Four factors impacting talent and hiring in the world’s fastest-growing economy.
By Michael Switow
Confused about the state of the India’s economy? The planet’s largest democracy is the fastest-growing major economy, with 2019-2020 fiscal year GDP growth expected to clock in between 6.8 and 7.3 per cent. But growth is starting to slow with government deficits rising and unemployment reportedly running at 6.1 per cent, a 45-year high (although Delhi has disavowed the statistic).
This clash of data combined with relatively negative projections has led to a host of conflicting news headlines and assessments of the job market.
“Hiring has not slowed down,” says Namita Bharadwaj, Mercer India‘s career products leader. “Across the board, we continue to see organisations that are fairly enthusiastic about hiring, and not just hiring for replacement talent, but adding to head count as well.”
Other industry experts, like Korn Ferry India’s Head of Professional Search Konika Chadha and Kris Lakshmikanth, founder and chief executive of The Head Hunters India, have observed a lull during the first half of the year.
“The current political situation and general elections have put a halt on a few sectors,” says Chadha. Parliamentary elections ran for nearly six weeks in April and May, with Prime Minister Narendra Modi’s ruling Bharatiya Janata Party and its National Democratic Alliance coalition winning a clear majority.
“Because of the elections, companies are going slow in their recruitment and investment,” agrees Lakshmikanth. “All the major companies have been very cautious in hiring. In fact, some of them have even laid off people at the executive level. We are expecting the hiring to pick up from June because elections will be over.”
High-profile companies that have retrenched workers this year or are reported to be planning cutbacks include:
- the state-owned telco BSNL, which may cut more than 50,000 jobs;
- IT services provider Cognizant, which says growth in headcount has outpaced revenue;
- IBM, which let 300 people go from its services division;
- Oracle, which retrenched 100 software developers, quality assurance, and documentation professionals; and
- VICE Media.
Analysts generally expect that any slowdown will be reversed in the second half of the year, with the newly re-elected government using fiscal stimulus to prime the pumps. But at the same time, the country faces several structural challenges when it comes to hiring and talent, starting with its educational system.
“One important point to call out here, and it’s unfortunately been a consistent part of our talent landscape for a very long time, is that whilst in India we continue to turn out the maximum number of graduates, the level of employable talent is still not as high as one would want it,” observes Bharadwaj.
Analysts conservatively estimate that up to half of all Indian university graduates and post-graduates do not have the skills required by employers due to outdated curricula and uneven, fast-paced growth in the education sector. Some observers believe the figure is actually much higher.
CP Gurnani, CEO of Indian multinational Tech Mahindra, says that more than 90 per cent of engineering graduates are not fit for employment without additional training. As a result, many companies have been forced to create their own learning centres to narrow the skills gap. A Mercer survey estimates that Indian companies are spending an average of $10,000 per person to re-skill employees.
The Modi government launched two prominent campaigns in recent years to address this issue: “Make in India” and “Skill India.” The goal of the former is to make India the world’s manufacturing hub; the latter envisions training 400 million people by 2022. Progress on both fronts has been halting.
“We have to up-skill our education system to meet these future demands. Progress is being made, but it’s slower than expected,” Chadha says.
Paying a Premium for High Tech
The skills gap has helped fuel stiff competition for talent in a number of tech-related positions despite the overall slowdown in the job market. This war for talent cuts across industries.
“One very key thing that we’re seeing in India is that IT is no longer necessarily just an industry vertical,” notes Bharadwaj. “The roles that we’re seeing are related to skills that drive a company’s digital agenda.”
Take, for example, an automotive original equipment manufacturer. Whereas a strong knowledge of engineering mechanics would have previously sufficed, today’s companies demand professionals with a keen understanding of machine learning and design engineering.
Skills in particularly high demand include cloud computing, cyber security, data analytics, and user interface design. Companies are paying a premium of up to 30 per cent to fill these roles, according to the Mercer India Skill Survey. Hands-on industry professionals are in more demand than team managers. E-commerce, online education, and fintech companies, in particular, are all hiring.
Another topic dominating India C-suite discussions is how automation, artificial intelligence, and machine learning will change the country’s job landscape. Most Indian executives -nearly two-thirds, in fact -believe that one out of five current jobs will cease to exist, according to Mercer’s 2019 Global Talent Trends survey. Many low-skilled jobs are either being automated or shifted to countries like the Philippines, where labour costs are even smaller than in India.
HR professionals are feeling relatively more confident, though, in their ability to assess which jobs will disappear and which skills will change as a result of automation. At the same time, the population of gig workers is on the rise. Seventy per cent of Indian corporations engaged gig workers at least once last year to address a major organisational issue, according to research by Noble House.
Finally, Indian companies are also questioning whether the country can capitalise on U.S.-Sino trade tensions. Foxconn Technology, for example, is planning to shift some iPhone production from China to India. Overall, Indian exports could rise by several percentage points as a result of the trade war, according to a recent United Nations study. However, if uncertainty and trade war fears lead investors to shift into the U.S. dollar, India will find it more expensive to service its debt, which in turn could make it more difficult for the government to reverse slowing growth, leading once again to a slew of headlines in need of deciphering.