Abstract: Majority of the organizations follow performance appraisal process to evaluate employee performance, and results of performance appraisals are used for a number of purposes such as administrative uses, rewarding, and identifying training needs. Most of the IT professionals perceive performance appraisal as an extra burden, and many questions about the appraisal process and results. IT professionals sometimes believe that performance appraisals have a negative impact on their motivation and work improvement. Therefore, it is imperative to study and understand the true impact of performance appraisals on employee work improvement in software development organizations.