The purpose of this chapter is to provide this dissertation with a concise opening. It outlines the reasons for choosing this topic for research with a background study. In addition to the rationale of research, the research aims are also described, by clearly outlining the research questions. The research methodology used to achieve the research aims will be highlighted with a detailed methodological model. Finally to make it easier for the reader to understand the overview of the research, the structure of dissertation is explained.
In an interview with Fishman (1998), the McKinsey director Michaels who was a part of the McKinsey team's report titled 'The War for Talent' asserts that for a company's success talent is the key factor because in the right kind of culture talented people come up with superior ideas and appropriately implement them along with developing other people.
Apparently, talent has become the most important resource. Over the next few years people who are smart, talented, sophisticated, responsive and globally shrewd will be considered as the most important corporate resource. The gap between the demand and supply for talent will soon develop when the demand for talent will go up and the supply of it will be going down (Hiltrop, 1999; Fishman, 1998). This particularly seems to be the case with the Indian Information Technology (IT) and Information Technology Enables services (ITES) sector where there is a prevailing demand for highly skilled labour to accommodate the growing demand for IT services but apparently, there is a lack of right skilled workforce. Furthermore, due to the lack of rightly skilled people, high attrition rates and rapid technological developments in the Indian IT-ITES sector, the Human Resource (HR) professionals identified talent management as the critical issue to be addressed on priority basis (Simhan, 2006; ibef, 2009; Arora et al, 2001). Since the Indian IT-ITES sector has to face the challenge of managing the talent, talent management is an important human resource practice in this industry.
The case of India
In recent years India has witnessed a boom in the economy with developments in the service industry and the IT-ITES sector are emerging as main drivers of the economy. The year 2009 was a year of transformation in the Indian IT - ITES sector. An analysis by Nasscom shows that this sector grew by 12 percent in FY 2009. Furthermore, according to a study by Springboard Research, it is estimated that the Indian IT sector will continue to be the fastest growing in the Asia-Pacific region with an annual growth rate of 18.6 percent. It is even estimated that there will be up to 7 percent increase in the total computer sale by the end of year 2010 (Nasscom, 2009; ibef, 2009).
Companies intending to offshore their IT-ITES owing to the increasing cost pressures in US and Europe prefer India. IT-ITES include a variety of services from data processing to customer support, voice operation and activities relating to market analysis and research. Thus, the foreign firms looking to consolidate their presence in India outsource to third-party service providers. The Indian IT-ITES sector comprises of service related firms, foreign and domestic firms. If the same rate of growth continues then as per the Forbes research in India there will be a potential shortfall of approximately 235,000 IT-ITES professionals and demand will out-pace the supply (Simhan, 2006; Bhatnagar, 2007, Nasscom, 2009).
Though, Indian IT sector holds a powerful position, the technological innovation, uncertain economic conditions, fierce domestic and international competition increases the demand for industry-oriented professionals with appropriate skills. The companies offering specialized high end services with higher level of technologies prefer to retain their competitive advantage. Hence these firms have to carefully manage talent. Though, there are numerous employees who have the required technical skill for the job but they lack the cultural skills to fit into an organisation. Furthermore, the firms in ITITES sector at present have a major attrition problem due to low employee engagement (Bhatnagar, 2007; Budhwar and Bhatnagar, 2009).
The aim of this research is to investigate the talent management practices of organisations in the IT-ITES sector in India and to investigate the extent to which these firms have adopted the best talent management practices identified in literature in this topic of HRM (Human Resource Management). Further, in case the finest talent management approaches are not being adopted, the researcher intends to identify the reasons for the same. In addition, there is lot of competition in IT-ITES sector as both the foreign and domestic organisations target the same talent pool. This study seeks to explore have the companies adopted more sophisticated methods in order to have the best people in the organisation. The importance of adopting finest approaches in this sector cannot be ignored, especially because there is a need to retain talented employees in a market where there is a shortage of skill a wide demand-supply gap Simhan (2006). In addition since both domestic and foreign companies target the same workforce, the labour market in this sector is extremely competitive, this has developed enthusiasm among the firms to implement the best practices in all the fields of management, to increase their performance and efficiency. Hence, to explore how talent management is implemented in a developing country India seemed to be a appropriate option (Budhwar and Bhatnagar, 2009).
