyoti, 2006)        2.4 SummaryTo sum up, the IT/ITEs industry is a backbonefor the economy of India and it provides a larger contribution to the globaleconomy as well. The Indian manpower industry is advantageous in a lot of wayssuch as providing services at a low cost, efficient & round the clockservices and good communication skilled resources.

At the same time, there arecertain weaknesses involved such as higher attrition rate because of variety ofreasons such as monotonous work, odd working hours, etc. The study alsoenlightens us by determining certain factors that lead to employee satisfactionsuch as salary, company policies, succession planning etc. The further study willhelp us determine the linkage between all the variables and will show us paththat can help to enhance the employee satisfaction ratio to companies inIT/ITES industry.

 

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