OCTAPACE

Organizational Climate (OCTAPACE)

An Insight into its effect on Job Satisfaction in the IT (Information Technology) Sector
A Dissertation Report submitted in partial fulfillment of the requirement for the MBA degree course of Bangalore University

By, Shweta M.L. Reg. No.: 03VWCM6097 (2003-2005)

Under the guidance and support of: Prof. Uma Sreedhar Faculty-Management Alliance Business Academy

Alliance Business Academy Bangalore 560 076 2003-2005

OCTAPACE

TABLE OF CONTENTS

Serial No. 1. 2.

Contents Executive Summary Chapter 1: Theoretical Background and Literature Review Chapter 2: Design of the study a. b. c. d. e. f. g. h. i. j. Objectives of research Problem Statement Scope of the study Research Methodology Research Instruments Methodology Plan of Analysis Limitations Operational Definitions Overview of Chapter Scheme

Page No. 1-2 3-9

10 10 10 11 11 13 14 14 14 15 17

3.

4.

Chapter 3: Industry Profile Chapter 4: Analysis and Interpretation

19 - 29

30 31 35 36 37

5.

a. b. c. d.

Descriptive Statistics Correlation Analysis 1 - way ANOVA t - test

6. 7. 8..

Chapter 5: Summary of Findings and Conclusion Bibliography Annexure

39 - 42 43 44 - 48

OCTAPACE

LIST OF TABLES

Serial No.

Contents

Page No.

1.

Table 1: Hygiene Issues and Motivators Table 2: Sample Distribution

2.

12

3.

Table 3 : Indian Software Exports Table 4: Top 20 it software & service exporters from India Table 5: Constraints Encountered by Indian Software Industries Table 6: Gender Distribution

21

4.

23

5.

24

6.

31

7.

Table 7: Distribution based on Designation

32

8.

Table 8: Qualification Table 9: Descriptive Statistics-Age and Experience Table 10: Group Statistics Table 11: Correlation - Job Satisfaction and Organizational Climate Table 12: ANOVA

33

9.

34

10.

34

11.

35

12.

36

13.

Table 13: Results of t-test

37 3

OCTAPACE

LIST OF FIGURES AND CHARTS Serial No. Contents Page No.

1.

Figure 1.1: Organizational Climate Index

2.

Chart 1: Indian Software Industry

22

3.

Chart 2: Growth of Knowledge Professionals

26

4.

Chart 3 : Gender Distribution

31

5.

Chart 4: Designation / Job Title

32

6.

Chart 5: Qualification

33

7.

Chart 6: Correlation

36

OCTAPACE

DECLARATION

I, Shweta M.L., studying in Alliance Business Academy hereby state that this report which is submitted in partial fulfillment of the requirement for the MBA programme to Bangalore University is an original research work carried out by me under the guidance and supervision of Prof. Uma Sreedhar, Faculty Guide and that the project or any part thereof has not been previously submitted for a degree/diploma to any university elsewhere.

Date: Place: Bangalore

SHWETA M.L. (Reg. No: 03VWCM6097)

OCTAPACE

GUIDE CERTIFICATION
This is to certify that Ms. Shweta M.L., student of MBA 4 th Semester of our institute has completed the DISSERTATION project titled Organizational Climate (OCTAPACE) - An Insight into its effect on Job Satisfaction in the IT (Information Technology) Sector.

This work is based on an original project study conducted by her under my guidance and no part of this report has been submitted for the award of any other Degree or Diploma to any other Board or University by any one else.

Date: Place: Bangalore

UMA SREEDHAR FACULTY

OCTAPACE

ACKNOWLEDGEMENT
The materialization of this project has witnessed innumerous contributions from numerous people in the form of selfless criticism, valuable suggestions and above all, power packed words of motivation. I am deeply indebted to all of them and take this opportunity to express my feelings of gratitude to all of them.

First of all, I place my heartfelt gratitude to Mr. Sudhir Angur, President and Prof. B.V. Krishnamurthy, Director and Executive Vice President of Alliance Business Academy for giving me the privilege to carry on this dissertation project.

I express a profound sense of gratitude to my project guide Prof. Uma Sreedhar, for her invaluable guidance and support during the ups and downs of this project. A special thanks to Prof. Vivekanand for his help in analyzing the results. Also thanks to all the faculty members and the lab-in-charges for all the help rendered.

Lastly, I would like to thank my family and all my friends who have been a constant reckoning for this endeavor, helping me by giving useful comments.

Gratefully, Shweta M.L.

OCTAPACE

OCTAPACE

EXECUTIVE SUMMARY
The Dissertation provided the Researcher with an opportunity to study and analyze the impact of Organizational Culture and Climate on Job Satisfaction. This study aims to find how the eight components of the OCTAPACE (Openness, Confrontation, Trust, Authenticity, Proactive, Autonomy, Collaboration and Experimentation) culture impact the level of job satisfaction of employees in the IT (Information Technology) sector.

The following chapters are included during the course of the research:

INTRODUCTION: In this chapter the researcher has given an overview of the theoretical concept of organization culture and job satisfaction. It explains the 8 different facets of Organizational Climate i.e. openness, confrontation, trust, authenticity, proactive, autonomy, collaboration & experimentation

(OCTAPACE). It includes an insight into what job satisfaction comprises of and how it can be increased. It also gives a brief insight into the various other past studies done on this subject.

DESIGN OF STUDY: In this chapter the researcher has included the following: Statement of problem, objectives of study, scope of study, research methodology, data collection, sampling plan, limitations of the study and the research process. The data is collected from various respondents in a leading software company in Bangalore. The data so obtained was downloaded in SPSS (Statistical Package for Social Sciences) software package for all the calculations and analysis.

INDUSTRY PROFILE: In this chapter the researcher had included a brief overview of the software industry in India, which is growing by leaps and bounds every day. It gives information about how culture can impact job satisfaction in the software industry. 9

OCTAPACE

ANALYSIS AND INTERPRETATION: The study was carried out at a leading Bangalore based software company. A sample of 40 employees was taken and the data were thus analyzed. The data that was collected is analyzed using SPSS (Statistical Package for Social Sciences) and interpreted accordingly. The various measures and tools that were used to analyze the data are Descriptive Statistics, Correlation coefficients, Means, Standard Deviation, ANOVA and t-Tests.