The purpose of this research is threefold. First, to discover the extent to which these firms follow the finest talent management practices outlined in literature. Second, to explore the extent to which the companies have adopted innovative approaches to manage talent and have these methods been helpful in the Indian context. Third, to evaluate if the foreign companies follow more refined talent management approaches compared to domestic companies and hence consider whether we can learn from foreign firms in terms of adopting finest talent management practices in the Indian context.
The above stated questions are important particularly in the IT-ITES sector as the Nasscom (2009) estimates reveal that this sector will face acute shortage of skilled workforce and thus it will be necessary for firms to implement best practices in talent management to maintain their competitive advantage by employing high quality workforce.
The primary method for this research is interview to know the extent to which companies practice the finest and innovative talent management approaches. In order to obtain a better understanding about the current status on talent management approaches in Indian ITITES sector, the HR professionals at managerial level were interviewed. This is supported by secondary research mainly developed from journal articles that offer concepts, theories and in depth reviews, HR related publications. As Fisher (2007) asserts the information gathered using this secondary resources is analysed using primary research. The figure 1.1 demonstrates the methodological model of the research which helps in achieving the proposed research aims.
All the chapters in this dissertation are framed in accordance with research aims and objectives.
Structure of the dissertation
This outline of the research will try to provide a brief understanding to the reader on how the entire research is structured. In order to achieve the research objectives this research paper is divided into seven chapters. The chapters are as follows:
Chapter 1- Introduction
A concise introduction to the topic under study with an explanation of their specific aims and objectives are presented in this chapter. Further, with a help of a methodological model it also explains the research methodology adopted.
Chapter 2- Theoretical background and introduction on Talent Management
This research will start by presenting a theoretical background to Talent Management i.e. its definition and importance in organisations. This is followed by a comprehensive review of the best practices, innovative strategies including employer branding and usage of technology on talent management that are identified in literature.
Chapter 3: Research Questions
On the basis of the theoretical developments, this chapter explains the three research questions that the researcher wishes to explore.
Chapter 4- Research methodology
The research methodology used for collecting the data and its limitations is described in this chapter. In order to gain a in-depth understanding of the respondents attitudes and point of view. The data collected will be analysed in next chapter.
Chapter 5- Data analysis
The findings of the research are analysed and discussed in detail here. These findings attempt to give answers to the research questions developed by the researcher
Chapter 6- Conclusion and recommendations
In this chapter besides the managerial implications resulting from the study the conclusions drawn from the research are presented and recommendations for future research.
Theoretical Review on Talent Management
This chapter confers a general overview of talent management and theoretical review on the talent management practices. During an initial research in the area of talent management the researcher have found stimulating literature which was useful in understanding the arguments within the scope of the subject. A review of the concerned literature has been carried out based on various journals, articles and presented below. The researcher noticed that literature on talent management had a practitioner influence and the academic ones.
Overview of Talent Management
In the next few sections the origin, concepts, the origin, evolution and definitions of talent management are presented to have a good idea about the topic under research.
Every organisation seeks to hire people they believe to be highly skilled and most suitable for their organisation. In this respect the idea of having rightly skilled employees is not a new observable fact. Nevertheless, the research commissioned on the global 'war for talent' by McKinsey in the year 1997 (Fishman, 1998) to evaluate the measures implemented by companies to employ the best performers concluded that for talented people the firms were aggressively competing against each other. Here the most essential factor to be observed was the belief of the business leaders that by employing the best talent a business can gain competitive advantage. The primary challenge was to manage the so called 'talent' effectively. After this research work was published there has been a tremendous growth in academic interest of the subject on adopting talent management strategies. The notion of talent management has evolved over years and has now intensified into a critical decision-making and functional organisational development issue (Beechler and Woodward, 2009). Perhaps, talent management seems to be rising with excellent focus on identifying, sourcing, motivating, developing and retaining the people that has a strategic impact on the business (Collings and Mellahi, 2009).
