A Resource-Based Analysis of Recruitment and Selection Practices of Indian Software
A Resource-Based Analysis of Recruitment and Selection Practices of Indian Software
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JIBR
2,1 A resource-based analysis
of recruitment and selection
practices of Indian software
32
companies
A case study approach
Pramila Rao
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Abstract
Purpose – The purpose of this paper is to detail staffing practices of five software companies located
in India.
Design/methodology/approach – This qualitative research paper uses purposeful sampling to
provide rich data on senior-level staffing practices. The interviews conducted in India are
tape-recorded and notes are also taken diligently. The interviews are coded to identify similar and
dissimilar themes.
Findings – This research identifies internal recruitment, employer references, succession planning,
interviews, personality tests, newspaper recruitment, professional search agencies, and bio-data as the
predominant senior-level staffing practices.
Practical implications – The paper identifies successful staffing practices adopted by domestic
software companies. As multinational companies significantly increase their presence in India, global
practitioners can implement successful staffing practices by having a thorough understanding of local
staffing practices.
Originality/value – This paper identifies successful staffing practices of the Indian software
organizations. This paper further provides a staffing model based on the Lepak and Snell staffing
typology and details the main human resource management challenges of the Indian software
industry.
Keywords Recruitment, Resource management, India
Paper type Research paper
Introduction
India has become a very prominent economic power today. Economists suggest that it
will become one of the leading global economies within the next three decades
(Meredith, 2008; Zakaria, 2006). The success of the Indian software industry is very
instrumental for the global attention the country is receiving today (Meredith, 2008;
Friedman, 2005). The focus of the software industry is to provide solutions to their
customers worldwide. The industry is predicted to bring around $110 billion worth of
business by 2010 (Murthy and Abeysekera, 2007; Babu, 2006).
Journal of Indian Business Research The Indian software industry attracted such global interest with the Y2K computer
Vol. 2 No. 1, 2010
pp. 32-51 crisis or the millennium bug in 2000. Organizations worldwide needed computer
q Emerald Group Publishing Limited remediation and Indian software engineers were able to provide superior technical
1755-4195
DOI 10.1108/17554191011032938 services worldwide (Meredith, 2008). Indian software professionals worked closely
with several multinational companies (MNCs) on Y2K projects and created high Indian software
visibility and established incredible credibility for the entire software industry. The companies
quality of work that Indian employees delivered was rated very high and the software
industry was identified as one of the best in the world today (Friedman, 2005).
India has become an attractive destination for MNCs for several reasons. First, the
government’s trade liberalization policy in 1991 was the first major step in this
globalization process (Meredith, 2008; Manikutty, 2000). Second, the country has a very 33
well-educated English-speaking work force that can communicate easily with other
English-speaking cultures. The British left an undeniable legacy of an English-speaking
school curriculum after their colonial rule (Vijayraghavan, 2008; Khanna et al., 2005).
Third, the country’s work force is commended for its high-work ethic-demonstrating a
willingness to work 12-hour days for six days a week (Zakaria, 2006).
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Fourth, professional labor costs are much lower in India, almost 25 percent lower
than that in the USA (Gordon, 2002). Global consultants, McKinsey, identified that if a
MNC of 1,000 employees shifted its operations to India, the organization would save
$18 million in labor costs (Budhwar et al., 2006). The cost of recruiting software talent
is also much lower in India compared to that in the USA. For instance, a programmer
with three years coding experience in the USA would get paid about $67,000, while in
comparison a programmer in India with similar experience would get about $17,000
(Gordon, 2002).
Further, the country has a well-defined private sector, a transparent financial system,
and respect for the law (Zakaria, 2006; Khanna et al., 2005; Friedman, 2005;
Ramamoorthy et al., 2005). The time difference between the USA and India allow Indian
organizations to provide their US customers a 24 £ 7 customer-service culture – an
undeniable business advantage (Wadhwa, 2008; Budhwar et al., 2006; Solomon, 2005).
Finally, India produces an abundant engineering work force conducive to the work
of the software industry. The engineering institutions in India are recognized globally
for their high-academic rigor (Friedman, 2005). In 2005, India produced 200,000
engineering graduates, about three times as that in the USA and twice as that in
Europe. In 2007-2008, this number increased to 300,000 engineering graduates with
India supplying 28 percent of the world’s engineering workforce (Takeuchi and
Nomura, 2008). India provides the highest number (28 percent) of engineers, followed
by China (11 percent) and Russia (10 percent). Table I provides details of the global
supply of applicants with engineering backgrounds.
