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Microsoft started its Indian operations in the year 1990 setting up Microsoft India Corporation (Pvt) Ltd in New Delhi. Later, Microsoft expanded its footprint in India by bringing all its six main units of business into the country. The headcount at Microsoft India Development Center (MSIDC) at Hyderabad grew from 20 in 1998 to more than 1,500 by the end of 2008, making it the company's second biggest development center in the world. Microsoft India's HR strategy was focused on building the organizational capability and strengthening employee engagement to leverage the limited human resources to achieve the company's mission. According to Microsoft India's HR growth model, HR was ultimately expected to be a change leader and business driver. Set in a context of a challenging global business environment, this case discusses the talent management and employee retention practices at Microsoft India, and its use of HR metrics to build accountability of the HR function toward business success.

The HR function as a change leader and business driver. Aligning local HR practices to the corporate mission and global/local business environment. Talent management and employee retention in the Indian IT industry. Managing knowledge workers and their work-life balance. HR metrics and Return on Investment (RoI).

Introduction Background Microsoft India's HR Approach Page No. 1 2 3

Human Resource Management Practices HR Metrics Followed by Microsoft India Conclusion Exhibits

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Key Words:
Human capital management (HCM), Employee Value Proposition, HR metrics, Best Companies to Work For in India, Microsoft India Development Center (MSIDC), Employee surveys, Learning and development, Succession planning, Recruitment and selection, Talent acquisition and development, Performance evaluation, Work-life balance, Workforce diversity, Mentoring, Attrition and retention, Information Technology (IT) industry, Leadership development, Microsoft Global Technical Support Center (MSGTSC) We have a talent agenda and we need to, because in any intellectual property-driven business, our assets walk in and walk out every day. If we are to remain competitive, we have to give them a proper environment to shine through, so that they stay with us."1 - Ravi Venkatesan, Chairman, Microsoft India2. "Once a year, we take a deep dive to look at key people, key positions, the existing succession plan and developmental needs. We aim to identify or develop at least two 'ready now' and 'one move away' candidates for each key position. The idea is to facilitate planned career moves, especially for our leadership bench."3 - Joji Gill, Director-HR, Microsoft India. "My experience in Microsoft has been exhilarating and rewarding so far. The three things that I like the most about Microsoft India Global Technical Support Center(IGTSC) are - Employee first approach, transparency and numerous opportunities for growth - both in personal and professional space." 4 Rohit Gulati, an employee, Microsoft India.

In 2008, Microsoft India Corporation Pvt. Ltd (Microsoft India), the Indian subsidiary of Microsoft Corporation (Microsoft), was ranked as number one in the list of 'Best Companies to Work for in India'5 surveyed jointly by Business Today6, Mercer LLC7, and Taylor Nelson Sofres (TNS) Global8.

Introduction Contd...

Microsoft India was also believed to be one of the most sought after companies for information technology (IT) professionals and graduates in India.9 In early 2009, Microsoft announced the layoff of five percent of its workforce worldwide, as it reported its first drop in revenues in its history of business spanning over three decades10. The company-wide cost cutting measures were applicable to some extent to its Indian operations, where the company laid off one percent (55 employees) of its total workforce.11 If the economic situation deteriorated further beyond a point, the company was prepared to prune its headcount further, globally as well as in India. Did the economic situation also warrant a change in Microsoft India's human resource (HR) practices? Or, were its strategic HR practices in alignment with the company's mission, values, and strategy?...

Right from its humble beginning in 1975, Microsoft had been an innovator in computer software and related services. Its product portfolio included the Windows series of operating system software for clients and servers, the office productivity suite - MS Office, business applications software, games, and software for mobile phones and handheld devices...

Microsoft India's HR Approach

Managing human resources in the IT sector has been a challenge for most companies that have set up operations in India. These companies aimed to take advantage of the relatively low cost of technically competent labor in India as compared to the US and developed countries in Europe. There was a huge demand for skilled personnel in this sector, but companies confronted by a lack of sufficient numbers of skilled personnel to meet the demand...

Human Resource Management Practices

Recruitment and Selection Microsoft India recruited both fresh graduates from academic campuses and experienced professionals in the IT industry. For campus recruitments, the selection process included written tests and several rounds of personal interviews... Training and Development For trainees, Microsoft India conducted a training program named Leap Engineer Acceleration Program (LEAP) which imparted technical and personal skills required to carry out the job... Career Management Microsoft India provided both vertical and lateral growth prospects for its employees in all the six business units present in India... Flexible Work Timings Microsoft India followed a flexible work timings policy for its employees. A flexi-time policy enabled the employees to work according to their convenience liberating them from rigid work timings... Employee Retention at Microsoft Global Technical Support Center (MSGTSC) For employee retention, Microsoft India initiated various programs particularly in MSGSTC, Bangalore, where work was carried out around the clock (24 X 7) in order to provide technical support services to its customers in different nations and time zones...

Human Resource Management Practices Contd...

Compensation and Benefits Microsoft India provided offered compensation packages on par or higher than the industry standards based on the technical skills and experience of the candidates. Employee benefits were standardized across employees... Performance Management Microsoft India followed a candid process while evaluating the performance of employees and regarding their compensation packages. The process was transparent so as to enable employees to identify their performance levels and have a clear idea of what was required in terms of performance in

order to reach to the next level... Women's Empowerment Microsoft India conducted special recruitment drives exclusively for women in line with the overall IT industry's aim of raising the female-male ratio in the workforce... Work-Life Balance In 2007, Microsoft India launched a program called 'Bring Your Child To Work' in a move to improve work-life balance among its employees...

HR Metrics Followed by Microsoft India

In Microsoft India, metrics were developed to track and define the effectiveness of the HR function. Microsoft India HR policies aimed to maximize the value of human capital in achieving business growth by focusing on talent acquisition and development, management development, leadership development, and management of evolution of the Microsoft culture...

Though Microsoft India's HR practices received accolades from many quarters, the 'Best Employer Survey 2008' released by Dataquest said that overall employee satisfaction at Microsoft India was below the industry average in India...

Exhibit I: Microsoft's Mission and Value System Exhibit II: Microsoft India's Business Units Exhibit III: Microsoft India's Mission and Strategic Initiatives Exhibit IV: Microsoft India's Employees Satisfaction (as of September 2008) against Industry Average