Journal of World Business 47 (2012) 159–166

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Journal of World Business

journal homepage: www.elsevier.com/locate/jwb

Managing growth: Human resource management challenges facing the Indian

software industry
Narendra M. Agrawal a,*, Naresh Khatri b,1, R. Srinivasan c,2
a
Organizational Behavior & Human Resource Management, Indian Institute of Management Bangalore, Bannerghatta Road, Bangalore 560076, India
b
Health Management and Informatics, School of Medicine, University of Missouri, Columbia, MO 65211, United States
c
Corporate Strategy & Policy, Indian Institute of Management Bangalore, Bannerghatta Road, Bangalore 560076, India

A R T I C L E I N F O A B S T R A C T

Keywords: Indian software industry has had a phenomenal growth in the last two decades and is expected to sustain
Indian software industry this momentum in the foreseeable future. Based on content analysis of 25 cases, the paper identifies
Organizational growth several human resource management challenges: managing human resources in globally distributed
IT professionals
team, shortage of software professionals having sufficient knowledge and competencies, low-skilled
Globally distributed teams
Human resource management practices
nature of the work, lack of well-developed HR systems and processes, high employee turnover, lack of
work-life balance, and the problems associated with the use of contract employees. The paper develops a
model for managing growth linking the various variables emerging from the study.
ß 2011 Elsevier Inc. All rights reserved.

The Indian IT industry revenue consisting of software and
services for the FY2011 is expected to be USD 76.1 billion. The
share of Indian IT industry as a proportion of national gross
domestic product has increased from 1.2 percent in 1998 to an
estimated 6.4 percent in FY2011. Its share of total Indian exports
has increased from about 4 percent to 26 percent in FY2011. It is
estimated that the industry provides direct employment to about
2.5 million and creates additional 8.3 million jobs through indirect
and induced employment (NASSCOM, 2011). Availability of
qualified and talented manpower at much lower costs than other
developing economies has been a major competitive advantage of
the Indian software industry (Budhwar, Luthar, & Bhatnagar, 2006;
Budhwar, Varma, Singh, & Dhar, 2006). Numerous structural
problems afflict Indian IT industry, largely because of its heavy
reliance on international markets and resulting lack of attention to
developing domestic market (D’Costa, 2004). Further, weak
domain expertise of Indian firms leads to lower productivity
and revenue per employee. Software export earnings per person
from India while on the rise have not been particularly high when
compared to other software economies such as Ireland and Israel
(Arora, Arunachalam, Asundi, & Fernandes, 2001)
The growth of industry has been fueled by customized software
solutions and maintenance services, and has depended mostly on
increase in number of professionals deployed (Arora et al., 2001;
* Corresponding author. Tel.: +91 80 2699 3037.
E-mail addresses: agrawal@iimb.ernet.in (N.M. Agrawal), khatrin@health.mis-
souri.edu (N. Khatri), srini@iimb.ernet.in (R. Srinivasan).
1
Tel.: +1 573 884 2510.
2
Tel.: +91 80 2699 3143.
Krishnan & Prabhu, 2004). Indian software projects are chiefly
time- and material-based and are positioned on the low end of the
value chain (D’Costa & Sridharan, 2004). Researchers have been
arguing about need for the Indian software industry to move up on
the value chain (Ojha & Krishna, 2004) and towards development
of software products (Krishnan & Prabhu, 2004). The high growth
rate of Indian IT industry and its importance for sustaining the
growth of Indian economy were the major motivating factors for
the study. In addition, the findings of the study are relevant for
other fast growing industries in India and other developing
countries.
1. Literature review
A survey of 658 chief executives from 40 countries by the
Conference Board (2006, quoted in Laurie & Lynch, 2007) found
that sustaining the top line growth was the top priority of chief
executives in America, Asia, Europe, and South America. The
growth of the firm facilitates attracting talent, creating processes
that lead to growth of capital, and increasing the market valuation
of the company. Management competence has been identified as a
critical factor in managing and sustaining rapid growth in high-
technology companies (McCarthy, Spital, & Lauenstein, 1987).
Using data collected from the chief executives of high-technology
firms, McCarthy et al. (1987) identified two major growth
challenges – market orientation and people.
