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Home > Business > Special

It's raining jobs! But whom to hire

Shuchi Bansal & Surajeet Dasgupta | May 12, 2007

When Ashok Sehgal, senior vice president-human resources, DS Constructions, left the Korean consumer electronics giant Samsung a year ago to join the infrastructure company, he did not know he was jumping from the frying pan into the fire.

At Samsung he was constantly losing his sales staff to rival consumer durables brands and to the retail industry. At DS Constructions he is forever looking for engineers for his company's growing infrastructure business.

This year alone, DS needs to hire 400 engineers with different skill sets for its Rs 2,000-crore (Rs 20 billion) Kundali-Manesar-Palwal expressway project. More people may be required when work on the SEZs begins.

Sehgal is worried as the shortage of design, planning and structural engineers is acute. "This may not be a cakewalk, but the 30 per cent attrition rate in the durables industry was not easy either," he laughs.

Ajit Anjum, managing editor, BAG Films has nothing to do with the infrastructure sector but his "people" worries are similar to Sehgal's. Anjum is shuttling between Delhi and Mumbai in search of 600 people - anchors, reporters, ad sales executives and distribution experts - for BAG's foray into broadcasting.

"Since a bunch of TV ventures are in the pipeline, everybody is eyeing the same people who are, therefore, charging a premium," says the 40-year-old television professional.

He expects another round of musical chairs among employees in the broadcasting space, especially news channels, with salaries at the middle and top-level positions hitting the roof.

Again, there is little in common between Anjum and Aditya Gupta, who is president of InfoVision, the Gurgaon-based business process outsourcing outfit, except the search for people. Gupta hires around 300 people a month for various voice and non-voice processes. Last year, he had a tough time recruiting 2,000 employees.

"It is bad enough finding employable manpower. High attrition rates compound the problem when one has to find the replacement staff equally fast," rues Gupta. The company has to add another 5,000 people by the end of the year.

Sector after sector, the human resource crunch is both similar and stark. To the aforementioned industries - construction, media and entertainment and ITES - suffering from manpower shortage, add retail, telecom, banking and financial services and hospitality. Little surprise that HR executives across hotel chains are worried about filling vacancies generated either by attrition or by growth.

Says Sundeep Shenava, HR manager at Bangalore's Leela Palace Kempinski: "The challenge is not so much from our competitors in the hotel industry, it's from sectors like BPO, airlines, retail and even cruise liners who are taking our people away."

Even as the economy gallops at 9 per cent a year, what's really making news is the shortage of skilled manpower in the boom sectors. Points out executive search firm INX Global's chairman, Peter Mukerjea: "There is fire in the economy and businesses are seeing a staggering growth."

If you believe T Krishna Rao, deputy general manager, HR, at Hyderabad-based Soma Enterprises, most infrastructure companies are growing between 30-50 per cent a year. Thanks to that growth, the shortage of engineers in the construction industry is more than small.

In fact, Soma urgently needs hundreds of people for the four Delhi Metro Rail stations and the six highway projects it is executing. Employment services company Ma Foi estimates a 19 per cent shortfall in the supply of civil engineers needed by the construction industry.

Explains Amitabh Das Mundhara, director, Simplex Infrastructures, that handled parts of the Delhi Metro and Golden Quadilateral projects: "People shortage in the construction industry stems from civil engineers abandoning construction in favour of higher-paying IT industry jobs all these years. Now that the infrastructure sector is growing, there is a huge demand and supply gap."

With over 60 television channels in the pipeline, the demand and supply gap in the media and entertainment industry is also huge. The industry, growing upwards of 20 per cent a year, will need 12,000 people in the next two years for its TV channels alone. And this is exclusive of the growth the content companies that supply programmes to the new channels will experience.

While Sony Entertainment Television's chief executive officer, Kunal Dasgupta, is not unduly worried about people's shortage in the sector ("it's a glamorous industry and people are attracted to it"), he admits that hard skill jobs that need formal training could be in short supply.

Sample the manpower requirement in the IT and ITeS space - the top IT companies will absorb 150,000 people this year. Wipro alone will hire 25,000-30,000 people in the current fiscal, of which 50 per cent will be hired from campuses. The remaining 50 per cent the company expects to hire laterally.

Achutan Nair, vice president-resourcing at Wipro, says that IT is not really short on numbers but is definitely short on talent. "Of every 100 engineers that pass out, only 25 are employable. The syllabus of engineering colleges has not kept pace with the industry's requirement."

Agrees Infosys director (human resources, education and research) T V Mohandas Pai: "There are more jobs in the industry than technical professionals produced by colleges. And the education system has to change to meet the industry requirements."

Staffing solutions company TeamLease believes that banking, financial services and the insurance sector are the fastest growing in terms of jobs. A Ma Foi Tracker Survey says 1,40,000 banking and financial services jobs will be created in this calendar year. And most of these will be in the tier 2 and tier 3 cities where, say, banks would need executives to sell mutual funds, personal loans, credit cards, insurance and fixed deposits.

Compared to these sectors, the shortfall among pilots and engineers in the aviation sector in India may appear insignificant but Deccan Air's managing director, G R Gopinath, says the crunch is critical. "The industry requires 400 pilots every year. Currently, 200 of these are expats as we cannot get so many Indian pilots."

He complains though that the pilot shortage is artificial and created by the government. "Pilots have to go through medical tests which, according to DGCA, can be taken only in two air force institutes. Here, the waitlist is about 12 months, so the guys are not available in the market. In the US, there are 5,000 establishments for this."

Being manpower-intensive, modern format retail, meanwhile, will create 2.5 million direct jobs in the next five years. There's a huge demand for chartered accountants as well in the corporate sector and the 7,000-8,000 people who qualify as CAs every year are not sufficient to meet this need.

