India is the world's second-most populous country with 1.2 billion people, and has a workforce of 502.1 million, which means that there are a lot of workers and it can be difficult to generalize working conditions with this many workers and in such a diverse country. There are some unique labor force characteristics worth taking into consideration. The first is diversity -- India has many different cultures, religions and languages. There is a high degree of economic stratification. There is a large pool of child labor, estimated to be 26.9 million. Only around 2/3 of Indians are literate. The nation's median age is around 27, so the workforce is fairly young (CIA World Factbook, 2016). The largest employers are government agencies, such as the national railway system, and many Indian states have histories of socialist or even Communist leanings, as does the country as a whole.
Legal Framework
The legal framework for HRM in India is messy, and complicated. Theoretically based on the system inherited from the British, and therefore not too far from the American system, and close to the UK, Canadian and Australian ones, India's system also bears the influence of Hindu or Muslim traditions and the unique Indian social context (Rao, 2015). This can make it somewhat less predictable than it otherwise should be. As such, the legal system has traditionally been poor with respect to its ability to defend workers' rights, leaving such matters into the benevolence of the employer, for better or for worse (Cooke & Saini, 2015). There is a case to be made that strategic HRM principles will become more important going forward, because the legal environment will continue to be poorly-developed but competition for talent will increase as the country's economy improves.
Business Culture
The Hofstede cultural analysis is a high power distance culture, which defines the relationship between supervisors and subordinates. Subordinates typically do not challenge superiors, and do not feel comfortable making decisions. Power distance has a strong influence of HRM practice in India. India has moderate scores for individualism and masculinity, but a high score for time orientation. What these factors mean is that in India, people are...
There are certain ways that these differences will reflect on the HRM practices of the country.
India scores relatively low for uncertainty avoidance, which means that Indian workers have the ability to handle uncertainty better than in many countries. They might be more direct in their communication as a result as well. Yet, a low indulgence score notes a high level of cynicism and pessimism. Yes, India is a study in contrasts, and it might be difficult for a non-Indian to fully understand how these different facets can exist all at once. Indeed studies comparing different cultures identify India as a unique cultural island, difficult for outsiders to understand fully because of its complexities and its contradictions (Sparrow & Budhwar, 1997).
India has become something of a hotbed for things like call centres, and IT outsourcing. One of the ways that this has influenced HRM in India is that it has empowered some of the more talented workers. While HRM was always seen traditionally as something perfunctory, today HRM is increasingly being viewed in India as a source of competitive advantage, particularly in industries where highly-trained young people work (Paul & Anantharaman, 2004). These changes are starting to trickle into other industries in India as well, marking a shift in traditional HRM practice in the country.
Lessons for Foreign Firms
There are many differences between HRM practices in India and HRM practices among foreign firms. For example, while HRM practices have a certain homogeneity in the West, they can be very different among different types of firms in India. Private enterprise is often very capitalist, and the most modern of firms may have HRM practices that are relatively similar to those of Western companies, but smaller firms, family-owned companies and government will tend to have very different HRM practices (Sita, Petrick & Gupta, 2000). There are also distinct differences in different industries, and depending on the age of the company in question. In essence, it can actually be very difficult to…