1 India 28
2 China 11
3 Russia 10
4 Philippines 8
5 Turkey 7
6 Thailand 5
7 Poland 4
8 Brazil 4
9 Others 23 Table I.
Global population with
Source: Takeuchi and Nomura (2008) engineering backgrounds
JIBR Recently, more than 125 Fortune 500 US companies have their R&D centers in India
2,1 (Zakaria, 2006). In 2007, Cisco’s hired 8,000 employees in India exceeding their US
operations in terms of organizational size (Weier, 2007). The US companies such as Dell
and Microsoft are doubling their work force in India bringing increased attention to
staffing practices (Frauenheim, 2006). The software industry’s phenomenal growth has
brought several human resource management (HRM) challenges right from elaborate
34 staffing to high attrition (Friedmann et al., 2008; Grossman, 2006).
the software industry increased from 242,000 in 2002 to 697,000 in 2004 – almost
threefold-making staffing a very time-consuming process (Murthy and Abeysekera,
2007; Grossman, 2006). The sheer magnitude and size of recruitment at the entry-level
positions is stupendous and on an average annually large companies recruit about
10,000 entry-level engineers (Schlosser, 2006). Entry-level applicants are subjected to
several tests (such as logical, analytical, and communication skills) and interviews
before the final applicants are chosen (Grossman, 2006; Schlosser, 2006). HRM leaders
spend an enormous time on staffing – almost about 80 percent of their time on
recruitment and selection (Grossman, 2006).
Second, as the knowledge, skills and abilities (KSAs) of this dynamic industry are
constantly changing, predicting the skills “even two quarters away” seems quite a big
challenge (Company D). Organizations rely online managers’ judgmental techniques to
predict future staffing requirements (Companies D and E).
Third, scholars suggest (Nancherla, 2008; Agrawal and Rao, 2002) entry-level
employees need intense training or a “finishing school” touch to integrate and
transition into the corporate. Usually, organizations offer about 12 weeks of training
where work-related skills are offered. The Indian educational system also does not
sufficiently prepare its graduates for business skills which therefore organizations
provide like a “surrogate educational” system (Wadhwa, 2008; Nancherla, 2008).
Fourth, there seems to be a perennial shortage of employees and job hopping is
very common. Potential applicants usually have two to three job offers and spend
considerable time deciding which offer they should accept. Organizations are never
certain about applicants’ acceptance of any job offer until the applicants report to
work (Grossman, 2006; Agrawal and Thite, 2003). The job attrition rate is around
15-20 percent, which further gets amplified at the lower and mid-management level
(Friedmann et al., 2008).
Fifth, Indian employees are very brand-conscious and prefer to work for
organizations that are well-known. This can be attributed to the assertive national
cultural dimension that dictates a very status-oriented society. Indian employees prefer
to work for software companies that are identified as the employers of choice (Chokkar,
2007; Brandel, 2006; Agrawal and Thite, 2003). Therefore, employer branding becomes
an integral part of the recruitment strategy (Grossman, 2006).
Finally, recruiting for mid-level and senior and managers is quite a challenge for
both domestic and multinational software companies. Software engineers with over
three years of experience usually accept more lucrative offers overseas. Further,
software professionals have demonstrated a reluctance to pursue supervisory positions
and prefer technical positions congruent with their engineering background. The Indian software
shortage of leaders has prompted organizations to promote high-performing junior
employees to leadership positions, albeit they might not be the best candidates
companies
(Agrawal and Thite, 2006, 2003).
Agrawal and Thite (2006) in a study of 117 software leadership participants
identified several challenges experienced by software leaders such as managing global
teams, working on very tight delivery schedules, having work-life balance issues, 35
experiencing communication problems with overseas peers, and accumulating
knowledge at a very fast pace. These additional demands could also contribute to
the reluctance of employees in pursuing leadership positions.
