CSR INITIATIVES OF INDIAN IT COMPANIES Sustaining and Enhancing Competitiveness in today’s Business Scenario Abstract The idea of corporate social responsibility (CSR) is not new to Indian companies. Growing number of Information technology (IT) companies with the direct involvement of employees are implementing CSR projects. Dedicated departments in most of the companies are looking into much more than just funding or getting involved in one-time projects.
The trend is especially strong in IT companies with a young workforce that increasingly feels that they would like to contribute to the cause of creating a better society. Voluntarism to them means taking technology to the grassroots levels and to bridge the digital divide. CSR activities have their advantages like building a positive image and encouraging social involvement of employees. This develops a sense of loyalty for the organisation. CSR activities help bond employees as a team, and with the organisation, which in turn helps in creating a dedicated workforce that is proud of its employer.
IT companies in India have realized that CSR makes business sense. Indian IT Industry has been harbinger of Indian economy and plays a big role in fuelling India’s growth. Today, it is also acknowledged to be one of the front runners in CSR, with initiatives spanning various sectors and themes such as education, health, poverty reduction general donations, social welfare schemes, rural development, web-based solution for adult literacy programme, creating a centralised data system on children for adoption.
IT companies in India are increasingly sending out this message and a growing number of companies and institutions in India are seeking to link their own growth and survival to the social cause that they are promoting. The paper’s purpose is to highlight the corporate social responsibility (CSR) initiatives taken by the Indian IT Industry, which can help them to enhance their overall performance. Keywords- CSR, IT Industry, Indian IT companies 1.
Background Corporate Social Responsibility (CSR) is by and large the way in which a company accomplishes integration of economic, environmental, and social imperatives while at the same time looking after shareholder and stakeholder expectations. The success of CSR is determined by the way businesses engage shareholders, employees, customers, suppliers, governments, non-governmental organisations, international organisations, and other stakeholders.
It helps make inroads into areas where a company might otherwise not have had a presence, building a talent pool, capacity building in communities, being perceived as a socially responsible corporate among employees which adds to a sense of pride for an organisation. Corporate social initiatives with core objective of business philosophy is not a charity rather, it is a mean to sustain long term economic gain over other competitors. Hence, the idea of a business organization to maximize profits and also contribute to the society is mutually exclusive.
Another definition given by the World Business Council for Sustainable Development in its publication “Making Good Business Sense” by Lord Holme and Richard Watts is- “Corporate Social Responsibility is the continuing commitment by business to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families as well as of the local community and society at large” The key CSR issues include governance, environmental management, stakeholder engagement, labour standards. 2. Reasons for undertaking CSR initiatives
CSR initiatives require money and human resources then how does it benefit the organisation? It is also a widespread fact that in many cases no CSR work was done in reality but was shown on paper to claim for tax exemptions. Another argument is that companies use it as a tool for brand building. Companies counter the argument and state that getting related with a cause can create a positive impact but that does not produce any tangible profits. CSR is not only about fulfilling a duty to society; it also brings competitive advantage. Some of the benefits of CSR are: 2. The economic aspects of corporate social responsibility: CSR in the broader sense can be understood as a mean to sustain economic activity by integrating social responsibility of the enterprise with business prospects. It is an innovative way to contribute by the firms to spend in towns and villages and to sell products to millions of people who are at the bottom of the pyramid. The philosophy of the book “The fortune of the bottom of the pyramid by C. K. Prahlad” calls for corporations to design products/services for the enormous population at the bottom of the pyramid. . 2 Access to capital Companies that are committed to CSR often have access to capital that would not otherwise be available, due to the increase in Socially Responsible Investment (SRI). The Dow Jones Group Sustainability Index, the FTSE4Good Index, Morley Fund Management Sustainability Index, BitC Corporate Responsibility Index (and others) all analyze companies’ CSR activities. These indices are increasingly looked at by investors who want to determine a company’s level of CSR engagement. 2. Increased profit Research conducted by DePaul university in 1997 found that companies with a defined corporate commitment to ethical principles do better financially (based on annual sales/revenues) than companies that don’t. Another comprehensive study done by Harvard University found that “stakeholder-balanced” companies showed four times the growth rate and eight times the employment growth when compared to companies that are shareholder-only focused. 2. 4 Increased operational efficiency
Over a period of time improved environmental management systems actually reduce operating costs by reducing waste production and water usage, increasing energy efficiency and in some cases, selling recycled materials. 2. 5 Enhanced brand image and reputation A company’s reputation results from ‘trust’ by stakeholders. A strong reputation in environmental and social responsibility can help a company build this trust. However, it needs to result from real practices and policies and integrity towards the companies responsibilities. 2. 6 Customer loyalty and Increased sales
Research has shown that consumers not only want good and safe products, but they also want to know that what they buy was produced in a socially and environmentally responsible way. A CSR Europe/MORI study in 2000 showed that 70% of European consumers say that a company’s commitment to CSR is important when buying a product and 1 in 5 would be willing to pay more for products that are socially and environmentally responsible. Interestingly, 1 in 6 shoppers often boycott (or buy) products because of the manufacturer’s reputation. 2. 7 Better quality and increased productivity
Improve working conditions, lessen environmental impacts or increased employee involvement in decision-making results in increased productivity and reduced error rate. For example, companies that improve working conditions and labour practices among their suppliers often experience a decrease in merchandise that is defective or can’t be sold. 2. 8 Development of branding among employees A company’s commitment to CSR can help to attract and retain employees. People want to work for a company that is in accordance with their own values and beliefs.