SUMMARY OF FINDINGS AND CONCLUSION: The last chapter consists of the summary of the analysis and concludes by providing certain recommendations that an organization can do to improve its culture and increase job satisfaction.

10

OCTAPACE

11

OCTAPACE

CHAPTER 1:

THEORETICAL BACKGROUND AND LITERATURE REVIEW

Culture is composed of many elements, such a symbols, heroes, rituals and values. Organization culture starts up with a common life style adopted by its members in form of shared learning, behaviors, values & interests & provides the employees with a clear understanding of the way things are done around them in their organization thus guides their further actions. It is considered to be a common perception held by the employees regarding their organization.

Culture in an organization plays at different levels, dominant culture which is shared & accepted by the majority of the organizations members, the next level to come are the subcultures that exist at the micro level that reflect the common problems & situations faced by every member in the organization within his own group or department. How does an organizational culture comes into existence? All this starts with the philosophy of the father figure & the founders of the organization, who then try to recruit & select the manpower of their desires who match their frequency when it comes to the thoughts, philosophies, values & beliefs, thus having a group of people standing in hierarchy with a common state of mind and this is the stage which is described as the socialization stage. (Adapting a culture among members of the organization).

12

OCTAPACE How does organizational culture benefit an organization?

It has direct links to the performance of an individual, although if one imposes a culture on the employees the results will never cross the confined boundaries of minimum specifications as enforcement kills creativity and makes the job monotonous. On the other hand if the employees are left to derive their own culture, it makes them feel at ease & adapt more quickly. Performance increases due to the freedom enjoyed by the employees which is the most dominating factor for the improvement of their creativity, sense of belonging to the job and the organization.

A healthy organizational culture is not individual in nature rather a grouped effort which brings common benefits to all; a slightest mistake might lose the man and his sense of belonging for ever so when magic words of organizational culture start they start with openness.

A healthy organizational culture rests on eight strong pillars of "OCTAPACE" referring to Openness, Confrontation, Trust, Authenticity, Proactive, Autonomy, Collaboration and Experimentation.

Thus, a healthy organizational culture with an open environment, filled with the feeling of mutual trust & confidence, with added flavor of authenticity, sense of collaboration, freedom & autonomy added to the responsibilities, proactive measures, loyalty, surrendered personal interests before

organizational interests and above all a treatment with respect and humanitarian consideration for each employee is important.

OCTAPACE values give a sense of direction to the HRD function. HRD outcomes include: competent people, well developed roles, high commitment, high job involvement, high job satisfaction, team work and synergy, problem solving, and good organizational health. The HRD function 13

OCTAPACE should contribute towards organizational effectiveness indicated in the effectiveness variables such as high productivity, growth and diversification, cost reduction, profits, and a better image of the organization.

Job Satisfaction is the pleasure and feeling of accomplishment employees derive from performing their jobs well. Job satisfaction can be influenced by a variety of factors, e.g., the quality of one's relationship with their supervisor, the quality of the physical environment in which they work, degree of fulfillment in their work, etc.

Increasing job satisfaction is important for its humanitarian value and for its financial benefit (due to its effect on employee behavior.) As early as 1918, Edward Thorndike explored the relationship between work and satisfaction in the Journal of Applied Psychology. Bavendam Research has included measures of job satisfaction in all employee surveys. The results were as follows:

Employees with higher job satisfaction: 1. Believe that the organization will be satisfying in the long run 2. Care about the quality of their work 3. Are more committed to the organization 4. Have higher retention rates, and 5. Are more productive.

Job satisfaction has been one of the most widely studied concepts in management literature, accounting for more than 5,000 published works (Wilson, 1996). Information generated by research into this area had practical implications for individuals and organizations alike. According to Wilson (1996), employees want to have the best quality of life possible for themselves and their families, and managers are confronted with increasing 14

OCTAPACE challenges of managing effective and efficient organizations by utilizing human, financial, and technological resources available to them.

Understanding job satisfaction and what it means is not only desirable but also a critical aspect of life for both individuals and organizations.

Previous studies have shown that organizational climate types are related to facets of job satisfaction. In his study of non-profit employees, Deshpade (1996) found that a caring organizational climate is associated with high level of satisfaction with supervisors, and that instrumental and authoritarian and task oriented climate types have negative influence on overall job satisfaction as well as satisfaction with promotion, coworkers and supervisors. Based on these findings one may be able to conclude that organizational climate types are associated with facets of job satisfaction and overall job satisfaction.

In a study done by Frederick Herzberg, he theorized that employee satisfaction depends on two sets of issues: "hygiene" issues and motivators. Once the hygiene issues have been addressed, the motivators create satisfaction among employees.

Table 1: Hygiene Issues and Motivators Hygiene issues (dissatisfiers) Company and administrative policies Supervision Salary Interpersonal relations Working conditions
th

Motivators (satisfiers) Work itself Achievement Recognition Responsibility Advancement

Source: Organizational Behavior, 5 Edition, Aswathappa, Pg 206-207

15

OCTAPACE KEY POINTS: Employee satisfaction affects every aspect of an organization, from customer satisfaction to overall productivity. Frederick Herzberg theorized that employee satisfaction has two dimensions: "hygiene" and motivation. Hygiene issues, such as salary and supervision, decrease employees' dissatisfaction with the work environment. Motivators, such as recognition and achievement, make workers more productive, creative and committed.

OTHER STUDIES ON ORGANIZATIONAL CLIMATE

1. Organizational Climate Index (OCI):

Figure 1.1: Organizational Climate Index The Organizational Climate Index (OCI) is an easy-to-use tool for quickly measuring and improving the organizational climate. Organizational Climate Index:

identifies the readiness for, commitment for, and skills for change. identifies the values, emotional competencies, and behaviors needed for success.

alerts

managers

to

needs

and

opportunities

for

training, 16

OCTAPACE communication, and development.

helps build strategies for sustainable growth. is scalable, measurable, and practical.