To hire senior talent to work in India, US MNCs usually recruit Indians living in the
USA or Europe and offer them lucrative compensation packages. Meredith (2008)
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refers to such overseas talent as “sea turtles” – animals that are known to usually find
their birthing place – and a very attractive recruiting option for MNCs. MNCs lure
such senior-level employees with attractive compensation packages of about $200,000
or 250,000 (Frauenheim, 2006).
Weier (2007) indicates that 20 percent of Cisco’s top Indian talent will move from
USA to India by 2010 to take-up senior-level positions in India. Similarly, in 2003-2004
approximately 10,000-40,000 overseas Indians returned from the USA to their
homeland in search of better opportunities and also to satisfy the “sea-turtle syndrome”
(Meredith, 2008; Takeuchi and Nomura, 2008).
Table II provides a list of these HRM challenges with corresponding reasons and
scholars who have identified these thoughts.
1 Shortage of mid- and senior- Indian employees prefer Meredith (2008), Weier (2007)
level talent technical positions and also and Agrawal and Thite (2006,
most software employees with 2003)
three years experience seek
lucrative offers overseas
2 Elaborate recruitment Indian engineering institutions Murthy and Abeysekera (2007)
practices at entry-level have a strong technical focus and Grossman (2006)
and thus entry-level applicants
have an extensive screening on
verbal, interpersonal and
general cognitive skills
3 Intense training for entry- Indian graduate schools do not Nancherla (2008), and Agrawal
level positions prepare applicants for corporate and Rao (2002)
skills, hence organizations
provide for that gap
4 High-job attrition The software industry is Friedmann et al. (2008),
undergoing a phenomenal Grossman (2006) and Agrawal
growth that cut-throat and Thite (2003)
competition is the norm Table II.
5 Brand-conscious Applicants are very brand Chokkar (2007), Grossman Main HRM challenges of
conscious and would prefer to (2006), Brandel (2006) and the Indian software
work for well-known companies Agrawal and Thite (2003) industry
JIBR Therefore, with so many HRM challenges, recruitment and selection of qualified
2,1 employees has become a very critical HRM function (Friedmann et al., 2008; Murthy
and Abeysekera, 2007; Grossman, 2006). The resource-based view (RBV) therefore
becomes an integral part in interpreting how talent acquisition can become a
sustainable competitive advantage (Murthy and Abeysekera, 2007; Barney, 2001).
This research paper is organized as follows: first, it details the theoretical
36 framework, the RBV, and its impact on staffing practices. Second, it identifies the
methodology adopted for this study. Third, it details the staffing practices as indicated
by the respondents from the interviews. Fourth, it discusses the results integrating
various perspectives from the literature. Finally, it addresses the contributions of the
paper and provides a staffing model.
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Methodology
This qualitative study uses purposeful sampling with interviews as the primary
method of data collection. The study analyzes each case followed by a cross-analysis of
the multiple cases (Patton, 2002). The use of multiple cases increases research
reliability and minimizes any bias that could result from a single case study. Several
scholars (Olivas-Lujan et al., 2007; O’Sullivan et al., 2002) have used multiple case
design to get in-depth perceptions on global HRM practices. Qualitative studies allow
interpretation of several interesting themes within specific cases and also analyzing
across multiple cases (O’Sullivan et al., 2002; Patton, 2002).
This research examined how five high profile software companies are recruiting
and hiring senior and middle management. Senior management was defined as
employees who had more than ten years of experience and middle management was
defined as employees having more than four years of experience. The goal of this
qualitative research study was to detail the current staffing practices and also identify
successful recruitment practices. Table IV provides description of these companies in
terms of size, branches, and educational backgrounds of the HRM leaders.
The five chosen organizations were located in Bangalore, India and identified as
high-performing organizations with excellent growth records. Two of the companies
were the US MNCs and three were domestic organizations. The informants for all the
companies were Vice Presidents/Senior directors of HRM. All the interviews were
conducted in Bangalore, India in July-August 2006 and lasted for about 60-90 minutes.
These companies were chosen as one of the researchers (a local Indian professor) had
contacts in two of the organizations and the other researcher was granted interviews
with three of the other companies. The sampling can be considered purposeful as the
main reason for contacting these organizations was that they would provide rich
information on the topic of study (Patton, 2002).
