Indian organisations have traditionally not considered their human resource as a means of distinct competitive advantage. Rather, people management has been a big challenge for the Indian business head. This situation is undergoing a rapid change today, because as Indian organisations are recognising the need for professional human resource management, simultaneously there is a growing demand for trained human resource professionals. At most universities, business schools have begun to offer specialised, customised courses to train the human resource professional.

Increasingly, organisations are encouraging line managers to handle human resource responsibilities. Ancient India was known for its occupation-based hierarchy. The ancient Indian text, the Arthashastra, refers to the job description of a supervisor and performance-linked pay for artisans. It was only after the year 1850 that formal industrial organisations emerged in India.

But it was only after India became an independent country in 1947 that significant improvement was witnessed in the personnel management policy of business organisations. After independence, when a mixed economy was encouraged as the Indian growth model, industrial organisations were broadly classified into public sector and private sector. Since the public sector units were the recipients of large investments and became the biggest employers, their approach towards personnel management received a lot of attention. The goal of a scientific society enshrined within the constitution of India implied that the protection of human resource became a significant objective.

Many constitutional provisions were created in order to protect workers. Organisations had to appoint welfare officers to take care of all personnel. The next phase of development saw the rise of the trade unions and manager unions in Indian business organizations. This further boosted the growth of personnel offices in most organisations.