Employees are not concerned only for promotion and salary any more. Employees feel a sense of pride when they are involved in CSR activities which in turn help in retaining them. It also helps in de-stressing many employees with hectic work schedules and help in developing more evolved and conscientious human beings. 2. 9 Potentially, reduced regulatory oversight The more a company is dedicated to CSR by complying with and going beyond legislation, the more lenient governments and regulators may be with the company.
They may be given preferential treatment when applying for permits or permission to do something, and if an accident occurs, will be regarded more favourably if they have been transparent and socially responsible in the period running up the accident/incident. 2. 10 Reducing risk, and increased risk management If the company is committed to CSR then there is possibility of less business risk. Fund Management companies are becoming more assertive about their expectations regarding a company’s manifestation of responsibility in order to reduce risk.
Morley Fund Management, for example, has presented a requirement for companies to disclose their approach to managing their environmental impact. 2. 11 Matching with competitors and where the market is Companies all over the world are adopting the concepts of CSR. Governments, consumers, investors, local communities and suppliers are all coming forward and putting pressure on companies to embrace CSR. 2. 12 Shows the way an organisation is evolving. The success of CSR activities depend on employee participation. It also makes leaders out of employees and helps them realise the concept of teamwork.
These efforts create a teamwork culture in the organisation. 3. CSR in India Studies revealed that Indian Corporate are increasingly implementing social development project themselves or support NGOs and Government’s initiatives on this. Even the small and medium industries are not lagging behind. According to Confederation of Indian Industry (CII), approximately Rs. 3,000 crores (2007) (around 600 million US$) is the extent of corporate philanthropic spending in India per year. Since the mid-1990s, CSR has been practised and debated by businesses, industry associations, NGOs and the government.
It has not become as a part of business practice and it is more of a “social good” left to the discretion of top management. The agenda does not does not declare CSR in terms of workers’ rights or employee care but is often left to employer benevolence. And while environmental care and total quality management have been driven by international competition as well as by legislation in India, compliance and enforcement are slack. The survey done by research organizations TNS India and the Times Foundation reveal that CSR initiatives have been implemented by over 90% of all major organizations.
Interestingly, the private sector is more involved in CSR activities than the public/ government sector. The leading areas that corporations are working on are education, health, environment, livelihood promotion and women’s empowerment. However, the wish list that the corporations prepared adds microfinance, slum improvement and agricultural development to the activities currently highlighted. CSR activity in India picked up after the liberalization of the economy in 1991. Most companies initiated action in the early 90’s and now have a formal policy in place.
One third or more still do not have a policy but do pursue CSR actively. A majority of CSR ventures are being done as internal projects whereas a small proportion are in the form of support extended as direct financial assistance to voluntary organizations or communities. The problems faced in implementing CSR pertaining to community participation, organization capacity building, lack of well organized civil society groups and transparency, greater importance associated to event-based activities, unavailability of clear guidelines on CSR, and lack of consensus regarding areas of focus and CSR impact assessment.
However, leading firms such as the Tata Group, Infosys, ITC, NTPC and Reliance are coming around these problems and are actively working with the government and society groups. Overall, though affected by its unique problems, CSR is growing at a rapid pace in India and promises to be an exciting opportunity. 4. CSR in Indian IT Industry The Indian Information technology ( IT) industry has emerged to be one of the chief pillars of the Indian economy. The industry accounted for nearly 3% of India’s GDP and employed close to 4 million people in 2005-2006.