Several steps were taken to make sure that the researchers have accurate
information of the interview. The main research questions were sent to the informants
ahead of time so that the respondents could reflect and provide accurate interpretation
Indian software
Number of employees Number
Company’s Number of in human resource of domestic HR leader’s educational companies
No. name employees department branches background
to the research questions. (The results section provides the main research questions).
Two of the interviews were conducted at a university campus (IIM-B, a leading
business school in Bangalore, India) with the HRM directors, while three of the
remaining interviews were done at the corporate office of the informants.
The interview was tape recorded with the permission of the informants.
A semi-structured interview format was followed so that the answers could be best
captured in the informants’ words. Every effort was made to capture the informant’s
point of view on staffing practices by taking notes diligently during the interview
process. The tape-recorded interview was transcribed to ensure complete clarity of the
interview. Further, the interviews were coded or categorized to provide easy
comparisons of data within cases.
Qualitative scholars (Patton, 2002; Denzin and Lincoln, 2000) compare coding to
breaking down of huge information into specific categories. Coding provides two
important purposes – “convergence and divergence” of interview data such that
researchers can identify recurring themes and also categorize dissimilar data. Patton
(2002) further suggests that interview information should be provided in
quotes wherever applicable so that readers can have a glimpse of the interview
verbatim.
The interviews were heard several times to systematically code the field interviews
into meaningful methods of comparison. Patton (2002) suggests that repeatedly
listening to interview tapes could provide better coding of data. Finally, interview
summaries were sent to the informants to ascertain accuracy. Subsequent email
interactions with respondents were maintained for clarification and comprehension of
interview material.
Results
This section provides a description of the staffing practices as identified by the
informants from the interviews. The four main research questions are:
RQ1. What are the most important goals of your organization for the next five
years?
RQ2. What do you consider the main roles of the human resource (HR) department?
JIBR RQ3. What are your predominant recruitment and selection practices?
2,1 RQ4. What are your most successful staffing practices?
Case 1: company A: software company
This organization has approximately 58,000 full-time employees, 400 leadership
positions, 39 offices globally, and about 300 employees in the HRM department. The
40 HRM leader has a technical background in engineering with considerable work
experience. The main organizational goal is to become a global software leader by
developing and building long-term relationships with their customers worldwide.
The main roles of the HRM department are talent acquisition, continuous training
and development, and interacting closely with senior management on strategic
decisions.
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The main recruitment practices are employee referrals (42 percent) and newspaper
advertisements. Employee referrals were considered a very good recruiting approach to
get quality hires. A very successful recruitment technique as indicated by the informant is:
Successful employees write in their own words about their positive and negative work
experiences in newspaper advertisements thereby providing a very strong reference point to
potential applicants.
In terms of internal recruitment, the organization has developed a very successful
succession planning with a three tier leadership program. In Tier 1, 50 functional
directors get mentored by the top board members. In Tier 2, about 150 high performing
employees from various functional units are selected and mentored by the 50
functional directors of Tier 1. Finally, in Tier 3, 300 high performing employees get
mentored by Tier 2 employees. The goal of this leadership program is that employees
are consistently identified for superior leadership skills and progressed from Tier 1
through Tier 3 in a span of 3-5 years.
The predominant hiring practices were panel interviews (with cross-functional
teams) and using behavioral interviews with specific work-related competencies. Cross
functional panel interviews help identify well-rounded applicants and behavioral
interviews have a strong emphasis on applicants describing their past work
accomplishments.
organization has acquired 23 domestic companies over the past 18 months and is
therefore integrating different organizational cultures. The organization is
experiencing maximum attrition at the junior and the middle management levels
and hence adopting strategies to enhance retention.
The HRM director expressed that the HRM should have more involvement in
recruiting applicants. The director commented that having HRM people with technical
backgrounds could alleviate some of the recruiting burden from line managers. In the
respondent’s words:
HRM leaders need to have technical experience, product expertise, and HRM expertise. Right
now recruitment is done predominantly by the line managers, and HRM is predominantly
involved only in first-level screening. The line manager has the ultimate word on the
recruitment process.
The predominant method is internet recruiting as the organization seeks highly
technical backgrounds and uses a global approach to seek qualified applicants. For
internal recruiting, referral from current employees is considered very successful as
employees generally recommend high-performing peers and also find such applicants
transition better into their work and organization. Succession planning is also
frequently used and usually three high-performing employees are identified for
senior-level positions.
process is considered valid and reliable. The company constantly seeks applicants that
demonstrate superior technical expertise, creativity and good interpersonal team skills.