Barringer and Jones (2004) identified key differences in
management techniques employed by fast-growth firms and
average- or slow-growth firms to overcome the ‘‘managerial
capacity problem’’. The managerial capacity problem, first
propounded by Penrose (1959), suggests that the firm’s ability

1090-9516/$ – see front matter ß 2011 Elsevier Inc. All rights reserved.
doi:10.1016/j.jwb.2011.04.002
160 N.M. Agrawal et al. / Journal of World Business 47 (2012) 159–166
to grow is directly related to its ability to add managerial capacity
to administer and accommodate its growth. In a study of high-
growth Finnish firms, Littunen and Tohmo (2003) argued that the
internal networks of firms (entrepreneurial teams) bring about
competitive advantage, innovations, and efficiency. Saunders and
Chan (2002) observed that the rapid-growth firms faced numerous
challenges, such as involving employees in decision making and
fostering an open work environment, finding the right employees,
attrition of employees with critical knowledge or proprietary
information, having a chief executive who can communicate the
vision of the organization, and developing leadership and
management skills in executives
Agrawal and Thite (2003) conducted in-depth interviews of
stakeholders from Indian software organizations and found that
the industry is facing many challenges: (1) high rate of voluntary
employee turnover, (2) reluctance of professionals to make a
transition from a technical to managerial position, (3) lack of basic
managerial and leadership skills, and (4) work and learning
preferences of software professionals that remain unmet. It is in
the above context that the study was designed as a qualitative
research study to understand the unique challenges of growth in
the Indian IT industry.
2. Methods
The study aspired to give meaning to the social phenomena
occurring in the context of software industry by describing,
decoding, and translating them (Van Mannen, 1979). Qualitative
research methods provide an opportunity to combine rational with
the intuitive approach to knowledge creation. In addition, they are
more holistic and benefit from serendipitous findings (Das & Hari,
1983). Evered and Louis (1981) suggest that view from the inside is
experiential, actor-focused, interactively emergent, and relevant to
the situation; and the data and meaning are interpreted in a
context. Hence, we employed a qualitative methodology to bring
the view from within. Eisenhardt (1989) argue that multiple cases
are powerful and better tools to generate theory, as they allow
replication of observations, thereby enabling the researcher to
validate and ratify hypothesized propositions. We used multiple
cases from different software organizations and also used insiders
to get context rich data.
Gibbert, Ruigrok, and Wicki (2008) highlighted the need for
internal validity, construct validity, external validity, and reliabili-
ty to assess the rigor of field case research. The internal validity of
the study was enhanced by incorporating triangulation in the
research framework that drew from the literature on various
streams in human resources management. The construct and
external validity were improved by triangulating data collected
Table 1
Clusters and frequency of problems associated with each cluster (total number of cases, N = 25).
S. no. Clusters
Frequently observed clusters
1. Turnover of IT professionals
2. HR-related problems inherent in onsite-offshore delivery model
3. Lack of technical and interpersonal skills in both team leaders and team members
4. Routine, boring nature of maintenance and legacy work
5. Inadequate HR practices/Systems
6. Poor transition from technical to managerial roles
Less frequently observed clusters
1. Estimation of time for projects
2. Contract Employees
3. Over promises and breaking of psychological contract
4. Work-life balance
from different firms at different points of time from similar
contexts, known as a nested approach (Yin, 2003).
The data for the study came from 25 experiential, narrative case
studies written by 55 participants of the Executive Post-Graduate
Program for software industry executives at a reputed manage-
ment institute in India. The cases were written by the participants
based on the real life situations in small teams of 2–3 persons per
team. The length of cases varied from 2 to 12 pages, with an
average length of 4.2 pages. The average work experience of the
participants ranged from 2 to 15 years, with a mean of 6.5 years
and a standard deviation of 2.5 years. Fifty-six percent of the
participants were from large organizations (>5000 employees), 26
percent from medium-size organizations (300–5000 employees),
and 18 percent were from small companies (<300 employees).
Eighty-eight percent of the participants were in leadership roles;
55 percent of them being team/module leader, and 33 percent
were project managers. Eighty-eight percent of the participants
were male.
Two researchers independently analyzed each of the cases and
identified the problems emerging from the cases. While the first
researcher identified a total of 54 problems, the second researcher
identified 48 problems. Both researchers discussed the problems
identified by them to forge a consensus. The two researchers
agreed upon a total of 52 problems emerging from the cases. Each
of the problems was identified with a key word/phrase and 52
problems were clustered into 10 broad themes. While fourteen
cases revealed multiple problems; 11 cases had one problem each.
3. Findings
Important clusters/themes and the frequency with which they
occurred in our study are presented in Table 1. Six themes/clusters
of HR-related problems were noted in 5 or more cases. The other
four themes/clusters of HR-related problems occurred only in 2
cases each. We elaborate on our findings on major HR challenges
that emerged in our study in the following paragraphs. We have
provided case numbers in parentheses.