The industry is expected to be growing at a compounded annual growth rate of nearly 2% per annum and its aggregate turnover is estimated to reach over USD 100 billion by 2010. The Indian software and services industry is expected to grow 16 percent this fiscal and log revenues of $60 billion despite the global slowdown, The National Association of Software and Service Companies (Nasscom) said in its report that together with the business process outsourcing (BPO) sector, the revenues are expected to top $71. 7 billion with a growth of 17 percent.
IT industry is recognized to be one of the frontrunners in Corporate Social Responsibility (CSR) initiatives and fuelling India’s growth. Most leading IT companies invest between 0. 1-1% of their annual turnovers for CSR programmes in number of sectors such as education, health, poverty reduction, etc. Indian IT industry has been spectacularly successful within a short span of time. The direct employment was estimated at 1. 3 million in software, IT and IT enabled services with an additional 3 million people being indirectly employed in the sector.
It has also been observed that embracing CSR activities are important and critical when a new industry booms in a country and with it the society gets introduced to new opportunities as well as issues. This is the situation faced by the Indian IT Industry. A vast majority of flourishing and renowned IT companies in India are not more than a decade old. The IT Industry’s apex body, NASSCOM, has a separate unit the NASSCOM Foundation which was formed to leverage the commitment of NASSCOM and its members towards social development.
IT is one of the most ‘green’ industries environmental hazards (unlike for the nuclear industry or the manufacturing industry) is not the driving factor for IT companies to adopt CSR. However, it is imperative that IT waste is disposed off in an environmental friendly way. Companies like HP have placed proper system to manage e-waste. E-waste is a term for electronic products that have become obsolete or reached their end of life. Hazards arise due to the improper recycling and disposal processes used.
E-waste is a mounting concern; 20 million devices become obsolete every year. Over the years, e-waste leads to chemical and metal leaching finally resulting in groundwater contamination. Mercury, for example, will leach when certain electronic devices such as circuit breakers are destroyed. The HP Planet partners Hardware Return and Recycling Program offers to take back end-of-life HP computer and printing hardware products. This initiative offers customers an option to dispose and recycle of used computing equipment in a socially and environmentally responsible manner.
Key CSR activities areas of IT firms is illustrated in the figure showing number of firms in a CSR activity area Source: NF-PwC Survey 2006-7 5. CSR Drivers for Indian IT Industry Some of the CSR drivers for Indian IT industry •Perception of CSR initiatives as socially responsible investments •Philanthropy •The perception that undertaking CSR initiatives would act as long term shareholder value drivers; •Image building purposes and public relation; •Investor pressure •Enlightened self interest To engage the workforce meaningfully and allow them an opportunity to satisfy their need to give back to society. 6. CSR efforts by the Indian IT companies 6. 1 TCS CSR Focus-education, designed Computer–Based Functional Literacy Method (CBFL), an innovative teaching strategy, adult literacy, environmental and civic problems, urban beautification, pollution reduction and healthcare; waste management in the office environment, tree plantation and water treatment, environment, betterment of rural infrastructure, village nowledge portal, education, helpline for children, computer literacy, women empowerment program, mid day meal scheme for Balwadi kids, HIV aids awareness programs Funds invested- 16 crore(2007), Charitable trusts own 66% of the shares in parent Tata Sons Area in focus- Pan-India presence Recipients- 90,000 adult learners, educations to 1500 students across 15 colleges 6. 2 Siemens Ltd. CSR Focus- rehabilitation, education, adult literacy, computer training and coaching for weak learners, health, Equal employment opportunity for the Differently Abled Area in focus- South India, Maharashtra, Mumbai, Banglore
Recipients- normal childhood to 240 street children, 918 adults can now read and write, adopted 15 children, 80,822 patients have been treated, Tsunami victims 6. 3 Infosys CSR Focus – health care for the poor, education, rehabilitation and promotion of Indian art and culture, research education, community services, rural research programme, employment, underprivileged rural areas, Social Rehabilitation and Rural Upliftment Funds invested – 20 crores (2008), 1percent PAT yearly, ad hoc donations Area in focus- Karnataka . 4 Wipro CSR Focus- education, Providing Basic Infrastructure at the School, rehabilitation Funds invested- 15 crore(2007), Ad hoc donations Area in focus- Bangalore , Pune and Nagapattinam, Gujrat, Orissa Recipients- 1000 schools across the country, tsunami victims, Gujrat earthquake victims, Orissa cyclone victims 6. 5 Hexaware Technologies Ltd CSR focus- Community, Donation Camps, Underprivileged Children, health, education Funds invested- ad hoc donations, 0. 5 crore (2007) Area in focus- South India, Mumbai, Chennai
Recipients-850 children from economically backward sector, homes are being run at 5 places with 650 children, including 100 scheduled Tribal children (called Erullar). So far around 1000 gypsies and other nomadic children have benefited 6. 6 Mastek Limited CSR focus- environment protection, inspire as many individuals and corporates to come forward and contribute to the social sector, underprivileged children, tree plantation Mastek is a part of the Planet Partner Program initiated by Hewlett-Packard (HP) for environment-friendly recycling solutions for printer cartridges.