Discussion
Recruitment practices
Employee referrals, succession planning and internal recruitment were the
predominant internal recruitment methods used by the software firms of this study.
As senior talent is difficult to recruit, organizations are relying on their internal labor
pool as a predominant source of recruitment (Agrawal and Thite, 2003).
Applicants that are referred by current employees demonstrate a better
person-organization and person-job fit largely because current employees provide
realistic job previews. Such internal information about their new job helps applicants’
make easy transitions into their work environments. In a study of 767 engineers
regarding recruitment sources and HR outcomes (Moser, 2005) demonstrated that
applicants referred by current employees demonstrated three strong HR outcomes;
fewer unfulfilled job expectations, higher job satisfaction and stronger organizational
commitment. Therefore, such employees performed at superior levels.
MNCs such as Deloitte Touche endorse employee referral programs as this
recruitment approach has brought in the most qualified hires. As professional
employees are more likely to socialize and interact with colleagues in a similar field or
industry, employee referrals allow organizations to tap into such professional
networking. Deloitte has added a global touch to this recruitment approach by
encouraging current employees to refer their overseas friends and colleagues also
(Brandel, 2006). In the Indian context, employee referrals are very conducive to the
collective orientation of the Indian culture that likes to promote family and friends
(Chokkar, 2007).
Succession planning is deliberate grooming and developing of internal talent for
leadership positions. The rewards of such internal development are having an
experienced talent that understands the organization, competitors, and customers very
well – therefore such employees make valuable business decisions (Kimes, 2009;
St-Onge, 2007).
Kimes (2009) identifies Procter & Gamble’s (P&G) succession planning program
“Build from within” as very successful as it consistently develops three replacements
for each of their top 50 leadership positions. HR leaders at P&G emphasize that internal
talent that is developed rigorously demonstrated higher organizational commitment
JIBR and such employees were also able to perform at superior levels almost immediately in
2,1 their new jobs.
Internal recruitment was also an important source for senior and mid-level talent as
such a method allowed the organizations to leverage their internal talent quickly. As
the attrition rate in the software industry is quite high, HR leaders want to fill-up their
vacant positions rather quickly (Agrawal and Thite, 2003). Moser (2005) in an
44 international study identified that internal recruitment applicants’ had realistic job
expectations and hence were more likely to make a better connection between their
KSAs and with their jobs.
Messmer (2004) suggests that apart from being very cost-effective, applicants
recruited internally identify very well with their organizational and peer culture.
Internal applicants usually do not need to acclimatize to a novel work environment and
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hence are able to focus on their new job whole-heartedly. Therefore, such a focus helps
these employees perform at superior levels rather quickly. Internal recruitment also
has a better impact when a cross-functional approach is adopted such that internal
vacancies are posted throughout the organization – therefore qualified employees can
be leveraged from other departments into the applicant pool.
The RBV supports the view that staffing practices such as employee referrals,
succession planning and internal recruitment provide a very idiosyncratic network of
employees. Further, these applicants have realistic job expectations, are grounded in the
organizational culture, are very cognizant of their customers and competitors – and
therefore become valuable and unique (Murthy and Abeysekera, 2007; Brandel, 2006;
Clulow et al., 2003; Moser, 2005). Lepak and Snell (1999) add that developing employees
within an organizational context can definitely be a source of competitive advantage as
such internal employees developed within a specific context become very hard to duplicate.
A point to note is the two MNCs of this study, apart from the methods discussed
above, also used e-recruitment and professional search agencies to identify senior and
middle-management talent. The Indian software companies did not rely on these
external methods for recruiting their managerial talent. MNCs use such external
recruitment methods to seek overseas Indians who bring with them their rich
international experience and also their sensitivity to local practices (Frauenheim, 2006).
Other recruitment practices that were identified as successful were having the
Chairman (CEO) as a part of the recruitment process. It is well-known in Silicon Valley that
Microsoft’s Bill Gates and Google’s founders, Larry Page and Sergey Brin, personally
interact with potential executive candidates to get the very best. The top organizational
leaders participating in the recruitment process portray very positive signals about the
exclusivity of the staffing process to potential applicants (Hardy, 2005; Grossman, 1998).
