Changes in Business Environment

Giobalization
Mergers & Acquisitions

Downsizing
Changes in Work Environment
Technological changes
(a) Collaborative Work

()
b) Telecommuting
(c Flexible Work Amangements
(d)Total
(a) Quality Management
(e) Benchmarking
Reengineering
(g Flexible Manufactuning Systems
Outsourcing. and Off shoring
Trends in Workforce
Workforce Diversity
(a) Generations X and Y
Human Resource Management

(b) Ageing Workforce

(c) Women in workforce

(d) Policy of Reservations
(e) Temporary Workers
() Employment relationship
Work-life balance
Economic, Political, Legal, Social and Cultural Environment
 So Companles Employers Will Therefore
Trends Expect from HR
Must Be
Management That They

Globalization More competitive Focus more on big picture

Increased competition Faster and more responsive
Deregulation and increased More cost-effective
indebtedness
Human-capital oriented
Technological innovation Quality conscious
More high-tech jobs
Downsized
More service jobs Organized flatter
More knowledge work (fewer layers)
An aging workforce
Organized around
Dramatic economic empowered teams :15
downtum starting Leaner
.
issues such as helping the
Company achieve its
strategic goals
Find
new ways to provide
transactional services such
as benefits administration
Create high-perfomance
work systems
Take steps to help the

employer better manage

in 2007/2008
More fiscally conservative challengingtimes
De-leveraging plus alikely More scientific in how they Fomulate practices and
slowdownin deregulation make decisions defend its actions based on
and globalization
credible evidence
Slower economic growth in
Manage ethically
many countries
Have the proficiencies
required to do these things
for instance, a command of
strategic management and
financial budgeting
 Globalization and Competition Trends
Globalization refers to the
tendency of firms to extend their sales, ownership,
manufacturing to new markets abroad. and/
Camry Kentucky, while Dell
in Examples surround us. Toyota
produces tha
that reduce tariffs and barriersproduces
PCs in China. Free trade
among trading partners-further
areas-agreement
national trade. NAFTA (the North American Free encourage inter
Trade Agreement) and the
(European Uniom) are examples. E
South Asian Association for
Regional Cooperation (SAARC), of which India is
member, offers preferential arrangements between members.
a

Indian firms have also been influenced

by globalization. Firms like Infosve
Wipro, and TCS serve customers around the world by developing software codes
and supporting their IT
systems. Tata Steel and Mittal Steel have acquired
plants around the world through competitive bidding and have steel
among the most efficient manufacturers. gained a place
Dell, and Google have located back-office Companies
like GE, American Express
countries from where they service
support operations in India and other
TVS Ltd. and Sundaram
global customers. Indian companies like Lucas
Clayton Ltd. have
mobile majors. On the other hand, there are emerged global suppliers to auto
as
firms that had to close
relocate elsewhere because of operations or
competition from outside the country.
Many Indian firms that depended more on global markets for business had
face the forces of economic recession that to
hit the global market. Such
experienced demand reduction, order cancellations, and problems in raisingcompanies
for growth and funds
expansion. In the Tata Group, the chairperson Ratan Tata wrote to
employees telling them about the recessionary situation and the need for cost
cutting activities to tide over the crisis.6
Companies expand abroad for several reasons. Sales expansion is one. Thus,
Google expanded its China presence by initiating its Google China instant
messag
ing service there. Walmart is opening stores in South America. Dell,
China will soon be the world's krnowing that
and selling there.
biggest market for PCs, is aggressively building plants
Firms go abroad for other reasons. Some manufacturers
seek new foreign produi
and services to sell, and to cut labor costs.
Thus, some apparel manufacturers design and
cut fabrics in Miami, and then have the actual
where labor costs are relatively low.
products assembled in Central Amenca,
Sometimes, it's the prospect of forming partnershus
that drives firms to do business abroad. Several
years ago, IBM sold its PC division to the
Chinese firm Lenovo, in part to cement firmer ties with the
booming China market.
For businesspeople, globalization's essential characteristic is this: More
globar
1zation means more competition, and more competition means more pressure to De
be

