The world’s fastest growing economy offers HR both opportunities and challenges.
By Michael Switow
Five and a half years ago, as India was undergoing a start-up boom, five human resources professionals from a large Delhi-based media company surveyed the marketplace and decided the time was ripe to venture out on their own.
Venture capitalists were flocking to India to fund companies with billion-plus dollar valuations like the e-commerce platform FlipKart. Rajneesh Singh and his colleagues, though, identified a gap: a lack of HR providers supporting the new start-ups.
Leaving behind one of India’s most popular news and entertainment networks—a company that operates Indian franchises of CNBC, CNN, MTV, and Nickelodeon among others— Singh, who was then a group head of HR at Network18 India, founded SimplyHR Solutions.
Like the stores selling picks, pans and shovels during the California Gold Rush, SimplyHR and other new providers like YOMA Multinational Solutions, OBOX HR Solutions, and Abhyudaya HR Business Solutions staked their business on providing the tools needed by others in a booming sector.
“Our outsource model really helps,” Singh notes, “because there’s not much for a full-time person to be doing” in start-ups and mid-sized companies. Human Resources Outsourcing accounts for about 60 per cent of SimplyHR’s revenue. New verticals— recruiting, networking events, and an online one-stop portal to assist clients with every aspect of HR from joining to exit management—account for the balance of the company’s business.
Like India’s economy—which is now the world’s fastest, growing at an estimated 7.6 percent clip—Singh’s company has expanded rapidly. SimplyHR has grown from the original founders to more than 25 people; it has offices in three cities and has been named one of the 20 most promising HRO companies by Silicon India.
India’s start-up sector, meanwhile, has become the third largest globally, with more than 4,200 companies. There are signs of concerns, though. A number of prominent newcomers have consolidated or closed down, whilst investment in the sector is off sharply. The start-up boom has either paused or come to an end, depending upon who you ask.
Are Companies Hiring?
Paradox in a country of 1.3 billion people—home to both the fastest growing economy and the largest number of people living in poverty—should come as no surprise.
Similarly, even though India tops the growth charts, analysts and media commentators give the economy mixed reviews, particularly when it comes to creating new jobs. Companies appear to be favouring capital investment over hiring. Job creation has dropped to about 100,000 new jobs per quarter, just one-third of what it was five years ago. Yet many recruiters are bullish.
India’s Economic Times reports that Korn Ferry, EMA Partners, Hunt Partners, Michael Page, TeamLease Services, and Transearch are all seeing a strong uptick in business. “Over the last six months, the hiring at senior executive level has gone up by 20-25 percent across all sectors,” Transearch India managing partner Uday Chawla told the paper.
“There are many spots of excellence and bright spots that are just around the corner,” says YOMA Multinational chief executive and managing director, Nishid Sood, who points to banking, logistics, and infrastructure as job-creating sectors.
Against this backdrop of rapid economic change, HR professionals have identified four major human resource challenges facing Indian companies today:
1. Finding the Right Talent. An estimated 1.5 million students graduate with an engineering degree in India every year; the country also produces several hundred thousand management graduates annually. Yet the vast majority of these graduates are considered ‘unemployable.’
“There is a huge demand and supply mismatch. We have a huge pool of working population, which needs to be provided with skills,” explains YOMA Multinational’s Sood.
More than 60 per cent of employees believe their company has trouble finding the right talent, according to a Randstad Work Monitor Survey conducted earlier this year. About the same percentage of workers expect the problem to worsen.
Narendra Modi’s government launched an ambitious skills-training agenda last year. It hopes to improve the employability of more than 400 million Indian youth by 2022. In the meantime, Singh says corporates need to do more in the way of offering internships and sponsoring courses. Sood adds that companies are also increasingly using technology and ‘big data’ to identify qualified new hires.
2. Talent Retention. Imagine losing 10,000 workers—one-fifth of your workforce—every quarter. That’s run-of-the-mill for Infosys. The software giant hired 13,000 people in the first quarter of the year, though, to make up for the deficit.
“There has been so much growth in the economy and so many newer companies coming in, the whole commitment level of people to a company has gone down,” says Singh. “You can see HR people and the leadership of any company really struggling to hold on to good talent. If you are good talent, the market is really good for you, because there are a lot of people that are chasing you and there’s good money to be earned.”