Says Rahul Roy, director, Ernst & Young, and past president of the Indian Chartered Accountants Institute: "The current shortage will pale into insignificance once we move from Indian to international accounting standards. The existing stock of CAs may become obsolete if it does not retrain itself."

Currently, India has one CA per 10,000 people whereas Australia has more than one per 140 people, the UK one for 500 and the US one for 870 people.

The telecommunication industry's talent crunch is also known. "We need people in the frontline sales, customer service, and technical areas like management of networks," says Krish Shankar, director HR, Bharti Airtel. On the qualitative side, the company needs people with expertise in value-added services and in content.

But talent shortage is just part of the story. It is the impact that it's having on these sectors that is frightening. The immediate fallout is a soaring wage bill and an unprecedented employee churn. And a possible slowdown in these industries cannot be ruled out if they do not find the right talent to fuel growth.

According to Ma Foi estimates - it has been hiring 4,000 people a month for the banking and financial services sector - that massive recruitment drive has led to an average wage escalation of 23-24 per cent across industries and attrition of about 21-22 per cent, except in the BPO sector where it is 80 per cent.

A Mumbai-based HR expert says, "HR is giving 25 per cent hikes to their best people this year," adding that "most employees are going home with above-average salaries."

To retain people, companies are offering loyalty bonuses and e-sops. In an effort to keep the wage bill under control, performance-linked pay or innovative variable pay is becoming the norm.

Says NDTV Media CEO Raj Nayak: "In a booming economy, the biggest challenge for an employer is to retain existing people. The mismatch between demand and supply of trained manpower is inflating people's cost in most media organisations."

According to broadcast media consultancy Mediaguru, the wage bill of leading national news channels has escalated between 100-130 per cent in the last five years.

Observes INX Global's Mukerjea: "To fill vacancies, companies are promoting people who may not be ready for the next level. This is especially true of the post of a CEO. Such promotions have a negative impact on the performance of the companies."

The head of a television content company says that talent shortage will have an impact on company growths.

"The issue is whether you let go of a project for lack of skilled manpower or get it done by the second rung people. Obviously, companies will not be able to scale up because of talent shortage," he adds.

Agrees Simplex's Mundhra: "Insufficient manpower may slow down infrastructure projects as companies may phase them longer than necessary."

To be sure, companies are resolving to recruit smart people and train them to suit their requirements. The IT companies are leading the pack. Infosys, for instance, has entered into an agreement with Karnataka University to enhance the quality of education at the graduate level to improve the employment opportunities for students across all disciplines.

"We have found that candidates from non-metros lack self-confidence. Through this partnership we aim to create industry-ready professionals for not just IT but all industries," says Pai.

The company is signing similar agreements with Shivaji University in Kolhapur (Maharashtra). The intention is to roll out programmes to other states such as Tamil Nadu, Andhra Pradesh and Rajasthan.  This year, Wipro plans to recruit 7,000 non-engineering graduates and provide them training.

The hospitality industry has also woken up to the crisis. Park Hotels has set up a hospitality institute in Navi Mumbai. Dawnay, Day Hotels is looking for land and will be setting up an institute soon. It will have its first hotel ready by the end of 2008. Though the Oberois and Welcomgroup have their own institutes, they have now also started programmes to recruit directly from schools for a working-cum-grad programme.

Leela at Bangalore also pursues the "Earn while you Learn" programme for college students and offers them part-time jobs. Some of these people are hired later.

A senior Hutch executive shares the company's strategy to survive the manpower crisis. "First, productivity per employee must be improved." Today its employee to customer ratio is 1:4,000.

"This will go up to 1:5,000 as we look for a 25 per cent increase in productivity," says the Hutch executive. In another smart move, Hutch has outsourced many of its functions to buck the challenge of inadequate manpower.

Today, Nokia manages part of its network and part of the customer service is managed by BPOs. "If we did not do this, we'd have to increase manpower by 40 per cent. The key is to think out of the box," says the executive.

The retail players are doing just that. Most retailers depend on in-house training. The RPG group has set up an RPG Institute of Retail Management. Others have made arrangements with management institutes to develop training programmes for their employees.

The Future group (Pantaloon) has tied up with the KJ Somaiah Insitute of Management for specialised courses for its employees. Carrefour, which is eyeing an India foray, is talking to IIMs for the same.

Says Kishore Biyani, MD, Future group: "We don't see major manpower problems because we have planned our future. We will require 1,00,000 people by 2010 compared to 20,000 currently. We have set up 15 training institutes, which churn out 1,000 mid-level managers into the system. At senior levels you require certain skill sets and so we have hired expats from South Africa." Biyani claims his attrition rate varies between 8-12 per cent and is lower than the industry average of 20 per cent.

Some months ago, auditing and accounting firm Ernst & Young set up its own tax associate programme at the E&Y Tax Academy. E&Y recruited 41 student graduates and took them to Chennai for a 4.5 months intensive course on direct taxes and allied subjects.

And if that seems too much of an effort, do what Atul Shrivastave, senior VP (HRD) at Datamatics does. For the IT consulting and services company, he recruits extra people to combat attrition.

Says Shrivastava: "If we require 200 professionals for a certain project, we usually add 400. This way, we end up expediting the project and in case there are dropouts, it does not affect the end result." The company adds more people on its payrolls, he admits, but "it minimises the risks of losing a client due to lack of resources."

That's one way to look at it.

Rajiv Shirali and Priyanka Joshi in Delhi, Dev Chatterjee in Mumbai, Bibhu Ranjan Misra, Aravind Gawda and Meera Vankipuram in Bangalore contributed to this story

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