"world-class"-to lower costs, to make employees more productive, and to do thi

better and less expensively. As one expert puts it, "The bottom line is that the
growing integration of the world economy into a single, huge marketplace is
increasing the intensity of competition in a wide range of manufacturing and servi
industriies." Both workers and companies have to work harder and smarter tha
 Indebtedness (" Leverage") and Deregulation
Other trends contributed to this economic growth. Deregulation was one. In many
In the United States and
cOuntries, governments stripped away rules and regulations.
commercial banks from expanding into
Europe, for instance, the rules that prevented
new businesses such as stock brokering were
relaxed. Giant, multinational "financial
As economies boomed, more
supermarkets" such as Citibank quickly emerged.
businesses and consumers went deeply into debt. Homebuyers bought
homes, often
to build more homes.
with little money down. Banks freely lent money to developers
than they earned. n a
For alnost 20 years, U.S. consumers actually spent more

debtor nation. Its balance

grander scale, the United States itself increasingly became
a

billion in 1960,
of payments (exports minus imports) went from a healthy positive $3.5
to a not-so-healthy minus $19.4 billion in 1980 (imports exceeded exports), to a huge

$695 billion deficit in 2008.21 The only way the country could keep buying more from
abroad than it sold was by borrowing money. So, much of the boom was built on debt.
While the financial system collapsed elsewhere, the Indian financial system
dominated by public sector institutions remained stable. The strict regulatory frame-
work adopted by RBI and the cautious approach taken by the banks in India pre-
vented the crisis from hitting hard. However, as mentioned earlier, the global
slowdown in business affected performance of Indian firms in many sectors, particu-
larly export-dependent sectors like garments, jewelry, and IT.

Technological Trends
Everyone knows that technology changed the nature of almost everything we do. We
use PDAs to communicate with the office, and plan trips, manage money, and custom-
build new computers online.
Similarly, technology changed what businesses do and how they do it. Technology
(in the form of Internet-based communications) enabled Dell and thousands of other
employers to offshore call center jobs to India. The retailer Zara doesn't need
expensive inventories. Zara operates its own Internet-based worldwide distribution
 Trends in the Nature of Work
One implication is that eehnology has als hard a huge irnpart on how pesple ye
nd on the skills and raining tday's workers necd

High-Tech Jobs For example, skilled machinist Chad Toulouse illustratrs ,

d e n blue-rollar weorker. Afer an B-week training cours, this former cle
stdent works as a tram leader inn a plant where about 40% of the machines
automated. In older plants, machinists would nanually control machines that
chunks of metal into things like engine parts. Today, Chad and his team spend my
of their time typing commands into computerized machines that create precisj
parts for products, inchuding water purmps. Like other modern machinists, he tan
about $50,000 per year (including overtimc).2 More and more traditional factor ir
are going high-tcch. As the U.S.
government's Occupatimal Outlook Quarterl put
"knowledge-intensive high tech manufacturing in such industries as aerospar
computers, telecommunications, home electronics, pharmaceuticals, and medi
instruments" is replacing factory jobs in steel, auto, rubber, and textiles.

