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International Journal of Management (IJM)
Volume 9, Issue 3, May–June 2018, pp. 01–13, Article ID: IJM_09_03_001
Available online at
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ISSN Print: 0976-6502 and ISSN Online: 0976-6510
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THE IMPACT OF HUMAN CAPITAL
DEVELOPMENT INITIATIVES ON EMPLOYEE
PERFORMANCE OF IT EXECUTIVES: CASE
STUDY OF BANGALORE, INDIA
Murali S
Assistant Professor, Department of Management Studies,
Ramaiah Institute of Management Studies, Bangalore, India
ABSTRACT
Human capital development initiatives for purposes of this study refer to the training and
development programs that the IT executives in Bangalore, India are accorded with.
Currently, the fact that human capital development of employees translates to competitive
advantages is no longer a subject for debate. According to Tomé, and Goyal, (2015) human
capital development of employees not only enhances their productivity in the short term, it
also helps prepare them for future skills and responsibilities. For organizations, industries
and economies, this translates to a lot of things including improved profitability,
performance efficiency, creativity and innovativeness. Moreover, it also helps improve
employee engagement while at the same time reducing turnover rates. The challenge
however is how to develop and implement the best human capital development strategy for
specific industries and organizations. The review of literature focuses on the factors that
influence IT firms in Bangalore, India to adopt human capital development initiatives, as
well as the significance of the initiatives to IT executives. This research paper discusses the
initiatives and its impact on the strategies and operations of the executives, and how this
impacts on their abilities to contribute positively towards the attainment of their goals and
objectives.. This way, the paper gets to discuss the overall function and impact of the
human capital development initiatives on performance of the IT professionals.
Key words: Human Capital Development, Performance Management, Training &
Development, IT Services.
Cite this Article: Murali S, The Impact of Human Capital Development Initiatives on
Employee Performance of it Executives: Case Study of Bangalore, India. International
Journal of Management, 9 (3), 2018, pp. 01–13.
http://www.iaeme.com/IJM/issues.asp?JType=IJM&VType=9&IType=3
Murali S
http://www.iaeme.com/IJM/index.asp 2 editor@iaeme.com
1. INTRODUCTION
1.1. Background
Organizations usually get work done through its employees and this is an attribute that led to
the emergence of the concept of human capital. Human capital has been described by
Siddharthan, and Narayanan, (2016) as the culmination of capabilities, knowledge, values,
personalities, and creativity, that facilitate the ability of individuals to perform labor and in
turn produce economic value. This concept is especially important when it comes to the
selection of competent and qualified employees out of a pool of several candidates. A best
example of this according to Azam, Raza, (2016) includes selecting the top management team
for organizations. Tomé, and Goyal, (2015) explain it more simply by claiming that the
concept of human capital applies most appropriately in circumstances when the pool of
qualified and competent human resources is in abundance, but opportunities are scarce, hence
human resources exceeds capital resource, as is the case with India. Ardichvili, Zavyalova,
and Minina, (2012) concur and postulates that human resources can be transformed through a
host of development strategies, the most common being training and development initiatives.
The authors add that the development of human capital usually translates to highly productive
human resources and when this is achieved for countries, economic progress and
improvement is inevitably realized.
An example of regions where human capital formation is highest is India and
Bhattacharya (2017) explains that this is because the region has one of the world’s highest
population growths and the region continually invests in qualitative improvement in each
generation. The author explains that the evidence of this can be seen in the fact that currently,
the third generation of India’s population is more qualitatively qualified than the previous
generations. Furthermore, the region’s economy has been significantly improving due to its
investments on human capital.
Figure 1 Size of India’s IT Industry as a Share of India’s GDP from 2008-2016
Source: Adopted from (Deepashree, 2016)
One of the main contributors to India’s growing economy is the Information Technology
(IT) Industry. The country’s technology industry consists of IT services and business process
outsourcing (BPO) (Deepashree, 2016). By 1998, the industry contributed about 1.2% of
India’s GDP, however, by the end of 2016 it contributed about 10% of the region’s GDP and
The Impact of Human Capital Development Initiatives on Employee Performance of it Executives:
Case Study of Bangalore, India
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the trend has been projected to increase exponentially as it has always done as shown in
Image 1 below. Directly and indirectly, the industry has provided employment to over 14
million Indians (Deepashree, 2016). On average, the IT industry generated revenues of $160
billion in 2016 (Deepashree, 2016). India is currently the world’s second largest exporter of
IT, with the export segment of IT making up 77% of the industry’s generated revenues
(Deepashree, 2016). The country however has intentions of bolstering its domestic IT industry
and this can best be achieved through Human Capital Development initiatives (Deepashree,
2016).
In specific terms, the Indian City of Bangalore is where a majority of the IT activities take
place and this is where the Human Capital Development initiatives will be directed. The
region is the IT hub of the county and also popularly called as the silicon valley of India.