Another winning recruitment practice was having successful employees write their
personal experiences in traditional newspaper advertisements. High-performers
stating their positive and negative experiences in their own words provide potential
applicants a very reliable reference point. Messmer (2004) suggests any approach to
make newspaper advertisements stand out differently (as employees writing about
their experiences) can be a very useful recruiting strategy to get qualified hires.
Selection practices
Personality tests, behavioral interviews, and resumes were some of the predominant
external hiring methods. Scholars (Goldberg and Cerullo, 2006; Witt and Burke, 2002;
Barclay, 2001) suggest that investing in a variety of effective selection practices to hire Indian software
the best help identify valuable and unique talent. The first point of contact for external companies
applicants is usually the staffing process and providing a sense of exclusiveness
through the hiring process will reap its own rewards. Employees, the most important
“brands” of any organization, are a reflection of an organization’s selection process
(Tyler, 2005; Barclay, 2001).
Personality tests help organizations identify valuable characteristics such as 45
person-organization and person-job fit. Software companies are predominantly in the
business of serving customers and hence place a paramount on project and relationship
management. Personality tests usually measure work-styles, team-player orientation,
creativity, multitasking, emotional intelligence, and dynamism – diverse work-related
characteristics that are hallmarks of the software industry (Knight, 2006; Witt and
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Burke, 2002).
Witt and Burke (2002) in a study of 94 information technology employees concluded
that personality tests help identify important characteristics such as relationship
management, openness to learning, and team-player orientation which is beyond the
traditional definition of job performance per se. Such characteristics are very relevant
to the software industry and comprehensive selection practices therefore help glean the
best (Witt and Burke, 2002).
Behavioral interviewing allows employers to probe in depth about applicants’ past
work accomplishments with specific relevance to core competencies (Tyler, 2005;
Barclay, 2001). From the applicants’ point of view, it allows them to describe their work
assignments just as they experienced it. Therefore, in this rich social exchange, very
critical job-related information relevant to the organization’s context is shared
(Barclay, 2001). In a study of 163 organizations in UK, Barclay (2001) states that
92 percent of the respondents indicated noticeable improvements with the quality of
hires with behavioral interviews and also additional positive outcomes such as reduced
turnover.
Interview-training for both line and HR managers was also adopted to ensure
reliable and valid behavioral interviews emerge. Tyler (2005) suggests that managers
are always not savvy on interviewing techniques and therefore need to be coached and
trained how to identify valuable talent. Organizations such as Daimler Chrysler’s (US
division) provide intense training to their line managers and observed positive
outcomes in terms of the quality of hires.
Panel interviews have been identified as reliable and valid methods of staffing
based on the premise that collective judgments render better hiring decisions. Panel
interviews are successful in identifying leadership talent because multiple interviewers
complement and augment with diverse business and judgments perspectives.
Therefore, having multiple interviewers help establish a comprehensive picture of an
applicant’s KSAs and therefore results in better hiring decisions. Also, panel
interviews help minimize hiring mistakes that result from interviews done by a single
person-hiring errors that can be very costly to an organization especially at senior
management levels (Dixon et al., 2002).
Resumes (bio-data) were also used to identify successful work experiences, career
stability, and relevant organizational competencies (such as openness to learning for
the software industry). Bio-data suggests that past accomplishments will mirror future
job performance (Witt and Burke, 2002). In a study of 672 employees in the health care
JIBR industry, Becton et al. (2009) demonstrated that bio-data helped identify superior job
2,1 performance and organizational commitment among employees with high and
moderate skills. Bio-data identified applicants that demonstrated fewer medical errors,
better patient care, and increased patient satisfaction. This study indicated that the
items on the bio-data helps organizations identify specific KSAs and competencies
related to the job and therefore make better hiring choices.
46 The RBV supports the view that qualified external talent will definitely enhance
organizational value. Therefore, hiring practices that seek to get comprehensive
applicants will categorically provide a competitive edge to organizations (Lepak and
Snell, 1999). Manikutty (2000) demonstrated that the traditional paternalistic
family-owned Indian companies are investing in superior education for their business
leaders that cannot be easily replicated to provide immense value to the organization.