3.1. High turnover of IT professionals (1, 3, 4, 6, 7, 8, 15, 16, and 19)
The theme appeared most frequently and was mentioned in 9
out of 25 cases. As seen from the following two illustrations a
number of factors contributed to high rate of attrition.
Ajit had joined Info Tech as a Product Development Manager.
After joining the company, he soon realized that the product
had slipped the delivery dates. He understood that high
attrition was one of the major reasons for the delays in project
Number of cases Case number in which
the cluster-related cluster-related
problems occurred problems occurred
9 1, 3, 4, 6, 7, 8, 15, 16, 19
7 1, 2, 7, 8, 14, 18, 25
7 1, 6, 9, 11, 19, 23, 25
6 7, 12, 13, 16, 19, 24
6 1, 5, 6, 7, 20, 24
5 6, 10, 17, 20, 21
2 4, 25
2 19, 22
2 9, 24
2 15, 16
 N.M. Agrawal et al. / Journal of World Business 47 (2012) 159–166
delivery. Ajit realized that the job market was really hot and
there were more job openings in the market as compared to the
supply of talent. (3)
Resources [IT professionals] were not inclined to work for long
term in projects of similar nature due to lack of growth and
learning opportunities; and round the clock (24  7) call require-
ments. People left the project once they learnt whatever they
wanted to learn (1).
The rapid growth of the industry, lack of opportunities to work
in new domains and technologies, high work pressure and
reluctance of leaders to invest in the growth of team members
have in all likelihood contributed to high attrition in software
firms. The high work pressure and routine nature of maintenance
and legacy work added to frustration and burnout. The shortage of
IT professionals emerged as one major reason for high turnover and
job-hopping (Khatri, Chong, & Budhwar, 2001). Other studies
(Nagadevara, Srinivasan, & Valk, 2008; Rathi, 2003) focusing on
Indian software industry corroborate the high turnover problem
observed in our study. High attrition rate seems to have led to the
loss of knowledge and competencies in project teams, which
adversely affected project delivery dates and customer satisfac-
tion. The high attrition also contributed to induction of new
members who often were fresh and not yet ready to be part of the
project team.
3.2. Problems arising from onsite-offshore delivery model (1, 2, 7, 8,
14, 18, and 25)
The onsite-offshore model requires that one or more members
from the project team are located onsite at the client organization.
Onsite members work with the client to define the project
requirements and coordinate on a regular basis between the client
and the offshore team working in India. This service model has
contributed significantly towards cost competitiveness of the
Indian software companies. The globally distributed team model
has not fully evolved as is evident from the following excerpt:
The project organization was not clearly defined in terms of
overall leadership of the project. It was not clear whether the
offshore project manager or the onsite coordinator was the
head of the project. The onsite resources were recruited in the
U.S.A. and they were deployed at the customer location. Since
the rotation of team members between onsite and offshore
locations was not very effective, they did not work with each
other and did not build team-spirit. The onsite team members
had excellent technical expertise, but they lacked relationship
management skills. The onsite team members looked down
upon offshore team members as they were ‘rookies’. Offshore
team members could not communicate well with the
onsite team members because they lacked confidence about
technology (1)
Onsite team members have rich experience and competence;
and continuous interactions with clients enable them to acquire
domain expertise. Offshore teams consist of experienced and
novice members. The relationships between onsite and offshore
team members are characterized by asymmetries in knowledge
and experience, which often become the cause of potential
misunderstanding (Vlaar, van Fenema, & Tiwari, 2008)
When Pravin visited the client second time for three weeks,
he used to hold a daily conference call with offshore team
around 8.00 p.m. Pravin used to give detailed instructions to
offshore team members on what they should work for
the next week. The instructions had very little continuity
from the previous week and the offshore team members
161
used to feel that the work assignment was happening
arbitrarily. (14)
The proximity to customer is likely to be used as a source of
power by onsite team members but is likely to create conflict
between onsite and offshore team members. Onsite team members
interact personally with customers and have greater visibility to
customers. Since onsite members perceive that they are expected
to keep customer in good humor, they tend to agree with
reasonable as well as unreasonable and unplanned requests from
customers. Such unplanned changes in the project requirements
make the project delivery task more complex and difficult for
offshore members.
Onsite posting is perceived as a reward by team members in a
software team, and those who do not get onsite posting perceive a
lack of fairness. Onsite postings create opportunities to visit a
foreign country and opportunities for substantial savings. In
addition, onsite postings create opportunities to learn about
domain knowledge and customer management skills.