The statistically reliable, normed assessment addresses five climate factors, plus an overlay dimension of Trust:

Accountability and Responsibility Collaboration and Problem Solving Perception of Leadership Alignment to the Mission Adaptability for Change

The OCI predicts:

47% of Customer Service 27.8% of Productivity 43.4% of Retention

2. A study on Organizational Ethos: Dr. Phalgu Niranjana and Prof. Biswajeet Pattanayak conducted this study that made an attempt to ascertain the relative importance of organizational ethos and its eight dimensions in determining organizational citizenship behavior. The sample size taken was 600 that were divided into eight groups. Each group comprised of 75 participants. The statistics used were descriptive analysis, ANOVA, correlation and step wise multiple regression analysis to analyze the data and interpret the results.

The study had thrown many interesting results. The major findings were: there is a significant difference between manufacturing and service sector on organizational citizenship behavior and organizational ethos. 17

OCTAPACE Manufacturing sector has better organizational culture in terms of openness, autonomy, collaboration and experimentation whereas service sector has high organizational citizenship behavior and learned optimism. Based on the findings, organizational development to and behavioral the development the

interventions were organization.

suggested

increase

performance in

TOOLS: Two tools namely, Citizenship Behavior scale and Organizational Ethos scale had been used to measure the dependent variables. They were 1. Organizational Citizenship Behavior Scale (Linn Van Dyne, Jill W. Graham & Richard M. Dienesch in 1994) 2. Organizational Ethos: OCTAPACE Profile (Udai Pareek in 1997)

The results show that organizational citizenship behavior has positive relationship with organizational ethos. It shows that a positive work culture and learned optimism will influence organizational citizenship behavior thereby developing loyalty, obedience and participation in the organization.

Hence, the cultural factors like confrontation and pro-action have positive impact on organizational citizenship behavior. Organizations do need to create ethos like confrontation and pro-action and also need to take initiative to make the employees learn optimism in order to develop organizational citizenship behavior.

18

OCTAPACE

CHAPTER 2: DESIGN OF THE STUDY

19

OCTAPACE The researcher had read various articles regarding organization climate and wondered as to how it affects an employee. The researcher wanted to know why climate is important in an organization. Also the research wanted to ascertain if organizational climate impacts job satisfaction. Hence to determine whether organization climate is one of the factors why employees join a certain organization and continue to work in that organization, this research study was undertaken. Also various previous studies have been done on similar topics, more specific to other industries such as manufacturing, banking, hotels etc. But not many such studies have been conducted in the IT sector. Thus this study has been conducted specific to the IT industry in Bangalore.

a. Objectives of the research:

1. To ascertain the impact of organizational culture on job satisfaction in the IT industry.

2. To understand the correlation between the different variables of organizational climate and job satisfaction.

b. Problem Statement:

Null Hypothesis: Organizational climate and culture does not impact the various facets (pay, promotion, work, supervisor and coworkers) of Job Satisfaction of IT (Information Technology) professionals.

Alternative Hypothesis: Organizational climate and culture impacts the various facets (pay, promotion, work, supervisor and coworkers) of Job Satisfaction of IT (Information Technology) professionals. 20

OCTAPACE c. Scope of Research:

This research is limited only to a certain company in the software industry in Bangalore due to certain constraints. The findings can be applicable in IT and related companies in Bangalore. The time that was required to carry out this research was 1.5 months.

d. Research Methodology:

i.

Type of Research: Causal Research Here the research aims to understand how organizational climate and culture impacts job satisfaction in an organization. Hence, this kind of research is used to determine how one independent variable affects the other variable that is dependent on it. Organizational climate is taken as the independent variable and job satisfaction as the dependent variable.

ii.

Sources of data:

Primary

Data:

This

has

been

collected

through

standard

questionnaires. Samples were taken from employees at a leading software organization in Bangalore. Secondary Data: From previous studies done on similar topics.

iii.

Sampling Plan: The sample used for this study consists of information technology (IT) professionals in a selected business organization.

Sample Size: 21

OCTAPACE A sample of 50 IT professionals was drawn. The size was restricted to 50 due to time and cost constraints.

Sample Distribution: Table 2: Sample Distribution Designation Age Gender Software Engineer Programmer Coder Testing Business Analyst Software Associate TOTAL
Source: Primary data

22-26 M 8 5 2 15 F 4 2 1 1 1 9

27-31 M 3 5 1 1 10 F 2 1 3

31-35 M 1 1 2 F 1 1 40

Sampling Method:

The sample was drawn using a simple random sampling technique. This technique was used since it is an unbiased method of selection in which each population element has a known and equal chance of selection.

e. Research Instruments:

Two instruments were used to gather data for this study: The 22

OCTAPACE OCTAPACE Profile (OP) and the Job Satisfaction Questionnaire (JSQ).

1. OCTAPACE Profile: This was developed by Udai Pareek. It consists of 40 items in which some are negatively worded. It measures organizational ethos in terms of eight different values- openness, confrontation, trust, authenticity, proactive, autonomy, collaboration & experimentation. Each dimension is measured by five items each. Each dimension has a combination of positive and negative items. Response is collected on four choices (4-Highly value, 3- Fairly high value, 2-Low value and 1-Very low value)

Reliability of instrument: Split- half reliability was found to be 0.84 on the 40 respondents. Alpha was found to be 0.85.

Respondents were asked to respond to these questions in terms of how the climates of their organization actually are and not how they would want the climate to be. The interpretation of this profile is as follows: higher score on any dimensions indicate the higher perceived value of the organization. Low scores indicate areas of concern.

2.

Job Satisfaction Questionnaire measures job satisfaction and the

instrument contains a total of 19 items; each to be ranked on a scale of 1 to 5 (1-Very Dissatisfied, D-Dissatisfied, 3-Neutral, 4-Satisfied, 5-very satisfied)

Reliability of instrument: Alpha was found to be 0.92 on the 19 items in the questionnaire.

h. Methodology: 23

OCTAPACE The instruments used to gather data were hand delivered to the professionals identified for this study. Of the 50 questionnaires distributed 40 usable questionnaires were returned (i.e. 80%).

g. Plan of Analysis:

The data collected were analyzed using SPSS (Statistical Package for the Social Sciences), which is a comprehensive and flexible statistical analysis and data management system. The various tests that were conducted on the data are: Descriptive Statistics, Means, Correlation, Standard Deviation, ANOVA and t-Test. h. Limitations:

1. The time given for the project was not sufficient to carry out an indepth study.

2. The sample size had to be restricted to 50 due to time and cost constraints.

3. The geographical are covered is small.

4. The responses given by the employees may not be true and could be biased.

i. Operational Definitions of Concepts: Corporate culture describes a set of values, feelings, attitudes and expectations that provide meaning, order and stability to members lives and 24

OCTAPACE influence their behavior.