Service Jobs Technology is not the only driving the change from "brawn
trend
brains." Today over two-thirds of the U.S. workforce is employed in producing andde
ering services, not products. Between 2004 and 2014, almost all of the 19 million ne
jobs added in the United States will be in services, not in goods-producingindustries
Several things account for this.26 With global competition, more manufacturing
jobs are shifting to low-wage countries. For example, Levi Strauss, one of the lastmajc
clothing manufacturers in the United States, closed the last of its American plants
few years ago. There has also been a dramatic increase in producivity that les
manufacturers produce more with fewer workers. Just-in-time manufacturing tec
niques link daily manufacturing schedules more precisely to customer demand, thus
squeezing waste out of the system and reducing inventory needs. As manufacturer
integrate Internet-based customer ordering with just-in-time manufacturing sstems
scheduling becomes even more precise. More manufacturers are collaborating with
their suppliers to create
integrated supply chains. For example, when a customer
orders a Dell computer, the same Internet message that informs Dell's assembly line to
produce the order also signals the video screen and keyboard manufacturers to
prepare for UPS to pick up their parts at a particular time. The net effect is that
manufacturers have been squeezing slack and inefficiencies of the entire produe
out
tion
enabling companies produce more products with fewer employees.
system,
in America and much of
to
Europe, manufacturing jobs are down, and service jobs u
India and China are countries
that benefited from the shift in
and later service
jobs. Under cost and demographic manufactur Iso
pressures, service jobs havc a
 Service
them new representatives jobs. The bank gave
training, taught them how to sell more of the bank's services, gave them more
authority to make decisions, and raised their
matically improved product sales and wages. Here, the new
computer system dra-
need human resource profitability. The moral is that today's employers
managers who do more than hire and fire
tor benefits. They need
ones who have the
human
employees and moni-
resource
the "human
capital" required to compete in a high-tech, management skills to create
competitive world.33
Workforce and Demographic Trends
All of this is
occurring along with big workforce and demographic trends.
Demographic Trends In
spite of the recession and job losses, workforce demo
graphic trends are making finding and hiring good employees more of a
around the world. India is also not immune to challenge
these effects. Acute skill shortage has
been identified as the main hurdle in
achieving demographic dividend from its
young, growing population. NASSCOM, the industry association for
businesses in India, estimated the IT/ITES
projected requirement for knowledge workers
by 2010 at 2.3 million and the expected shortage of skilled
with relevant education at 0.5 million.34 A rise in the knowledge professionals
demand for IT talent during
2010 is expected, especially given the
signs that the recession is getting over.
India's growing hospitality sector is expected to
require more than 0.2 million
trained people every year, while the annual supply is less than 10% of the
required
amount3° Core sectors like power and petroleum are also facing a supply crunch.
The Working Group on Power for the Eleventh Plan has esimated the immediate
shortage of power sector talent as 33%. The growth experienced in other sectors of
the economy, including financial services, manufacturing, and retail business, has
created a huge demand for skilled labor across sectors. The experience of the
Indian fish-processing industry, a large foreign-exchange earner, is interesung. In
recent years, the processing companies experienced difficulty in attracting worker
 Retirees Many humnan resource professionals from the West call "the aging work
force" the biggest demographic trend affecting employers. The basic problem is that
there aren't enough younger workers to replace the projected number of baby
47
boom era older-worker retirees."
Employers are dealing with this challenge in various ways. One survey found
that 41% of surveyed U.S. employers are bringing retirees back into the workforce,
34% are conducting studies to determine projected retirement rates in the organiza-
tion, and 31% are otfering employment options designed to attract and retain semi-
retired workers.48

Nontraditional Workers At the same time, there has been a shift to nontradi-
tional workers. Nontraditional workers include those who hold multiple jobs, or
who are "contingent" or
part-time workers, or who are working in alternative work
arrangements (such as a mother-daughter team sharing one clerical job). Today,
almost 10% of American workers-13 million people-fit this nontraditional work
force category. Of these, about 8 million are independent contractors who work on
specific projects and move on once they complete the projects.
In India and its neighboring countries,
part-time work and other alternate
arrangements are seen in small numbers. The striking feature of the Indian work
force is that 93% of its workers are in the unorganized informal sector.

Economic Challenges and Trends

All these trends are occurring in a context of challenge and
upheaval. As you can see
in Figure 1-6, gross national product (GNP)-a measure of the United States of
America's total output-boomed between 2001 and 2007. During this period, home
prices (see Figure 1-7) leaped as much as 20% per year. Unemployment remained
docile at about 4.7%.9 Then, around 2007-2008, all these measures seemingly fell