Effect of Human Capital on Software Development Productivity?

The term human capital is defined as non-real resource, which increases from social networking and environment. The human capital networking is quite an important term in human community. Human capital is type of an investment not in form of money or physical resources but in form of human relations, which can provide huge returns in software market. In the present paper, we will present our approach on handling the human productivity and human relations in software organizations using the well-known statistical approach of “Structure Equation Modeling” (SEM). The variables that are of hidden nature, and cannot be measured directly i.e. human capital, human productivity and productivity, can be solved using the SEM approach, which can be used to obtain the correlations between them. The whole study was carried out in an industrial environment, so as to get an insight of practical viewpoint about the correlation between hidden and observed variables. To start the analysis, we chose certain critical factors from literature affecting the three hidden variables. In order to make our results more accurate we refined our list of critical factors through the series of group discussion (among software company employees). Finally, after gathering and refining the raw literature data, we applied SEM approach to solve the correlation between different observed and hidden variables. The results indicated good and strong dependence of different observed variables on each of the hidden variables. Also positive correlation was established between different hidden variables. The end conclusion was that the “human capital” understanding is quite important in today’s software industry, for software organization success in the area of software development field.