Openness: Spontaneous expression of feelings and thoughts, and sharing of these without defensiveness.

Confrontation: Facing and not shying away from problems; deeper analysis of interpersonal problems; taking up challenges.

Trust: Maintaining confidentiality of information shared by the other person and not misusing it; a sense of assurance that others will help when needed and will honor mutual obligations and commitments.

Authenticity: Congruence between what one feels, says and does; owning ones actions and mistakes, unreserved sharing of feelings.

Proactive: Initiative; pre-palling and preventive action; calculation pay-offs before taking action. Autonomy: using and giving freedom to plan and act in ones own sphere; respecting and encouraging individual and role autonomy.

Collaboration: Giving help to and asking from, others; team spirit, working together (individual and group) to solve problems.

Experimentation: Using and encouraging innovative approaches to solve problems; using feedback for improving; taking a fresh look at things encouraging creativity. Job Satisfaction is the pleasure and feeling of accomplishment employees derive from performing their jobs well. Job satisfaction is in regard to one's feelings or state-of-mind regarding the nature of their work. Job satisfaction can be influenced by a variety of factors, e.g., the quality of one's relationship 25

OCTAPACE with their supervisor, the quality of the physical environment in which they work, degree of fulfillment in their work, etc.

Causal research: When the objective is to determine which variable might be causing a certain behavior, i.e. whether there is a cause and effect relationship between variables, causal research is undertaken. In order to determine causality, it is important to hold the variable that is assumed to cause the change in the other variable(s) constant and then measure the changes in the other variable(s).

Correlation the degree to which one phenomenon or random variable is associated with or can be predicted from another. In statistics, correlation usually refers to the degree to which a linear predictive relationship exists between random variables, as measured by a correlation coefficient. Correlation may be positive (but never larger than 1), i.e., both variables increase and decrease together; negative or inverse (but never smaller than 1), i.e., one variable increases when the other decreases; or zero, i.e., a change in one variable does not affect the other.

ANOVA stands for Analysis of Variance, a method by which the source of variability is identified. This method is widely used in industry to help identify the source of potential problems in the production process, and identify whether variation in measured output values is due to variability between various manufacturing processes, or within them. By varying the factors in a predetermined pattern and analyzing the output, one can use statistical techniques to make an accurate assessment as to the cause of variation in any process.

The t - test is a statistical test which computes the probability that two groups of a single parameter are members of the same population. The population must follow a distribution. 26

OCTAPACE

Simple Random Sampling is a process whereby a sample is chosen from a population randomly, in which each member of the population has the same probability of being chosen. In small populations such sampling is typically done "without replacement", i.e., one deliberately avoids choosing any member of the population more than once

j. Overview of Chapter Scheme:

Chapter 1 contains a theoretical background to the subject under study. It describes what Organizational Culture and Climate mean and provides information on the various aspects that determine culture in an organization. Then it explains about job satisfaction and what are the various factors that increase or decrease job satisfaction. It also gives a brief description of some past studies that have been done on the same subject.

Chapter 2 contains the design of the study with regard to the type of research done, its objectives, the sampling plan used, the methodology of data analysis and the limitations of this study. It also the various operational definitions that have been used in this study.

Chapter 3 gives an overview of the IT (Information Technology) industry in India. It provides some highlights about the top companies in this industry and the trends in this industry. It also provides a prediction on the future of this industry.

Chapter 4 analyzes the data collected. All the tables and graphs are depicted in this chapter. The inferences obtained from the various tests are mentioned in this chapter. Various analyses like correlation, ANOVA etc have been 27

OCTAPACE conducted on the data to arrive at conclusions and prove the hypothesis.

Chapter 5 is the final chapter that gives a summary of all the findings of this research and suggests certain recommendations. It also provides information on scope for further research.

28

OCTAPACE

CHAPTER 3: INDUSTRY PROFILE

29

OCTAPACE IT (INFORMATION TECHNOLOGY) INDUSTRY IN INDIA

DEFINITION: The term IT industry generally covers development, production and services related to IT products. Hence it contains three basic sectors: software, hardware and services. So, the IT software industry has two components: IT software and service. According to the definitions given in Information Technology Action Plan-I (under Recommendation No. 19), IT Software means any representation of instructions, data, sound or image, including source code and object code, recorded in a machine readable form, and capable of being manipulated or providing interactivity to a user, by means of an automatic data processing machine falling under heading IT products, but does not include non-IT products. IT service is defined as any service which results from the use of any IT software over a system of IT products for realizing value addition.

OVERVIEW: The software industry began in the late 1950s when the use of computers for business applications expanded rapidly creating a huge demand for people with programming experience. A number of people who had learned their programming skills working for computer manufacturers or for the large companies and government agencies that were the first computer users saw this as an opportunity to start their own companies and sell their services under contract. The number of computers in use and their size and speed expanded rapidly in the 1960s escalating the demand for software to support the numerous tasks for which computers were now being used. This provided enormous opportunities for entrepreneurs to create new companies to serve this expanding market. 30

OCTAPACE The 1970s saw the contract programming industry continue to grow at a rapid pace. These companies came to be known as "professional services" firms reflecting the fact that they often provided a broad range of consulting, analysis and design services in addition to programming. As global organizations strive to improve the quality of their processes while managing their bottom lines, Business Process Outsourcing ("BPO" or "Outsourcing" or "Off shoring") has become the new imperative in the 1990s and 2000s. In the recent past, India has emerged as one of the most preferred BPO destinations of the world. Currently, the BPO industry in India is at the second stage of its operations. The initial stage, in the late 1980's and 1990's was marked by the setting up of captive operations in India by giant multinational corporations ("MNC") like American Express and GE. Now in the second stage, independent third-party operations are emerging out of the shadow of the more visible, captive MNC units. The USD 2.3 Billion BPO segment is growing impressively in India. The most cogent reason for Outsourcing is to reduce or control operating costs. The total number of IT Software and Service companies in India is estimated to be 5000. Of this, 60% of the companies are domestic players, while 40% are MNCs.