Greg said to Devendra, ‘‘Though I am not too keen about a
foreign trip, an onsite posting provides an opportunity to make
a lot of money’’ (7)
Indian software companies lack career planning processes. The
software professionals after they return from the onsite posting
realize that they have lost on the promotional opportunities and
the associated salary increases and perks. It makes them feel that
the organization was not fair to them and they tend to leave the
organization.
Rohit who had been onsite for three years, after coming back at
offshore realized that his boss wanted him to be in the same
senior developer role which he had played before onsite
posting. He argued with his boss that almost all his
contemporaries at offsite were promoted as a project manager
or as a team leader. In addition, Rohit was pained that he would
get much less salaries as compared to his contemporaries after
coming back to India (8).
Due to proximity and visibility of onsite members, a customer
tends to give substantial credit for successful completion of a
project to onsite members and communicates it to offshore senior
management. Onsite members being close to customers also tend
to take credit for all the good work done by the project team. The
familiarity with the existing onsite members often leads to a
customer asking senior management of the company that the same
person to continue as onsite coordinator for subsequent projects.
Senior management tends to accept such a request from the
customer to keep them satisfied. However, such an action by the
senior management further reduces the possibilities for other
offshore team members to go onsite and reinforces the sense of
inequity as perceived by them.
3.3. Lack of technical and interpersonal skills in team leaders and
team members (1, 6, 9, 11, 19, 23, and 25)
Software development team needs to have technical knowl-
edge, domain expertise, project management skills, and customer
management skills (Agrawal & Thite, 2006). Seven cases provided
evidence about lack of sufficient knowledge and competencies in
team members and leaders and how it affected the functioning of
the software development team.
Offshore team members could not face the customer directly
due to lack of communication skills. They even were uncomfor-
162 N.M. Agrawal et al. / Journal of World Business 47 (2012) 159–166
table to communicate with the onsite members due to lack of
confidence about technology (1).
Nipun had to quickly get people on the project. He tried to get
contract employees, took a fresh graduate from outside, and got
an onsite member to join the team. While he got the numbers,
the team dynamics got disturbed. He found that some team
members did not have necessary skills to work on the project
and most of them found difficult to work along with each
other (19).
Creation and enhancement of a project team on a short notice,
movement of team members to other projects, and high attrition
are major factors that lead to a software project team experiencing
shortage of manpower. Due to exigencies of work and shortage of
competent fresh software professionals in market, organizations
are forced to select fresh graduates who may not have technical
competencies for the project. Further, particularly in small
organizations, fresh graduates are put in project team without
any induction or project-related training.
Kapil had four years of project management experience and
hence he was made the project manager for the new project
involving Microsoft technology. Kapil was absolutely clueless
about the Microsoft technology and he had only worked for Java
technology. However, he had felt that the two team leads, Ram
and Rakesh being experts in Microsoft technology, could
provide the technical support for the group. (11)
The findings raise an interesting question that what compe-
tencies are absolute essential for the role of a project leader in a
software project.
3.4. Routine and monotonous nature of work (7, 12, 13, 16, 19, and 24)
Karan was responsible for Mariner, a maintenance project,
having three million lines of code (LOC), written in VB 3.0
application with 16-bit code. The project was highly visible,
provided for direct customer interaction and generated
substantial revenue for the company. Karan was very happy
when he was asked to lead the project. However, just within six
months, Karan started getting request for project change from
his team members. The typical reasons for project change were
– ‘‘I cannot take the pressure any more’’; ‘‘I think I don’t have a
value add for my career’’; ‘‘My life has become a huge bug-fix’’;
‘‘It’s a monotonous job’’ and ‘‘I think this project is a crap’’. The
frustration in the team grew with time and with more hectic
schedules, the motivation level started dwindling. The project
being a very routine maintenance project provided very limited
learning opportunities for the team members (12).
The findings suggest that software professionals seem to be
interested to work on software development involving current and
new technologies. They get bored easily with the maintenance and
legacy work. As perceived by software professionals, a typical
maintenance project does not provide enough learning opportu-
nities, requires bug fixing or time-bound enhancement and hence
is not considered to be significant or a challenging task. Continuous
monitoring and change requests from customers add to work
pressures and tensions, and reduce the sense of autonomy for
people working on such projects. Consequently, many young
software professionals working on maintenance projects request
for change to another project within the organization or move to
another organization at the earliest opportunity. Knowledge
workers like to work on assignments which create opportunities
for them to use the existing knowledge and make it possible for
them to learn new knowledge (Agrawal, 1999).
3.5. Inadequate HR systems and processes (1, 5, 6, 7, 20, and 24)
The shortage of manpower leads to a tendency in mangers to
hold on to the manpower available to them without being
concerned about the growth aspirations of the employees.