Bhattacharya (2017). Economists have provided evidence of how Bangalore is important to
the overall economy of India, contributing about US$83 billion as part of India’s GDP
Bhattacharya (2017). By the end of 2017, the region was home to 2.5 million IT professionals
which is 25% of India’s overall pool of IT professionals Bhattacharya (2017). On average,
Senior IT executives in the region earn about $568,742 per year and this has been argued as
being lower that the average pay for technology engineers in most developed and rapidly
developing nations Bhattacharya (2017). Sharma, and Dharni (2017) however points out that
despite achieving its fete with regards to growing IT performance, in comparison to other
major cities across the globe, finding IT talent is still challenging in Bangalore. This is
especially with regards to finding talent for IT executives in Bangalore IT companies
Bhattacharya (2017).
1.2. Research Gap
There have been considerable numbers of studies that have been conducted to investigate
what human capital development is as well as what its impacts are. Numerous researchers
have explored different aspects of the concept of human capital as well as the different
initiatives that can be used to facilitate human capital development. However, there is limited
information that exists relating to the specific impacts that human capital development
initiatives have on specific industries or professions. This paper focuses on bridging this
knowledge Lacuna through providing evidence of the impact of human capital development
on IT professionals. To offer focus by narrowing the scope of the study, the paper centers on
India’s Bangalore IT industry as the case study. In specific terms, it investigates how IT
executives are impacted by human capital development initiatives. The paper achieves this
aim through providing discussions on how IT executives of firms located at the Silicon Valley
of India are impacted on by human capital development. The IT executives have been selected
because the IT industry in India has been identified as one of the fastest rising industries
across the globe, and Bangalore is the Indian IT capital. Since the global IT industry is
changing rapidly and becoming more competitive, it would be appropriate and relevant to
discover how human capital development initiatives impact on the performance of IT
executives in Bangalore, India.
1.3. Research Aim and Objectives
1.3.1. Research Aim
The Research Aim is to identify the human capital development initiatives has on the
performance of employees. In order to attain accurate and relevant information, the paper
explores how the initiatives impact on the performance of IT executives in Bangalore India.
This is because the IT industry in Bangalore is very vibrant and competitive, and identifying
or measuring the impact of the human capital development initiatives is possible.
Murali S
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1.3.2. Research Objectives
Influenced by the research aim, the main objectives of this study include:
To determine factors that influence need for human capital development initiatives on IT
executives in Bangalore India.
To explore the significance of human capital development initiatives on IT executives in
Bangalore India.
To determine how IT executives operations and strategies have changed as a result of Human
capital development initiatives.
To ascertain how human capital development initiatives on IT executives contributes to the
achievement of organizational goals and objectives.
1.3.3. Research Questions
What are the factors that influence need for human capital development initiatives on IT
executives in Bangalore India?
What is the significance of human capital development initiatives on IT executives in
Bangalore India?
How have IT executives operations and strategies have changed as a result of Human capital
development initiatives?
How has human capital development initiatives on IT executives contributed to the
achievement of organizational goals and objectives?
2. REVIEW OF LITERATURE
2.1. Significance of Human Capital Development
Figure 2 Human Capital Strategy
Source: Adopted from (Nguyen, 2017)
Performance is according to Andra, and Boldea (2015) a multi-dimensional construct,
because it can be subjective, depending on the objectives as well as specific aspects, being
evaluated. This according to the author means that there is no single approach that can be
The Impact of Human Capital Development Initiatives on Employee Performance of it Executives:
Case Study of Bangalore, India
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determined as being the best approach to measuring performance. Ardichvili, Zavyalova, and
Minina, (2012) concur and add that focusing specifically on one aspect as the main attribute
of performance measure can have adverse results. For instance, if the focus is on sales and
profitability, then ethics and morality will be at stake because many employees can end up
engaging in malpractice, so long as it translates to improved sales performance. It is with
regards to the above perspectives that Armstrong (2014) postulated that performance is an
attribute that indicates behavior as well as results and as a result it should be measured as
such. Behavior according to Armstrong refers to input, and the results is the output, hence
they all need to be considered in equal measure. According to Armstrong (2014) performance
of employees can be influenced in a number of ways. The approaches according to the author
commonly target the personal traits, and behavior of individual employees, and it does so in
both formal and informal ways, and human capital development initiatives are an example of
such ways. figure 2 below summarizes the overall strategies of human capital development
initiatives, and this study seeks to discuss their impact for IT professionals in Bangalore.
According to the human capital theory, development of employees is best achieved
through educating the human capital as well as enhancing their welfare. According to the
theory, the development initiatives can include schooling, training, and improvement of
benefits such as medical care. The theory is according to Sharma, and Dharni (2017) deeply
rooted in the field of macroeconomic development theory since it contributes to improved
economic efficiency and performance as shown in Figure 3 below. In the same regard
Sharma, and Dharni (2017) summarize the benefits of human capital development as being
improved work efficiency, working conditions, earnings, and overall performance. This is
what makes the initiatives important.
Figure 3 Model of Human Capital Theory
Source: Adopted from Sharma, and Dharni (2017)
2.2. Human Capital Development Initiatives
According to Siddharthan, and Narayanan (2016) there are not as many human capital
development initiatives for executives as there are for employees holding lower levels
positions in organizations. For Bangalore, the human capital development initiatives for the
IT executives include executive development programs. The programs can include functional
training, general management training and IT management programs. Andra, and Boldea,
(2015) suggests that such programs have been found to have direct impact on improving the
success of executives, in this case the IT executives. The program also enhances the
leadership skills of the executives.