With lack of significant domestic demand, growth in Indian software industries has been spurred mainly by the growth in export market demand. The export market is mostly concentrated in the United States and Europe. Almost two thirds of the software revenue for the Indian companies comes from servicing the United States market.

The structure of the Indian software exports industry in 2003-04 is as follows:

Table 2 : Indian Software Exports 31

OCTAPACE Annual turnover Above Rs. 1,000 crore Rs. 500 crore-Rs.1,000 crore Rs.250 crore-Rs.500 crore Rs.100 crore-Rs.250 crore Rs.50 crore-Rs.100 crore Rs.10 crore-Rs.50 crore 220 Below Rs. 10 crore
Source: Nasscom Reports

No. of companies 5 5 15 25 55 220 2,483

Much of Indias export of software services is actually carried out at the clients site overseas, commonly referred to as onsite services, rather than offshore more popularly known as turnkey projects. Approximately 70% of export services are onsite work, while only about 30% are offshore type, although, this is now showing reverse trends.

2003-04

has

witnessed

increased

outsourcing

of

software

development work by global corporations resulting in a shift in the Onsite: Offshore ratio. Offshore revenues are higher than onsite revenues. The important factors taken into consideration by clients for decision on off shoring of projects are managerial skills, quality control and access to technology. Today, India is increasingly being seen as a destination where these parameters are fulfilled as per international standards and

requirements.

32

OCTAPACE

Chart 1: Indian Software Industry

IT MARKET:

The growth in the Indian IT industry was largely driven by exports. The software and services exports registered a growth of 18.4%, recording revenues of Rs. 34,800 crores (US$ 7.2 billion) in 2002-03. NASSCOM, the chamber of commerce of the IT software services and ITES-BPO industry in India, announced the rankings of Top 20 IT Software and Service exporters in India (excluding ITES-BPO revenues). According to the survey, Tata Consultancy Services has emerged as the leader, clocking IT Software and Services (excluding ITES-BPO) revenues of Rs. 5,503 crores followed by Infosys at Rs. 4,709 crores and Wipro with Rs. 3,920 crores respectively. The combined revenue of the top 20 software and service exporters in the area of IT Services, Products & Technology services is Rs. 26,464 crores (US$ 5.77 billion) in 2003-04 and have witnessed a year-on-year growth of 31.6 per cent (in dollar terms) compared to the total combined revenue of Rs. 20,668 crores in 2002-03. The software and services exports industry (excluding the ITES-BPO sector), recorded revenues of US$ 8.9 billion in 2003-04, registering a growth of 25 per cent over the revenue of US$ 7.1 billion in 2002-03. 33

OCTAPACE While the top 20 IT software and service exports accounting for nearly 65 per cent of the total IT software and services exports, continue to drive the overall growth of the Indian IT industry, Small and Medium Enterprises have also performed well during 2003-04.

Table 3: Top 20 it software & service exporters from India (2003-04) (Excluding ITES-BPO)
Exports (Rs crore) 5503 4709 3920 2472 1895 1223 773 727 579 544 541 538 488 427 393 379 378 352 345 321 Exports (US$ million) 1198.9 1026.0 854.1 538.6 412.9 266.4 168.4 158.5 126.1 118.6 117.9 117.2 106.4 93.1 85.5 82.5 82.4 76.6 75.1 70.0

Rank 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19

Company Tata Consultancy Services Infosys Technologies Ltd Wipro Technologies Satyam Computer Services Ltd HCL Technologies Ltd Patni Computer Systems Ltd iFlex Solutions Mahindra British Telecom Ltd Polaris Software Perot Systems TSI (HCL Perot Systems Ltd) Digital Globalsoft Ltd NIIT Ltd iGATE Global Solutions Limited (Mascot Systems Ltd) Birlasoft Ltd Mphasis BFL Ltd Mastek Ltd Hexaware Technologies Ltd Larsen & Toubro Infotech Ltd Tata Infotech Ltd

20 Hughes Software Systems Source: Nasscom reports

34

OCTAPACE

MARKET CONSTRAINTS: With a constant flow of new entrants in the global software industry, profits from the sale of traditional services, for the Indian software industry, are likely to fall in the future; revenue growth would depend only on growth in number of software workers. In order to survive the increased level of competition in the world market, Indian companies, therefore, would have to develop new products that are at the high end of the value chain.

Table 4: Constraints Encountered by Indian Software Industries

35

OCTAPACE
Source: Nasscom Reports

Despite challenges such as the volatility of the rupee, Indian IT

companies have witnessed significant growth in their revenues. This has been possible as Indian companies are increasingly moving beyond traditional service lines being able to draw more strategic business as well as bag larger contracts from their customers and tap new geographies.

Indian IT companies, apart from consolidating their presence in traditional verticals such as BFSI, also diversified into new verticals such as Telecom, Retail, Utilities and Healthcare. Some leading players also moved into new services lines in the IT services arena such as IT consulting, packaged software implementation and systems integration. Apart from the Indian companies, MNCs are doing an increasing amount of their software development and design work at their captive centers in India. In the coming years, IT software and service project execution will take place through a global delivery model, with most companies offering three-tier delivery and a network of global centers.

GROWTH AND PROFITABILITY: In terms of size, Indian IT companies are much smaller although the top three - TCS, Infosys and Wipro - have just crossed a billion dollar in revenue. In comparison IBMs service revenue is $43 billion, EDS $22 billion and Accentures is $13 billion. Being relatively younger and operating on a smaller base, Indian companies are growing faster. In 2003, for example, TCS revenue registered 32 per cent growth over the previous year, Infosys grew 44 per cent and Wipros revenue growth was 26 per cent.

The only global player that came close to these is Computer Sciences Corporation whose revenue jumped up by 22 per cent last year. All other 36

OCTAPACE companies, including IBM, EDS, Accenture etc, grew at a much slower rate. In terms of profitability too Indian companies are far ahead. A research report prepared by JP Morgan shows that EBITDA (earnings before interest, tax, depreciation and amortization) margins of Indian companies were 27 per cent

for TCS, 32 per cent for Infosys and 23 per cent for Wipro. In comparison, the EBITDA margins of global IT majors varied between 13 and 18 per cent.