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Conclusion
The study is not without its limitations. First, this is a qualitative study of five leading
software firms and therefore the results of this study cannot be generalized to be
representative of the whole Indian software industry. Second, the single-respondent
bias could apply as the respondents’ answers were considered to reflect the firm’s
staffing practices. Finally, all the interviews took place in Bangalore, India and
Internal External
No. recruitment Characteristics recruitment Characteristics
Scholars (Brown, 2007; Friedman, 2005) suggest that the best talent will walk in
through your door only if cultural nuances are considered. Friedman (2006) uses the
term “glocalize” suggesting a need to hybrid local and global practices to get the best
talent.
Bjorkman and Budhwar (2007) demonstrated in a study of 76 multinational
subsidiaries in India that adoption of local HRM practices lead to superior
organizational performance. Adopting local practices suggest compatibility and
commitment with domestic norms therefore increasing employee commitment and
organizational visibility. For instance, Japanese organizations in India operate a
hierarchical management structure conducive to the local high-power distance culture,
while they promote an egalitarian management approach in their home organizations
(Bjorkman and Budhwar, 2007; Chokkar, 2007).
Successful local staffing practices such as succession planning, employee referrals
and internal recruitment of the software firms can be definitely attributed to the
high-collectivist orientation of the Indian national culture (Chokkar, 2007;
Ramamoorthy et al., 2005). In a study on national cultures, India ranked very high
for in-group collectivism (fourth) among 61 countries (Chokkar, 2007) suggesting a
national culture that prefers to recruit and hire “known” talent compared to
“unknown.”
Second, this paper contributes to the RBV literature as it details successful staffing
practices that help identify superior applicants therefore contributing to better firm
performance. Personality tests help identify applicants with positive project
management skills, team-building skills, and an openness to learning-skills that are
very essential for the dynamic and unpredictable nature of work in this industry.
Behavioral interviews help interviewers ascertain and determine whether applicants’
KSAs are congruent with the organization’s core competencies. Internal recruitment
practices help develop and groom an idiosyncratic senior talent as external talent is not
easily available. Panel interviews help identify the best with the premise that cognitive
diversity of interviewers results in superior hiring decisions (Barclay, 2001; Witt and
Burke, 2002; Dixon et al., 2002; Agrawal and Thite, 2003). The RBV suggests that
staffing practices, internal or external, can be leveraged to enhance a firm’s sustainable
competitive advantage by creating a talent pool that is very distinctive to the
organization and industry (Lepak and Snell, 1999).
Third, this paper identifies predominant HRM challenges of the software industry
(Friedmann et al., 2008; Weier, 2007; Agrawal and Thite, 2006; Brandel, 2006;
JIBR Grossman, 2006; Agrawal and Thite, 2003). Recruitment and hiring of senior talent,
2,1 detailed recruitment processes, intense training, high-employee turnover and being
brand-conscious are identified as some of the predominant HRM challenges. Therefore,
MNCs can adopt proactive steps to alleviate some of these challenges. For instance,
Indians are very brand-conscious – both when choosing personal marketing products
and also when looking for organizations to work for. Most Indians, in the software
48 industry, prefer to work for the “Big Three” software companies (Infosys, Wipro, TCS)
regardless of their work. MNCs consequently have to invest sufficiently in employer
brand building as Indian employees like to work for distinguished organizations
(Grossman, 2006; Brandel, 2006).
Employer branding, or becoming an employer of choice, creates a strong emotional
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bond between employers and employees. Organizations should strive to make the place
of work the best for employees and therefore create a strong sense of pride among
employees (Sartain, 2006; Sartain, 2005). For instance, Google’s diverse ethnic on-site
restaurants, presentations with high-profile business leaders for employees, work
concept of 70-20-10 (main work/professional development/creativity) are some of their
organizational practices that have branded the organization as the best place to work
for (Iyer and Davenport, 2008).
Finally, this study focuses on an economy that is moving forward in leaps and
bounds (Meredith, 2008; Friedman, 2006). Meredith (2008) suggests that India is one of
the most successful emerging economies and is becoming the world’s corporate
headquarters. MNCs should increase their awareness of management practices in these
upcoming economies and identify how to make their transitions into these economies
easier.
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