Mangers tend to agree to the expressed expectations of the fresh
recruit at the time of selection but due to work pressures or due to
lack of commitment for the growth of team members they do not
give enough attention to the career aspirations of the team
members leading to frustration and breakdown of psychological
contract.
Greg was a techie at heart. He wanted to get into product
development. Dev, his present project manager as well as
Prashant, the previous project manager had assured him that
they would facilitate a change of role. However, even after one
and half years, Dev could not transfer Greg to his field of liking.
Inter-group transfers were very difficult. This coupled with lack
of clearly defined job rotation policy led to the Greg’s transfer
issue being never seriously considered. Greg resigned from the
organization and joined another organization (7).
It was observed that the manager who recruited the new person
left the organization without meeting the commitments made by
him. It seems that many managers knew that they would not be for
long in the company and hence they felt comfortable in making
promises to the new recruits without being bothered about
fulfilling them.
The recruitment team could not judge the individuals well as
the recruitment processes were not mature enough (1).
The high growth rate of Indian software industry and the
high attrition rate have led to Indian software industry
recruiting large numbers on a regular basis. In such a context,
the case observation that recruitment processes were not
matured enough sounds rather odd. Possibly, the need to
recruit large number of software professionals on a short notice
leads to organizations not making enough investment to
develop recruitment processes.
Annie after her post-graduation in human resources from a
reputed B-school had joined a leading IT multinational
corporation. She reported to Arnab, the HR head, and
indirectly to Ram, the business manager. Arnab was earlier
handling sales function and was moved to HR function a few
years before. Arnab, despite his intelligence and abilities,
lacked professional maturity. Ram never liked or approved
policy decisions initiated by Arnab. Ram was not even helpful
to Annie. In fact he made things difficult for Annie by
offending her on small errors and by not giving her due credit
when she did a good job. Annie, though tactful and
diplomatic with Ram, got so frustrated that she started
looking for a new job just after three months of being with
the organization (5).
The case findings show business manager did not respect HR
systems and processes. Lack of respect for HR systems and
processes by business managers make the task of HR professionals
more difficult and complex. It seems that business managers are
highly pre-occupied with business challenges and as a result, they
seem to be reluctant to invest time and effort to institutionalize
HR systems and processes. The lack of effective job rotation, career
and succession planning, coaching and mentoring, development
of leadership and management skills, and lack of matured
recruitment processes clearly emerged from various case data.
 N.M. Agrawal et al. / Journal of World Business 47 (2012) 159–166
3.6. Poor transition from technical to managerial roles (6, 10, 17, 20,
and 21)
The software industry being a knowledge industry, most of the
new employees join as individual contributors. The fast growth of
the industry creates numerous leadership positions. The high
performing IT professionals are the ones who are usually promoted
to these positions. Young IT professionals who are promoted as
leaders show low leadership skills and poor understanding of their
roles as leaders.
‘‘Converting high-strung young technologists to managers is no
easy task’’, said Dipesh, senior manager of a fast growing group
in a big multinational. His group had a steep growth from
around 10 members to 50 members in the last six months.
Dipesh promoted his brightest technical talent, Ravi, Ram and
Rohit as project managers and each of them was managing a
team of about 15 members. The promotion came as a pleasant
surprise to Ravi, Ram and Rohit – but after the initial euphoria,
they started getting frustrated in the new roles, especially with
the human issues (6).
Ravi said, ‘‘I can code in five hours what my best engineers do in
five days. I cannot work with a team as incompetent and de-
motivated as I have. Give me three IIT graduates like me, and I
will complete the module in one-fourth the time’’ (6).
High performers, promoted as first-level leaders have a
tendency to compare the performance and competencies of the
team members with their own competencies and performance.
They do not realize that, as leaders, their main responsibility is to
improve the competencies and capabilities of the team members.
‘‘After all, the whole team has contributed; why can’t we give all
of them the same performance rating and be done with it?’’
quipped Ram, while looking at the bell curve. Ravi was more
forthright in expressing the difficulty all of them were really
facing. ‘‘How can you look at a guy in the face, and tell him that
his performance is below the mark. Ultimately, the perfor-
mance rating will reflect in his salary, and he will just quit if he
does not like it. I do not want to spend hours recruiting another
fresh person and training him on the basics of the domain.’’ (6).
Software professionals in leadership positions find it painful
giving performance feedback to their team members. The task of
force fitting bell curve becomes much more complex because of the
project- and team-based nature of the software development work
in the Indian context.