Moreover, with off shoring going main stream, the volume of business shifting offshore is large enough to drive growth for Indian vendors for quite a few years. Naturally, large Indian players like TCS, Infosys, Wipro, etc, who have developed leaner cost structures and established credentials of offshore project delivery, are unlikely to be threatened by the global giants or their Indian operations.

EMPLOYEE PROFILE:

Chart 2: Growth of Knowledge Professionals

37

OCTAPACE

Profile of Employees engaged in the Indian IT Sector

The number of employed IT software and services professionals increased to 522,000 by the end of 2001-02 compared to 280,000 employed in the year 1998-99. This figure includes professionals, who are engaged in software, IT services and IT-enabled services including professionals engaged in software development units in user organizations.

The hiring of new IT professionals was highest in South India at 41 percent and lowest in the Eastern region at 6 percent.

The overall median age of software professionals was about 25.6 years.

79 percent of software professionals in software companies were men, whereas 21 percent were women. However, this ratio is likely to be 65:35 (male: female) by the year 2005.

44 percent of the software professionals or knowledge workers possessed over 3 years of working experience.

There was an average of 6 percent rise in basic salary during 2001. (This was the lowest rise ever recorded since 1990). Most companies are increasingly adopting the variable pay concept in order to link pay to revenues, and control costs.

The

skills

in

demand

were

in

the

areas

of

Software

engineering/programmers/analysts, applications,

Internet

and

e-commerce

Database administrators,

Network specialists and

communication engineers, Digital media, Business applications of software development, Web based applications, Networking

applications, Java, Data warehousing, Client-networking, Project management, Quality assurance & technical writing, Legacy systems, etc. According to a Forrester study conducted in November 2001, India's IT strengths are: 38

OCTAPACE 1. The country's decade-old experience in this area 2. Fluency in English 3. Supportive government policy infrastructure, and 4. High-quality offerings 5. The attractive wage structure in India is of course a very important point. The average salary for an Indian software professional is somewhere around 20 to 25 per cent of the corresponding wages in the US. This is amplified by a 1999 World Bank study, which says that India is the only country that figures in the high-quality-low-cost segment of the quality-cost matrix. India also has a talent base with enormous potential. It has the world's second largest pool of English-speaking scientific manpower. The past year has sliced the software industry into three. There are the giants, who now have enough scale, marketing and execution prowess to continue growing at rates in excess of the industry average. Then, there are the small companies, who specialize and survive. And in between are the middle-tier companies, who are caught between the need to specialize and the desire to grow big rapidly. The middle-tier companies run the risk of becoming the "living dead" unless they achieve rapid growth. Software is one industry in which consolidation is likely to happen less through mergers and acquisitions but more through the departure of clients and employees in the middle-tier companies. All in all, India's software industry is growing up - fast. The opportunities are there but so are the challenges. As the euphoria of skyrocketing stock prices has faded away, there is a growing realization that while the market opportunity is there, a lot more needs to be done to grab it.

39

OCTAPACE FUTURE OF THE SOFTWARE INDUSTRY: The NASSCOM - McKinsey report on India's IT industry is as follows: 1. Software & Services will contribute over 7.5 % of the overall GDP growth of India 2. IT Exports will account for 35% of the total exports from India 3. Potential for 2.2 million jobs in IT by 2008 4. IT industry will attract Foreign Direct Investment (FDI) of U.S. $ 4-5 billion 5. Market capitalization of IT shares will be around U.S. $ 225 billion

Hence, the value proposition of the Indian software industry can be summed up as "faster, better, and cheaper."

40

OCTAPACE

CHAPTER 4: DATA ANALYSIS

41

OCTAPACE

The data has been analyzed using the software SPSS. SPSS (Statistical Package for the Social Sciences) is a comprehensive and flexible statistical analysis and data management system. SPSS can take data from almost any type of file and use them to generate tabulated reports, charts, and plots of distributions and trends, descriptive statistics, and conduct complex statistical analyses. It can perform a variety of data analysis and presentation functions, including statistical analyses and graphical presentation of data. Among its features are modules for statistical data analysis, including descriptive statistics such as plots, frequencies, charts, and lists, as well as sophisticated inferential and multivariate statistical procedures like analysis of variance (ANOVA), factor analysis, cluster analysis, and categorical data analysis.

The data was first coded for the descriptive variables and then entered into the SPSS package to perform the analysis.

a. Descriptive Statistics: 42

OCTAPACE

1. Gender Wise Distribution of Data:

Table 5: Gender Distribution Gender Male Female Total

Source: Primary Data

Frequency 28 12 40

Percent 70 30 100

Chart 3 : Gender Distribution

30% 70%

Male Female

2. Distribution based on Designation / Job Title:

43

OCTAPACE Table 6: Distribution based on Designation

Designation / Job Title Software Engineer Programmer Coder Testing Business Analyst Software Associate Total
Source: Primary Data

Frequency 17 14 4 2 2 1 40

Percent 42.5 35 10 5 5 2.5 100

Chart 4: Designation / Job Title

5% 10% 42% 5% 3%
Software Engineer Programmer Coder Testing Business Analyst

35%

Software Analyst

3. Distribution based on Qualification:

44

OCTAPACE Table 7: Qualification Qualification BE B Tech MCA B Sc M Tech B.Sc BCA Total
Source: Primary Data

Frequency 24 7 4 2 1 1 1 40

Percent 60 17.5 10 5 2.5 2.5 2.5 100

Chart 5: Qualification
BE

30% 50% 9% 5% 1% 1%1% 3%

B Tech MCA B Sc M Tech B.Sc BCA Total

4. Descriptive Statistics with regard to Age and Experience: Table 8: Descriptive Statistics-Age and Experience 45

OCTAPACE Variable Age Experience (in months) Experience (in years)

Source: Primary Data

N 40 40 40

Minimum 22 7 .58

Maximum 35 72 6

Mean 24.33 18.93 1.58

Std. Deviation 2.25 12.68 1.06

5. Group Statistics: (Mean and Standard Deviation) Table 9: Group Statistics Variable Openness Confrontation Trust Authenticity Proaction Autonomy Collaboration Experimentation Job Satisfaction Organizational Climate
Source: Primary Data