Funds invested- 0. 5 crore (2007), ad hoc donations 6. 7 ITC CSR focus- farmer partnerships to embrace a host of value-adding activities, creating livelihoods by helping poor tribals make their wastelands productive, investing in rainwater harvesting to bring much-needed irrigation to parched dry lands, empowering rural women by helping them evolve into entrepreneurs; and providing infrastructural support to make schools exciting for village children. Area in focus- villages across the country
Recipients- 3 million villagers across India 6. 8 Genpact CSR focus- environment, e-waste, recycle, reduce waste and conserve energy, investment in latest technologies to improve our power efficiency and minimize environmental releases – year on year reduction in power consumption in each of our sites, public health, upskilling teachers, mobile computer literacy, aids, education to blind and underprivileged children Funds invested- ad hock donations- Area in focus- Rajasthan . 9 iGate Global Solutions Ltd CSR focus- education, tree plantation, IT education to youth, differently able children, promoting tribal craft of Bhil community, environment, electricity conservation, recycling used water, Funds invested- 0. 9 crore (2007), ad hoc donation Area in focus- Banglore, Hydrabad, Chennai, rural Karnataka and Andhra Pradesh 6. 10 CMC Ltd CSR focus- awareness seminars blood donation camps Funds invested- 1. 6 crore (2007) 6. 11 Mahindra & Mahindra
Focus- education, rural underprivileged children, education to girl child, health and disaster relief, promoting art and culture, environment protection Funds invested- 1% of its profit after tax (PAT) Recipients- 3300 children expected to increase by 10000 Area in focus- Uttar Pradesh, Assam, Madhya Pradesh, Rajasthan, Bihar and Tamil Nadu 6. 12 Satyam CSR Focus- education, urban underprivileged children Funds invested- 7 crore(2007) Area in focus- Karnataka, Andhra Pradesh. Orissa, Maharashtra Recipients- 52 government schools in Hyderabad. 6. 13 Mphasis BFL Ltd
CSR- education, underprivileged children, healthcare, differently able employees Funds invested- 0. 5 crore(2007) Area in focus- Noida, Ahmedabad , Mangalore, Mumbai, Bangalore, Pune Recipients- Funding three schools in Mumbai, children of Sion Municipal School Bangalore, 30 slum children, education of 15 children 6. 14 HCL CSR focus- environment, e-waste Management, Internal waste Management, underprivileged children, community service, solar heating systems, water harvesting, increased use of recycled material, customer awareness programme, conservation of energy Funds invested- 3. crore (2007) Area in focus- Pan India Recipients – Tsunami victims, Orissa cyclone victims, Gujarat earthquake victims, Tirupati and Tiruchendur temples 6. 15 NIIT CSR focus- computer literacy, women, differently able employees/people, HIV/Aids awareness Funds invested- 0. 6 crore(2007) Area in focus- tribal of Andhra pradesh, Jodhpur, Dimapur, Tihar inmates, Bangalore 6. 17 CISCO System Inc. CSR focus- Education, best-in-class networking equipment to those non-profit organizations that best put it to work for their communities.