Sector-wide attrition numbers are actually falling, though, for the first time since 2009. The average is now 16.3 per cent, according to a survey by Aon Hewitt, which shows that the most common reasons for switching jobs are money, limited growth opportunities, and role stagnation. Salary increases, meanwhile, appear to have stabilised at about 10 percent.
3. The Leadership Pipeline. Related to the issue of talent retention is training new leaders. Take the case of the online retailer FlipKart. Over the past year, it lost its chief product officer, chief people officer, and chief business officer as well as its head of commerce & advertising, head of seller ecosystem and VP of engineering. It’s hardly the only company to lose top personnel recently.
IT companies, in particular, face the challenge of turning coders into leaders, if they are not going to waste the better part of a year searching the market for candidates. Ill-prepared techies are not being groomed for leadership roles, though, as Ketan Kapoor, the head of one of India’s leading talent assessment companies. Mettle, told a panel discussion in Bengaluru two months ago.
At the same time, local companies—who want to go regional, national, and even global—struggle to find the right personnel to lead their expansion.
“The preparedness of the leadership to take up positions in different parts of the country or globally is something that has started bothering some of the owners that I see,” says SimplyHR’s Singh. “They’re really finding it difficult. Ideally, they would want somebody internally who can be moved. But to really prepare them to be ready for higher responsibilities is a challenge.”
Singh believes that HR has a huge role to play in helping businesses deal with this issue, by identifying and investing in future leaders. Some companies may prefer in-house mentoring or coaching programmes, whilst others develop long-term relationships with executive education programmes.
4. Corporate Culture. More than two-thirds of employees in the I.T. sector would prefer to work for a young boss. In fact, the majority of Indian workers outside the automobile industry, would choose a young leader over an older one, given the choice, according to a survey by TeamLease. Why? Young managers are believed to be more understanding, more creative, more energetic… and less traditional.
Of course, young leaders are not the norm. Traditionally, the owner of an Indian company runs the show. But globalization and an influx of multinationals is leading many family-run businesses to change how they operate.
“I think this is where people like us are getting a lot of inquiries because quite a few Indian companies want to professionalize,” says Singh. “They want to bring in systems, they want to bring in processes and that’s where they feel the role of HR is very critical to this whole culture transformation.”
Given transformations like these along with the country’s breakneck growth, HR professionals are most definitely in high demand.
Singh recently returned to the business school where he graduated three decades earlier. “That school specializes in HR,” he told me. “There was a time there were not many companies. Now, when I go there, there are so many companies queuing up to pick up the students.”
India Expected to Extend Maternity Leave
India’s government is preparing to amend a decades-old law to significantly increase maternity benefits. An estimated 400 million women could potentially benefit from the changes.
The proposed amendments to India’s 1961 Maternity Benefits Act include:
• Increasing paid maternity leave to 26 weeks (from the current 12)
• Enabling many new moms to work from home for up to 26 additional weeks; and
• Requiring employers to provide nearby day care facilities (within 500 meters of the office).
Once enacted, the changes proposed by India’s Ministry of Labour will affect employees in both the public and private sectors and will place India among the top 16 countries worldwide for maternity leave.
A number of multinationals and leading Indian companies— including Accenture, Deutsche Bank, Flipkart, Godrej, HCL Technologies, Hitachi Consulting and the Tata Group— already offer six to seven months paid maternity leave.
“In most of the progressive organisations, even the midsized companies, they are extending the leave not as a mandate, but to make the workforce more participative and inclusive,” explains YOMA Multinational’s Nishit Sood. “Some organisations are even talking about paternity leave of up to a month. As the workplace becomes fair and neutral, I see maternity leave becoming more prevalent with increased support.”
Currently, more than 1 in 3 Indian women leave their company mid-career to raise children, and those who do find it very difficult to reenter the workforce, according to a report by the Confederation of Indian Industry’s Indian Women Network.
“This is not a good situation to be in,” notes PeopleStrong co-founder and chief business officer Shelly Singh, who believes that expanding maternity benefits will “surely help women to continue their careers.”
Whilst the proposed changes are being welcomed by the HR profession, they are receiving a mixed reaction from the public. “Why want it all at the expense of the company,” writes one commentator on the Times of India site. “Why not just prioritize family life over career for that period and be at home by quitting and joining back later.”
“I work for an MNC which gives a work from home option [and] six months paid maternity leave. In addition, there is also a fast track programme to help women bring up to speed, post leave, and make up for the lost months so their growth is not affected,” counters another reader. “This company has a high percentage of women leaders and employees and very low attrition because people working here are happy.”