Gender Male Female Male Female Male Female Male Female Male Female Male Female Male Female Male Female Male Female Male Female

N 28 12 28 12 28 12 28 12 28 12 28 12 28 12 28 12 28 12 28 12

Mean 2.81 2.68 2.83 2.46 2.54 2.37 2.51 2.36 3.01 2.93 2.50 2.45 2.80 2.72 2.73 2.58 3.50 3.56 2.72 2.57

Std. Deviation .47 .49 .45 .34 .41 .32 .52 .29 .44 .55 .32 .19 .46 .32 .41 .39 .54 .61 .30 .26

b. Correlation Analysis: 46

OCTAPACE 1. Correlation between Organizational Climate and Job Satisfaction: The value of correlation between organizational climate and job satisfaction is 0.63. This is a two-tailed test conducted at 1% level of significance.

Inference:

At 1% level of significance, there is a positive correlation between organizational climate and job satisfaction. The reason for this is that there is high openness in this organization and also there is a significant level of collaboration between the employees. This means that better the climate in an organization, higher is the level of job satisfaction in the employees.

2.

Correlation between Job Satisfaction and the 8 variables of Organizational Climate: Table 10: Correlation - Job Satisfaction and Organizational Climate OCTAPACE Variables Openness Confrontation Trust Authenticity Proaction Autonomy Collaboration Experimentation Job Satisfaction 0.581 0.521 0.464 0.123 0.572 0.126 0.580 0.422

Source: Primary Data

47

OCTAPACE Chart 6: Correlation

Experimentation

Job Satisfaction

0.422 0.58 0.126 0.572 0.123 0.464 0.521 0.581 0 0.2 0.4 0.6 0.8

Collaboration Autonomy Proaction Authenticity Trust Confrontation Openness

Inference:

At 1% level of significance, it has been observed that there is a maximum positive correlation between openness and job satisfaction and minimum positive correlation between authenticity and job satisfaction. The reason for autonomy and authenticity to have a low correlation with job satisfaction is that there is no empowerment given to the employees. The decision making is done mostly by the top management and hence the degree of autonomy that the employees perceived was low.

c.

1- way ANOVA (Analysis of Variance):

Table 11: ANOVA Degrees of Freedom 39 Inference: F 19.402

The F value obtained is significant at 1% level of significance, which means that the null hypothesis is rejected. Hence it can be inferred that there 48

OCTAPACE is an impact of organizational climate on job satisfaction. d. t-test: At 5% level of significance, the various t values for the different variables are obtained:

Table 12: Results of t-test Variables Openness Confrontation Trust Authenticity Proaction Autonomy Collaboration Experimentation Organizational Climate
Source: Primary Data

Calculated t value 0.798 2.547 1.282 0.910 0.447 0.496 0.573 1.041 1.465

Significance (Two-tailed) 0.430 0.015 0.208 0.368 0.657 0.623 0.570 0.304 0.151

Inference:

All variables in the above table except Proaction and Autonomy have the calculated t value greater than the significant value. Hence, this implies that the result obtained is significant. Therefore the inference is that the null hypothesis is rejected and we can conclude that organizational climate does impact the level of job satisfaction in an organization.

Also it can be noted that if the total of the eight variables that comprise 49

OCTAPACE Organizational climate are taken together, even then the calculated t value is higher than the significant value i. e. 1.465 > 0.151. Hence it can be concluded that the results obtained are significant and hence the null hypothesis can be rejected. Therefore job satisfaction is affected by the culture and climate of an organization.

50

OCTAPACE

CHAPTER 5
51

OCTAPACE

a. Summary of findings:

1. There is a positive correlation between organizational climate and job satisfaction. Better the climate, higher the job satisfaction in employees.

2. Among all the eight variables of organizational climate, there is a maximum positive correlation between openness and job

satisfaction and minimum positive correlation between authenticity and job satisfaction.

3. Using ANOVA, it was ascertained that the value obtained was significant and hence the null hypothesis was rejected which implies that organizational climate and culture impact job satisfaction. 4. Using the t test, the various t values were obtained for the individual variables of OCTAPACE. Of these, all the results were significant except for two (proaction and autonomy). But the final conclusion is that since all the eight variables of OCTAPACE together were significant, the null hypothesis has been rejected and hence the alternative has been accepted which states that Organizational climate and culture impact the various facets of job satisfaction.

b. Recommendations: 52

OCTAPACE 1. The authenticity variable in the climate of an organization can be improved to increase job satisfaction.

2. Factors like trust can be given higher priority in an organization.

3. More empowerment can be given to people in the organization to increase job satisfaction.

4. Employees must be given opportunities where their leadership styles can be displayed. Also they must be given the chance to bring new ideas without the fear of rejection.

5. Since the IT industry mainly comprises of knowledge workers, such employees cannot be enslaved but only led. Hence they must be given the direction and authority to do their job.

6. The employees must be given a feeling that they belong to the organization. They should work towards a shared vision of the organization.

7. The employees must have a psychological contract with the organization. This is because, more the employees feel that he/she is valued in the organization, greater will be his/her job satisfaction.

c. Conclusion: 53

OCTAPACE In the last one decade, after the liberalization and globalization process of the Indian economy, organizational competition has become very high, throwing thereby a challenge for survival. Most of the organizations are finding it difficult to sustain their positions, which have been reflected in the ups and downs trend of Fortune 500 companies in India and abroad.

This is high time that the Indian organizations should understand the culture specific organizational dynamics that determine the failure and success of the organizations. Pareek (1994) has rightly pointed out that

culture provides a strong rim for a fast moving wheel, which keeps several factors integrated and acts as a binding force to move in a difficult terrain. Sinha (1994) pointed out that the move to get out of the western mould, through indigenous organizational behavior research in India, has taken three roots. The first is a religious-philosophical model of human beings who strive to relate by seeking purity and peace of mind, cultivating a sense of detachment and accenting work as a duty. The second one emphasizes on the strategic role of the organization in nation building. The third root yields to socio-economic and political compulsions and explores how people work in the organization. This three approaches often overlap and taken together present a contrast to a western view of culture.