Area in focus- Pan India except north east states, Bihar, Goa, Lakshadweep, Pondicherry, Daman & Diu and Dadara & Nagar Haveli, Jharkhand Recipients- 10000 students 6. 18 Larsen & Toubro Infotech Ltd CSR Focus- education, drinking water, aids awareness, tree plantation, child care, environment, health, education Funds invested- 2-3 per cent of L&T’s revenue CSR Budget: Rs. 26 crores (Source :Sustainability Report ’07-’08) 6. 19 GTL Ltd CSR focus- education for blind, vocational training, IT education, reduced electricity and water consumption, support to differently able children Funds invested- 1. crore (2007) CSR Budget = 1 % of Net Profits Area in focus- Maharashtra Recipients- 22500 students under Gyan IT; 1000 students under KNOW; 54 students undergoing training under AASARA; 32 children have been awarded scholarships under GYANJOT; 200 people (ladies, senior citizens, graduates, school children) are beneficiaries of the Village Knowledge Centre. 6. 20 Kale Consultants CSR focus- centralised data system on children for adoption, child welfare, adoption, foster care and rehabilitation, destitute child rehabilitation. Funds invested- Rs 10 to Rs 12 lakh invested annually
Area in focus Recipients- 6. 21 IBM Global Services India Pvt. Ltd. CSR focus- eduction, early learning programs, teachers, computer education, support to disable people, Area in focus- Pan India Recipients- Under-served primary school children 6. 22 CSC CSR focus- education, support to less privileged children, community development, health, medical support Area in focus- Kancheepuram, Krishnagiri districts of Tamil Nadu and outskirts of Chennai city. Recipients- 1000 poor and underprivileged students. 6. 23 Patni Computer Systems CSR focus- education
Funds invested- 1. 5 crore(2007) 6. 24 Flextronics Software Systems Ltd CSR focus- community service, education to underprivileged children Funds invested- 1. 0 crore (2007) 6. 25 Geometric Software Solutions CSR focus- Children and youth, with education as the focus area. Area in focus- Pune 6. 26 Honeywell Automation and Solutions CSR focus- Education for street children, blood donation camps, medical camps 6. 27 I-flex CSR focus- education, health, rehabilitation of physically challenged children, decision support systems for Karnataka Government Fund earmarked- 1. crore (2007), ad hoc donations Area in focus- Banglore, Chennai, Pondicherry, Andhra Pradesh, Karnataka, Mumbai Recipients- tsunami victims, earthquake victims of J &K, Education Department of Karnataka, Bethany Special School, Kutumba, an organization working to promote the concept of integration of physically challenged individuals in society 6. 28 Polaris Software Lab Ltd CSR focus- education, economically challenged students Fund invested- 1. 4 crore (2007) Area in focus – Tamilnadu, Mumbai Recipients- students 6. 29 Accenture Services Pvt. Ltd.
CSR focus- education, children with special needs, support to victims of natural calamities Area in focus- Karnataka, Tamil Nadu, Andhra Pradesh, National Capital region and Mumbai Recipients- approximately 11000 children 6. 30 Sapient CSR focus- education, shelter & support to street & working children, autistic children Area in focus- Karnataka, Delhi, Haryana Recipients- education, 6. 31 Xansa (India) Ltd. CSR focus- education, computer literacy, health, career counselling, sports activities, development of special skills Area in focus- Noida, UP; Tamil Nadu, Maharashtra
Recipients- 14000 school children across the country,17 schools, orphanages – 7 in Noida, 8 in Chennai and 2 in Pune. 6. 32 Zensar Technologies CSR focus- education, IT education, personality development, rehablitation Area in focus – Maharashtra and Andhra Pradesh Recipients – 115 girls and 55 boys from 7th standard of Hambirrao Moze School Chandannagar. On an average 85 students attended personality development course 7. Conclusion Indian IT industry has already made considerable contributions to the development goals of the country through firm specific CSR interventions.
However, progress in achieving wider impact has been largely blocked by factors such as limited interaction between key stakeholders, the absence of a common platform where knowledge and best practices can be shared and the absence of monitoring and reporting mechanisms. Most of the IT companies are not aware of international CSR standards like the Millenium Development Goals (MDGs). CSR initiatives of firms with an international presence such as Accenture, Satyam, Cisco, Covansys, Xansa and Cognizant have been found aligned with global CSR standards.
Most of the firms generally do not have predetermined CSR objectives and hence these firms do not explicitly link their CSR goals with the country level MDGs. Absence of a mechanism that can monitor and evaluate CSR initiatives of the firms further complicates this problem. Researchers have found that most direct CSR initiatives by IT companies are philanthropic in nature. Almost 43% of the firms (Indian multinationals like Infosys, Satyam and Cognizant Technologies) have dedicated CSR divisions.
Whereas 30% of the companies’ CSR initiatives were carried out by the other departments such as Corporate Planning, Corporate Communications, Human Resources, etc. Many companies which do not have their own CSR foundations are associated with local communities and non- Governmental organizations (NGOs) to carry out CSR activities. In this era of economic recession the Indian IT companies have not slowed down in their CSR effort. According to the survey carried out by British Telecom (BT) on the sustainability index of the Indian companies the top 11 list are Tatas, Reliance, Infosys, ITC, Wipro, Suzlon, Airtel, Honda, ONGC, IL&FS and Satyam.
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