Talent Management v/s Human Resource (HR) Approach
The meaning of talent management has always been a debatable subject. The literature on talent management discloses a lack of transparency with regard to the meaning and scope of talent management. This is because talent management means differently to different people. Some authors believe talent management is just a new language for existing HR activities where as others emphasise the strategic importance of talent management (Huselid 1995; Tichy et al, 1982; Jackson and Schuler, 1990; Chuai et.al, 2008; Stainton, 2005). HR is concerned about developing competency in the firm. However, since competencies become out dated over time, there is a need to develop them. It can actually be dangerous for firms working in a dynamic industry. Nevertheless, in case of talent management the focus is on developing capacities by the enhancing the individual's potential. When there is a comparison of the functional areas, talent management and HR cover areas of people management (Chuai et.al, 2008). Authors like (Huselid, 1995; Tichy et al, 1982) claims that the act human resource management (HRM) is an essential process that involves getting the right people to match the available job and this increases productivity. HRM deals with activities of attracting, selecting, developing and retaining individuals to accomplish the organisational goals as well as the individual's personal goals. This is similar to various authors notion on talent management. For example, (Jackson and Schuler, 1990; Chuai et.al, 2008) emphasise that talent management is an ongoing process of acquiring, developing, and retaining talented employees followed by internally developing and retaining. On similar lines Stainton (2005) views it as an activity of ensuring the right job to be given to the right person to facilitate highest performance. The author further added that managing talent assures the supply of rightly skilled whenever there is a requirement. This illustrates that HRM and talent management share areas in common.
On the contrary, despite the above similarities, the importance of superior talent which is considered to be a primary source of competitive advantage for organisations cannot be ignored. (Chambers, et al 1998 cited in Fishman, 1998) recommends that every business which is determined to make optimum use of its superior talent must encourage a talent mindset throughout the organisation. The authors make it clear that talent management is a part of the senior management team and asserts that in the process of inculcating talent mindset in a firm the involvement of CEO is essential. Furthermore, the research commissioned by (Ashton and Morton, 2005) highlights talent management cannot be successful if we look at it from merely a HR perspective. Talent management is absolutely different from HRM as the former differentiates the employees by paying attention to different demands of people who are high performers of utmost importance to business. Though HRM considers employees as the main source of competitive advantage it treats each employee in the same way. While (Gladwell, 2002 cited in Beechler and Woodward, 2009; Lewis and Heckman, 2006) takes a different perspective stating the need of segmenting the high performers else the managers might equally treat all his employees without considering their performance and capability. Such an act might add to the costs of the company. For instance, by training people who might not necessarily need it. This is even discussed by (Chambers, et al, 1998 cited in Lewis and Heckman, 2006) who points out that organisations divides their talent and accordingly customises the policies of the firm. He further adds no company can do everything to all the workers. The Maslow's theory of need points out that every individual's needs vary according to their potential and performance (Huczynski and Buchanan, 2007). Thus the means of managing these individuals should also differ by deploying the business resources towards key employees and chosen leaders.
The above discussion about TM and HRM principles and practice reveals that it is inappropriate to conclude that TM is same as HR activities or completely new concept. TM has emerged and evolved under certain contexts and enhancing the existing practices emphasising the needs of the business from its workforce to attain its current and future business requirements.
Evolution of Talent Management
Over the years talent management has evolved with sophisticated and extra responsibilities. Bersin, 2006 demonstrates how talent management has evolves from the 1970 to the current age. Initially the personal department was concerned with the people management. The main job of this department centred on for hiring people and accordingly paying them. Later in the 1990s firms started realising that HR was a broad topic and was more important than just hiring and paying people thus there was an emergence of strategic HR. The role of HR was now about hiring, developing and helping the business to achieve the goals of the business through these people. The HR department played the role of a business partner and accordingly supported the business. Meanwhile there was the emergence of talent management (Fishman, 1998) which concentrates on acquiring efficient and skilled employees with the help of proficiency based hiring process rather than selecting candidates by sorting their resume. The focus is now on developing sustainable talent pipeline, identifying the gap between the demand and supply for talent; identify suitable individuals and successors to fill the vital positions of the organisation (Bersin, 2006; Davis et al 2007; Budhwar and Bhatnagar, 2009). The following figure by shows the evolution of talent management.
Definition of Talent Management
In the review of the existing literature on talent management there is a lack of consensus on the meaning and conceptual scope of the topic. In a study Tansley et.al (2006) noted that only 20% of respondents were aware of a formal talent management definition. Traditionally it was about being good to employees. But now talent management is about attracting, retaining talent who are valuable to the organisation or strengthening employment brand. Although there is a discrepancy in the talent management definition its importance cannot be ignored (Bhatnagar, 2007; Lewis and Heckman, 2006; Scullion, Caligiuri and Collings, 2006; McCartney, 2009). Aston and Morton (2005) in fact believed that there is no single definition of talent management. However, the review of the talent management literature is categorised into a variety of topic and combining all of these together illustrates that the focus of the topic of talent management has been shifted to a critical review from a practitioner influence (Bhatnagar, 2006; Lewis and Heckman 2006). Despite such a criticism, three chief perspectives of talent management were identified in the extant literature.