The case data suggest that the young software professionals,
promoted as managers were reluctant to invest in coaching and
mentoring team members as revealed by the following case
excerpt:
‘‘As managers, it is your job to coach people and counsel them
into better performers’’, Dipesh tried to explain. ‘‘It is much
easier said than done.’’ Rohit persisted, ‘‘You cannot make a
horse out of a donkey. You cannot imagine the amount of time I
have to spend explaining trivial technical issues to my team
members. I get interrupted every hour by one of them, and it
dampens my productivity’’ (6).
Young technocrats as first time leaders show poor customer
orientation as revealed in the following quote:
‘‘I have no understanding of why my customer loves to talk on
the phone for hours going over my status report with me after I
have wasted a full 2 hours creating it. (6)
163
The data suggest that young software professionals promoted
as leaders feel that performing leadership functions such as
attending customer meetings and preparing PowerPoint presenta-
tions are waste of time. Project managers do not like to spend time
on making customer calls. Invariably, these calls have to be made
late in the day requiring them to stay back in the office.
3.7. Other issues
3.7.1. Estimation of time for projects (4, 25)
Estimation of delivery time for software service projects is a
highly challenging and unpredictable task.
Madhu, the project manager had felt that the project estimates
were less by thirty percent. Group members had concluded that
the project estimation was done by someone who was clueless
about the project functionality and technology. Govind, the
senior project manager kept insisting that the group should
follow CMM Level 5 processes for the project and the group
members had felt that it would further add to the delay (25).
Due to lack of reliable estimates and highly demanding
customers, project managers tend to agree with unrealistic time
estimates. However, such time estimates become a point of conflict
between project manager and his or her team members.
3.7.2. Contract employees (19, 22)
Contract employment is one way to overcome the problem of
shortage of manpower resources in a project team. Organizations
typically use contract employees to do mundane job, as regular
employees are reluctant to work on repetitious and monotonous
jobs. Contract employments are low paying jobs without any job
security. Contract employees tend to keep looking for permanent
job opportunities and this leads to greater attrition amongst
contract employees compared to permanent employees. Secondly,
software employees who continue to work as contract employees
are possibly those who are not able to get permanent employment
due to lack of relevant knowledge and learning abilities. Such
contract employees will require much higher level of supervision,
creating extra work load on team leaders and project leaders.
Nipun employed some contract employees to meet the urgent
project needs. However, he found that contract employees
tended to have much higher level of attrition as compared to
regular employees as they were always in search of a
permanent job. Contract employees, who stayed back longer
in a job, were typically having fewer competencies and hence
required much higher level of supervision as compared to
regular software professionals (19).
High performing contract employees in software firms feel that
they have not been adequately recognized and rewarded.
Consequently, they experience lower level of belongingness and
commitment to their organization.
Sanjana Ramachandran was a high performing contract
employee who had experienced a different kind of problem.
She was an employee of IDM Technologies in Chennai and was
working for L3 Technologies in Bangalore for the last five years.
She was extremely good at her work and enjoyed her work.
However, being a contract employee, she could not enjoy many
facilities and perks which were available to regular employees
of L3 Technologies. . .One day, a colleague of Sanjana, a regular
employee of L3 Technology was promoted to the post of team
leader. He was apparently less competent than Sanjana but she
had to report to him and she did not feel good about it. ‘‘I feel
164 N.M. Agrawal et al. / Journal of World Business 47 (2012) 159–166
that I neither belong to IDM nor to L3. Though I like the work I
am doing at L3, I am missing the growth opportunities in my
career. I cannot afford to be an entry level software developer all
my life.’’ (22)
3.7.3. Over promises and breaking of psychological contract (9, 24)
Pooja was one of the average performers in Manjeet’s team.
During the integration phase of the project, Manjeet wanted the
team members to put extra efforts to ensure timely completion
of the project. Manjeet on the advice of his boss, Prem, told
Pooja to put extra efforts. He promised her that she would be
crowned as ‘‘Champion’’, the highest ranking for performance
appraisal, if she put all the extra effort. Project was successfully
completed. During the appraisal process, Pooja and Ravi were
two competitors for the choice of ‘‘Champion’’. Prem strongly
felt that Ravi deserved the most coveted ‘Champion’ rating and
Pooja was rated the highly competent employee. Pooja felt
highly depressed after receiving the performance appraisal
rating. She felt terribly let down and felt that she was
exploited. (9).
Data from the case suggest how managers make promises to
meet urgent project needs without thinking through the
implications of not meeting those promises. In another case,
the manager who promised job-rotation to a team member to a
software development group from testing and maintenance
function was not very keen to lose a high performer in an
existing role. The manager gave reasons which would look valid
why the person could not be job-rotated to software develop-
ment group. In both the cases, team members found that the
promises made to them were not fulfilled. In turn they
experienced breaking up of psychological contract and pain,
anger and frustration which were associated with the unfulfilled
psychological contract.
