Information technology (IT) services is one of the largest sectors in the Indian economy, and major Indian IT services companies rank among the world’s leaders, especially in business process outsourcing (BPO). However, BPO has increasingly become competitive and commoditized, with Indian IT companies facing significant competition from firms in other countries in Asia, including Russia, and elsewhere.
Why this study
Indian IT services companies, in response to this competition, are attempting to transform their organizations so that they can work more closely with their customers and become innovation partners to them. This is a very different approach to business than traditional BPO. It requires changes in organizational structure, corporate culture, and talent management.
A key partner for this project is a leader in IT industry transformation. This company’s initiatives have gradually transformed it from a traditional IT services company to one that now works closely with its clients on new products, product design, and general continuous improvement of client operations.
Prior to this, two of the researchers (Gibbs and Siemroth, along with a co-author) conducted research at an Indian IT company on two innovative policies instituted as part of long-term organizational transformation. The first was the company’s Value Portal – a formal, intranet-based employee suggestion system that employees use to suggest new ideas that can benefit the organization and/or its clients. The second was an experimental reward that was implemented to see if it could foster more or higher quality ideas from employees.
In the first project, it emerged that the reward did motivate employees to be more innovative: though the number of ideas did not increase, more employees became involved in ideation, and the ideas submitted were of higher quality. It was further estimated that benefits of both the reward and suggestion systems were likely to be very high as compared to their administrative costs. In response to the findings, the partner organization then implemented a version of the reward throughout the company.
These policies–employee suggestion systems, rewards for innovation, and employee collaboration networks (the proposed new topic)–are widely relevant since they can be implemented in any Indian corporation.
We propose to run a new experiment. The project partner firm has an internal employee “social” network—in some ways similar to Facebook. This company believes that the system has potential for improving innovation by fostering more communication, collaboration, and sharing of ideas.
Academics have long argued that an employee’s social network can be an important source of innovation and creativity. While there is some evidence in the development context of how innovation diffuses through a social network (Banerjee et al, 2013), there is very little existing research on how networks contribute to generating innovation.
An employee with a sufficiently broad, high quality and active network is more likely to be exposed to different ideas and perspectives, and gains access to greater expertise than can be tapped to find solutions and implement ideas. The research question is, therefore, what is the causal effect of the employee’s network position, and network size, on the amount and quality of ideas suggested?
In order to test this, the researchers are developing a field experiment with the company, in which some new hires will randomly be assigned to receive training on social network concepts. Over their first year at the company, the study will track how their social networks develop. Simultaneously, it will also track their innovation activity, as well as other indicators of job performance. These outcomes will be compared to those of a control group of new hires who did not receive this training.