HRM after opening up of economy in India

There were questions about the real impact created by HRD. A study of HR professionals concluded that the HR (personnel) function was considered to be at the lower order of hierarchy terms of importance. Another survey based study conducted in the later half of 1980s observed that the major hurdle for HR professionals performing effectively is the lack of top management support and lack of adequate and meaningful research inputs to the profession. At the same time, the survey noticed the change in the role and status of the HR profession within organizations. Another study conducted in 1984 found that 3 in 1984 found that 30% of the 54 companies studied had separate HRD departments and another 38% had a separate HRD function as a part of the personnel department.

Total Human Resource Management:

Opening up of the Indian economy after the budget in 1992 saw Indian firms facing direct competition from MNCs entering India. The government started discussions about strategic disinvestments of PSUs and introduced competition in sectors like banking and insurance as well as allowed foreign direct investments in many sectors. While the trade unions resisted, they found that their support base was diminishing. The opening up of the Indian economy created a demand for talent and the traditional organizations (both in public and private sectors) became talent sources. The highly competitive higher education system comprising a network of Indian Institutes of technology, Regional Engineering Colleges, IIMs and state government and private institutions had created a focused pool of competent professionals. At the same time, a section of managerial employees viewed the opening up of the economy as an opportunity to experiment with new experiences and also to improve earnings.

Another significant event that happened was the development of the Information Technology sector, riding on the Y2K wave, Indian organizations like Infosys, Satyam, TCS, and Patni Computers positioned themselves as cost effective and reliable supplier of human resources to international companies with legacy systems so that they can tide over the crisis. Their strength was the ability to mobilize a vast pool of technically trained people who could be deployed at the client’s location, with development support from India. Massive staffing requirements saw recruitment evolving as very specialized function separate from but closely interlinked with the other HRM functions. As demand exceeded supply of technical talent compensation levels also rose right at the entry point. India witnessed the arrival of the “knowledge worker – well skilled, individualistic and ambitious about career. Attrition till then a restricted phenomenon become common place and this placed the next set of demands on the HR function.

The demonstrated success of Y2K allowed Indian companies to get sustained business from abroad. This entailed continuing with the massive sourcing exercises and also making sure that internally organizations remained stable. It was also necessary that employees distributed across geographic locations were connected wit the organization. IT supported solution particularly ERP based human resource information systems like SAPHR. People Soft, Oracle, and Ramco became handy. Innovative HR practices adopted by the IT industry including the much discussed allowance of NIIT and employee stock ownership plans (ESOPs) as well as workplace resembling college campuses more than factories become the new face of HRM.

Post 2000 competitive pressures and budget cuts were forcing many global organizations, including the government to cut operating costs. Indian was soon recognized as a cost effective location for outsourcing. This gave rise to the information technology enabled services (ITES) companies, whereby organizations could transfer their internal processes to India. The advantages India were its English speaking, university educated population, and relative low operating costs. While IT industry concentrated on the technically educated talent, the ITES industry focused on the large number of non technical students from Indian universities. However, the massive displacement of jobs abroad led to opposition form international trade unions and political parties and these became highly discussed points during elections in the US and Europe.

A similar revival was seen in manufacturing sector too, where Indian companies were able to rise to global performance benchmarks. The list of Indian companies winning the coveted Deming Prize for quality has been impressive, with four Indian companies including Asahi Glass India (auto glass division), Rane Madras, Reliance Industries Ltd (Hazira manufacturing unit) and Mahindra & Mahindra (farm equipment unit) winning awards in 2007. Sundaram Calyton Limited (the brakes division) one of the early winners of the most coveted Japan Quality Medal, was able to achieve it by focusing on HRM to keep a highly skilled and motivated employee group.