3.7.4. Work-life imbalance (15, 16)
Unrealistic project delivery dates due to demanding customers
tend to overload IT professionals causing them to experience work-
life imbalance.
Srikanth was a project manager in a product startup company
developing a platform for wireless data solutions. One
afternoon, Mahesh, one of the lead developers, came to
Srikanth and told him, ‘‘Srikanth, it is the last project for me
in the company. I need to balance my work and social life. I don’t
think I can do that here’’. Many of the recent projects that
Mahesh worked on were crunched on delivery dates. Require-
ment specifications were not clear and the developers were
asked to redo the work. The scope of the project increased
several times but the deadlines did not change. Mahesh had
married recently but did not complain about long working
hours (15).
The case data suggest that organizational and individual
factors jointly are responsible for adversely affecting work-life
balance for software professionals. Competent software profes-
sionals are given much bigger responsibilities as compared to
other team members. Being young and energetic, they enjoy it
initially but over time they get stressed and experience burnout.
They soon realize that while many colleagues have been having
comfortable life, they are being burdened with additional work
and have no work-life balance. They experience a sense of
inequity, resent it, and want to take revenge on superiors and
the organization for the inequity by resigning from the
organization.
4. Discussion
Findings from the study have identified six major and four
minor challenges in the fast growing Indian software industry. The
data from the cases show linkages between the challenges and
other issues which are described in cases. The emerging model
from the findings is presented in Fig. 1. Many of the linkages shown
in the model are referred in multiple cases, establishing the
reliability of the linkages. Five variables, namely, onsite-offshore
delivery model, lack of knowledge and competencies amongst
team members and leader, nature of work, inadequate HR systems
and processes; and technocrats as first time leaders are rooted in
the unique structure and the fast growth of the software industry
in India. Since, these variables can be molded by an organization;
they are categorized as independent variables. We discuss below
the five variables and their antecedences and consequences as
emerging from the cases.
Project structure of the work being done by globally
distributed teams is a major challenge in terms of project delivery
and satisfaction of team members. Since onsite and offshore team
members are geographically too far from each other, they do not
get many opportunities to interact face-to-face. The findings
suggest that the onsite and offshore members lack role clarity and
as a consequence, they do not build a single team identity or
superior understanding of the work context of each other. In turn,
it affects the project delivery. Onsite posting is perceived and
aspired for as a reward by team members and lack of proper
selection criteria lead to team members perceiving lack of
distributive and procedural justice. During an image sharing
simulation run by the first author for software professionals
(Agrawal, 2008), interesting images emerged based on the
perceptions being held by onsite and offshore team members
about it each other. Members of offshore team had described
onsite team members as having easy time, no process orientation,
behaving as customers, glorified postman, always complaining
and low on appreciation and getting lot of recognition from senior
management and customers. Onsite members had described
offshore team members as operating in comfort zone and not
being in touch with customer’s real situation, highly ‘technical’
and lacking business acumen, inefficient, not being able to
appreciate cultural difficulties of working in a different country;
and response time which was not in congruence with the agreed
commitments. Vlaar et al. (2008) suggest that the onsite and
offshore team members should engage in acts of sense-giving,
sense-demanding, and sense-breaking. It facilitates them to make
sense of their tasks and their environment, which may encourage
congruent and actionable understandings. Frequent movement of
onsite team members to offshore and vice versa can further work
towards developing superior understanding of context and the
behaviors emerging from those contexts. Lagerstrom and
Andersson (2003) suggested effective socialization of onsite
and offshore team members helped them in appreciating and
empathizing with each others’ contexts and facilitated creation
and sharing of knowledge.
Lack of knowledge and competencies in team members and
leaders is linked to high rate of attrition. Indian software firms
being mainly in service field accept contracts in different domains
and technology. In addition, for mitigating the geographical risk,
the Indian software firms have been developing business in
different countries (NASSCOM, 2008). Kuruvilla and Ranganathan
(2008), based on the study of Indian software industry have also
observed that the growth of Indian software industry is seriously
threatened by two macro-level problems, namely, skills shortages
and the inability of the country to produce higher levels of skills;
and two micro-level problems, namely, high levels of employee
attrition and rapidly increasing manpower costs.
 N.M. Agrawal et al. / Journal of World Business 47 (2012) 159–166
Fig. 1. Linkages of clusters emerging from the analyses of 25 cases.
