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Skill gloom amid job boom

Last updated on: December 30, 2005 11:55 IST

CS Mirchandani, placement coordinator at the Goa Institute of Management, says he is on cloud nine these days.

The reason: the first six hours of the school's placement week, which concluded last Friday, saw one student being placed every 10 minutes. "For the first time, 33 companies had to return empty-handed from our campus," he says.

The experience of one of India's middle-rung MBA schools is just one of many signals that the jobs boom, which started in 2004, is set to spill over into the new year. India Inc is courting talent as if there is no tomorrow.

The Big Boys (the top MBA schools) are yet to enter the job market, but an Indian Institute of Management executive says the pre-placement deluge has already begun and the "numbers being projected this time round may give the last year's batch an inferiority complex".

For the record, the average salary level for IIM-Ahmedabad students in March 2005 was Rs 14.5 lakh (Rs 1.4 million) per annum (Rs 790,000 in 2004).

Consider the projections for 2006. According to a Manpower Employment Outlook survey for the first quarter of 2006, India leads other countries with a positive overall net employment outlook of +27 per cent. Another survey, by Hewitt, projects Indian salaries to increase by 14 per cent in 2006 - the highest in the Asia-Pacific region.

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Topping the recruiters' list is the information technology and IT-enabled services industry, which will continue to recruit an average of 400 people every day. National Association of Software and Service Companies estimates fresh IT labour supply at 250,000 in 2006-07.

India is poised to be a $60-billion software market in 2010, providing direct employment to more than 2.2 million people (and nearly thrice that number by way of indirect employment), Nasscom says.

Tata Consultancy Services CEO and managing director S Ramadorai says he expects a strong hiring trend in 2006-07. The company will hire a net 13,500 professionals in India and about 2,000 overseas. In addition, it is recruiting 950 professionals in the UK and 1,250 in Chile.

"The range of skills being hired may only increase," he says. IT recruitment firms are working overnight to cash in on the boom. Gautam Sinha, CEO of Bangalore-based recruitment firm TVA Infotech, says his company recruited 200 IT professionals a month in 2005, compared with 120-130 in 2004. The number is expected to shoot up to 350 a month in the New Year.

McKinsey estimates India's factories will need 73 million workers by 2015, which is 50 per cent more than today's. India's airlines will add 440 new planes by 2010 to their fleets, which means 3,200 additional jobs for pilots alone, and many times that for cabin crew, ground staff and airport handling. About 40,000 vacancies are expected in the next three to four years, just for cabin crew jobs.

Other sectors like FMCG and real estate are not far behind. Services like retail and telecom are expected to create two million jobs in India in the next two years.

Kishore Biyani, managing director, Pantaloon Retail, expects the retail sector to create 150,000 to 200,000 jobs (both front-end as well as senior management staff) in 2006.

"If you take indirect employment, including the peripheral jobs, the total employment will be 500,000," he says. Pantaloon will double its recruitment to 10,000 in the new year.

Textiles is another high-growth area. Dilip Jiwrajka, managing director, Alok Industries, says almost a million jobs will be created in the sector within the next two years, with the industry projected to invest over Rs 90,000 crore (Rs 900 billion) in the next few years.

Pharma research and biotech are two other hot areas. NS Rajan, partner, Human Capital, at Ernst & Young, says India has already become the most preferred destination for over 100 Fortune 500 companies in the knowledge process outsourcing space.

More are expected to join the queue. Half of these companies are in the IT space but sectors like automotive design, telecom networking, biotech, chemicals, pharma and financial services are also catching up fast.

The flip side of the story is that industry fears an acute skill shortage. A McKinsey Quarterly survey showed that as many as 81 per cent of top Indian executives feel that the cost and availability of talent will be a significant constraint on business over the next five years.

Take India's premier engineering firm, Larsen & Toubro. The company needs 2,000 engineers every year to maintain its 20 per cent growth pace. But, stung by a huge attrition rate of around 30 per cent, Anil Manibhai Naik, chairman and managing director of Larsen & Toubro, says there are just not enough quality people available.

Naik is losing people heavily to the software industry, multinational competitors in India, and rivals in the Persian Gulf that pay twice his company's current salary levels.

The shortage is not limited to the engineering sector. Manpower issues, especially the tremendous shortage of talent at the middle level, dog sectors like textiles, retail, financial services and KPO. Companies are simply not getting the talent they are looking for.

For example, there is demand for 8,000-10,000 engineers in the embedded software and chip design space, but the supply is just a third of that number. In the wireless segment, there is an annual shortfall of 8,000 engineers.

Ernst & Young's Rajan gives an example of the huge problem. The KPO space requires a large number of Mtechs and PHDs. But India produces 3 million college graduates and only 3,500 IIT engineers. Transferable competencies will, thus, be at a premium.

"While jobs are booming, the middle of the pyramid is crying for talent," Rajan says. Agrees Ramadorai: "There may be a shortage of 500,000 professionals in four years, unless urgent remedial measures are taken by industry and government to augment talent."

What The Experts Say

Hewitt Associates

Manpower Inc

McKinsey

Shyamal Majumdar, in Mumbai
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