Organizations should initiate proper human resource intervention techniques to develop a performance oriented work culture. Specific OD initiatives should be developed for manufacturing and service organizations. Service organizations should take more initiative in developing better work culture to maximize the customer satisfaction and also to attract and retain the best customers. Training programmes and action research should be undertaken by sector specific different organizations to develop employees on these attributes and also organizations in creating a healthy work culture, which would be more vibrant, competitive, performance oriented and environment sensitive. 54

OCTAPACE

With regard to further avenues for research, one can study why culture plays an important part when people join a company for the first time and what are the reasons they stay in the company. Also, one can find methods to increase openness, trust, authenticity, autonomy, proaction,

experimentation and collaboration and decrease confrontation in employees. Such a study will enable one to improve the climate and culture in an organization which will in turn increase the job satisfaction level of employees. Thus to conclude it is not the organization, which makes the difference; it is the people in the organizations who really make the difference.

55

OCTAPACE

BIBLIOGRAPHY
56

OCTAPACE

BOOKS: DeCenzo, David E. & Robbins, Stephen P. Personnel / Human Resources Management, 3rd Edition, Prentice Hall India Private Limited, 1997. Aswathappa, K. - Human Resource and Personnel Management, 3rd Edition, Tata McGraw-Hill Publishing Company Limited, 2002.

Cooper, Donald & Schindler, Pamela - Business Research Methods, 8th Edition, Tata McGraw-Hill Publishing Company Limited, 2003.

Pareek, U. (1997). Organizational ethos: OCTAPACE Profile. Training Instruments for Human Resource Development. New Delhi: Tata McGraw- Hill.

WEBSITES: http://www.spss.com http://www.indiana.edu/statmath/stat/spss/win www.hrzone.com/articles/climate.html www.sba.muohio.edu www.aims.org.in www.dhan.org/

57

OCTAPACE

ANNEXURE
58

OCTAPACE

QUESTIONNAIRE

ORGANIZATIONAL CLIMATE AND ITS IMPACT ON JOB SATISFACTION

Kindly fill in the details below:

1. Gender: 2. Age:

--- Male

--- Female

3. Designation / Job Title: 4. Qualification: 5. Years of Experience:

This questionnaire will help you to look at some values and beliefs of your organization. Below are given statements indicating some values of the top management, and hence generally shared in the organization. Read each statement and indicate in the space on the left hand side of the statement, how much the spirit contained in the statement is valued in your organization. Please be frank.

Use the following key for your responses: Write 4 if it is highly valued 3 if it is given a fairly high value ____ 2 if it is given a rather low value 1 if it is given a very low value.

1. Free interaction amongst employees, each respecting others

feelings, competence and sense of judgment

____ 2. Facing and not shying away from problems

____ 3. Offering moral support and help to employees and colleagues in 59

OCTAPACE crises.

____ 4. Congruity between feelings and expressed behavior

____ 5. Preventive action on most matters

____ 6. Employees taking independent action relating to their jobs

____ 7. Teamwork and team spirit

____ 8. Employees trying out innovative ways of solving problems

____ 9. Genuine sharing of information, feelings, and thoughts in meetings

____10. Going deeper rather than doing surface-level analysis of interpersonal problems

____ 11. Interpersonal contact and support amongst employees

____ 12. Tactfulness, smartness and even a little manipulation to get things done

____13. Seniors encouraging their subordinates to think about their development and take action in that direction.

____ 14. Close supervision of and directing employees in action

____ 15. Accepting and appreciating help offered by others

____ 16. Encouraging employees to take a fresh look at how things are 60

OCTAPACE done

____

17. Free discussion and communication between seniors and

subordinates

____ 18. Facing challenges inherent in the work situation

____ 19. Confiding in seniors without fear of their misusing trust

____ 20. Owning up mistakes made

____ action

21. Considering both positive and negative aspects before taking

____ 22. Obeying and checking with seniors rather than acting on ones own

____ 23. Performing immediate tasks rather than being concerned about large organizational goals

____

24. Making genuine attempts to change behavior on the basis of

feedback received

For statements 25 to 40, write 4 if it is a very widely shared belief ; 3 if it is a fairly widely shared belief ; 2 if only some persons in the organization share this belief ; 1 if only a few persons or none have this belief.

____ 25. Effective managers put a lid on their feelings

____ 26. Pass the buck tactfully when there is a problem

____ 27. Trust begets trust 61

OCTAPACE

____ 28. Telling a polite lie is preferable to telling the unpleasant truth

____ 29. Prevention is better than cure

____ 30. Freedom to employees breeds indiscipline

____ 31. Usually emphasis on teamwork dilutes individual accountability

____ 32. Thinking out and doing new things tones up organizational vitality

____ 33. Free and frank communication between various levels helps in solving problems

____ 34. Surfacing problems is not enough; we should find the solutions

____ 35. When the chips are sown you have to find them for yourself

____ 36. People are what they seem to be

____ 37. A stitch in time saves nine

____ 38. A good way to motivate employees is to give them autonomy to plan their work ____ 39. Employees involvement in developing organizational mission and goals contributes to productivity ____ 40. In todays competitive situation consolidation and stability are more important than experimentation. JOB SATISFACTION 62

OCTAPACE

ANSWER KEY: VD Very Dissatisfied D Dissatisfied N Neutral S Satisfied VS- Very Satisfied Sl. How satisfied are you: VD D N S VS No. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. with your job? that the leaders in your work environment are positive role models? with your direct supervisor? that your supervisor keeps you well informed about what's going on in the company? that your views and participation are valued? that your supervisor cares about and is responding to the issues of most importance to you? with the professionalism of the people with whom you work? with the team spirit in your work environment? with the morale of the people with whom you work? with your own morale? that your work gives you a feeling of personal accomplishment? that you receive appropriate recognition for your contributions? with the empowerment you have to influence the quality of your work? with the reasonableness of your work responsibilities? with your ability to maintain a reasonable balance between your family life and your work life? that your compensation matches your responsibilities? with your overall job security? with the amount and frequency of informal praise and appreciation you receive from your supervisor? with the company as a place to work? Thank you for taking the time to complete this questionnaire. 63