The nature of work in Indian software industry is essentially
maintenance and testing functions for legacy systems. These
account for about 65 percent of the total revenue (NASSCOM,
2008). Because of an attractive salary, pleasant work environment,
positive brand image and lack of equally good opportunities in
other industries, Indian software industry is able to attract highly
competent knowledge workers, mostly engineers who have
excellent learning and analytical capabilities (Agrawal, 2001).
Project nature of work is characterized by uncertainties and
overloads. In context of Indian software industry, the fast growth,
global delivery model and lack of knowledge and competencies
further add to the complexity. Enriching the project with resources
is one strategic move to take care of uncertainties and overloads.
Typically, a fresh engineer needs to be provided 3–6 months of
finishing school training, followed by internship on a project for
another six months. Agrawal and Rao (2002) have discussed the
need for the software organization to adopt second and third tier
academic organizations and work along with them to deliver
finishing school training as a part of the degree programme. While
sporadic initiatives have been taken by a few software organiza-
tions, much more needs to be done in this direction.
Lack of well-evolved HR systems and processes lead to
managers making over promises and breaking of psychological
contract and which in turn adversely affects attritions and project
deliveries. Greiner (1972) observed that in the journey of
evolution, firms experience challenges of direction due to lack of
leadership and challenges of control due to lack of systems and
processes. Kotter and Sathe (1978) observed that the fast growth
requires firm to invest a much higher level of effort for recruitment
and selection and as a consequence the other HR functions, such as
training and learning, get neglected. Since software professionals
were promoted by the firms after 2–3 years in leadership position,
they were not ready for the leadership position and hence did not
perform the leadership role effectively. Leaders were reluctant to
take responsibility for communicating with and managing the
customers. Thus the lack of leadership competencies and inade-
165
quate HR systems led to lack of work-life balance, high attrition
and delays in the project deliveries.
5. Managerial relevance
Findings from the study have important lessons for sustaining
the growth of Indian software industry and for sustaining the
growth in other global service industries. The growth and
competitiveness of Indian software industry is structured around
globally distributed project team model. Team managers need to
ensure that the model works effectively and members feel good
about their membership in the distributed teams. Every member in
the globally distributed team irrespective of the location should
have clear and specific role-script. Since software professionals
perceive onsite posting as a reward, managers should clearly
define criteria being used for onsite posting and inform every team
member about those criteria. Lack of project related knowledge,
both technical and domain expertise, leads to team members
feeling stressed and anxious and project gets delayed. Early in the
life of a project, managers should ensure that the team members
have requisite knowledge and skills required for the project.
Further, high attritions during the life of a software project leads to
new members being added and they need to be educated on a
continuous basis. A large part of the work being done by the Indian
software industry is targeted legacy systems, which are routine
and simple. These routines can be learned fast and has contributed
to the growth of the industry. However, the legacy system work is
found to be monotonous and hence most of the software
professionals do not like it. It is one of the major factors
contributing towards high attrition in the software industry.
Managers need to realize that the nature of work which
contributed to the growth of the industry so far will not be able
to sustain the growth in future. Thus the industry needs to learn,
innovate and grow up on the value chain to sustain the growth.
Finally, the findings from the study clearly suggest that managers
need to make substantial investment in nurturing leadership and
166 N.M. Agrawal et al. / Journal of World Business 47 (2012) 159–166
HR processes and should work towards helping team members to
experience work-life balance.
6. Limitations and agenda for further research
The primary limitation of this study is the small sample size.
However, given the purpose of the study – to decode human
resource challenges as experienced by the participants of the
industry, the study used case-based narratives from the actors in
the Indian software industry. The study has helped in building a
model for managing the growth of the industry. The future studies
can validate the model emerging from the study. The participants
who wrote the case studies were essentially middle managers with
operational responsibilities. Future research could capture the
perceptions of managers from different levels, particularly from
senior and top management; and from the corporate services
functionaries such as HR and finance executives, using mixed-
method approaches as employed by Budhwar, Varma, et al. (2006)
or case-based approaches (Raman, Budhwar, & Balasubramanian,
2007).
With the focus on rapid-growth firms in the Indian IT/ITES
industry, some of the challenges might arise from the specific
nature of the industry, viz., onsite-offshore delivery models. The
findings and implications for managing those might not be
generalizable to other rapid growth contexts. A multi-industry
study could largely help in identifying generic challenges for
managing and sustaining rapid growth.
Acknowledgements
We are grateful to Centre for Software and IT Management
(CSITM) at Indian Institute of Management Bangalore, India for the
financial support for the project. We like to place on records our
sincere thanks to all the participants from the Indian software
industry who participated in the study.
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