When Piyush Mehta decided to leave PepsiCo to join Genpact (earlier GE Capital International Services) in 2001, he had absolutely no idea that the industry he was joining — business process outsourcing (BPO) — would be rewriting the rules of the job market in India and changing it forever. He also had no inkling of the stupendous growth the sector would experience. But being an HR person, he not only had a ringside view of the apocalyptic transformation taking place, but was also, in many ways, lending a helping hand to it.
"We (the BPO industry) changed the employment landscape of the country," says Mehta, Global Head (HR), Genpact. And so did other emerging sectors like telecom, infrastructure, real estate, retail and insurance, which, together with the high GDP growth that accompanied them, made the first decade of the millennium a defining one. Says Sanjeev Bikhchandani, Founder-CEO, Naukri.com, who built a Rs 273-crore business from scratch in the last decade, courtesy the burgeoning job market in India: "The urban job market is clearly linked to GDP growth and the rest follows."
The Turning Points
As businesses grew in the post-liberalisation years, so did the market for talent. However, the dynamics of the talent market underwent a qualitative shift in the late '90s when multinational companies operating in India, which had hitherto been run as part of their parents' Asia-Pacific operations, started to report directly to their corporate headquarters in the US and elsewhere, as part of the localisation of decision-making. At the cusp of the millennium, several new sectors came up, which, in turn, created a demand for new roles and skills.
This forced India Inc. to hunt for the right people, an exercise that escalated into a war for talent in later years. In fact, many of the early telecom and BPO companies were built mostly with people drawn (read poached) from the FMCG biggies. New growth areas like real estate and infrastructure, too, further skewed the talent demand-supply equation. "The major turning point for the job market is entrenched in boom across three sectors—BPO, IT and telecom. To top this, private sector retail banks expanded massively. All this while, of course, a massive influx of overseas capital gave the wherewithal to Indian companies to grow," says Bikhchandani.
As new sectors came up and the existing ones expanded, the barriers to entry into the job market were reduced. "Unlike the conventional route of engineering and management education being the dominant suppliers of talent, undergrads and graduates found opportunities in service sectors like retail and insurance," says S.Y. Siddiqui, Managing Executive Officer-Administration (HR, Finance and IT), Maruti Suzuki India. The auto major, too, lowered its entry barrier during the last decade to recruit arts and commerce graduates.
But, beyond this frenzy to acquire talent, the urban workplace itself changed, and with it, the mindset of employees. Says Deepak Gupta, Country Head, Korn/Ferry International, an executive search firm: "The biggest trend of the last 10 years has been that companies in India have moved from being hierarchical to much flatter organisations. This was triggered by cost and growth pressures. Organisations became informal and open."
This was a consequence of outsourcing— both domestic and overseas. In an outsourced environment, the workplace moved to a different level—from cost arbitrage to knowledge arbitrage. This skewed the employer-employee balance in favour of the latter, which threw up new challenges for the employers—winning, attracting and retaining talent. "Employee attrition", as a result, became a dreaded word for managements.
The slowdown brought some respite to the employers by tilting the balance back towards the employer. But given the now-certain recovery and, more importantly, the demographics of India, it could prove to be just a breather. "In two years, we will be scrambling for talent globally," predicts Gupta.
Advantage Millennial Workforce
Peter Promnitz, Head (Asia Pacific), Mercer, a global HR consultancy, predicts that the Indian workforce will rule the workplace across the world in the next decade, courtesy its demographic dividend. "The next 10 years will be very different for India from the rest of the world, thanks to the composition of its workforce and the pace of its growth. India has highly educated talent... that's why you will see them ruling the workplace all over the world." Economies across the US, UK and Europe will be adjusting to slower growth and an ageing population all this while. But as talent becomes scarce in the next few years, India's challenge will be getting trained manpower, says Promnitz.
According to India Labour Report 2008, from 2001 to 2026, the country's population is projected to grow from 1.029 billion to 1.4 billion. The proportion of population in the working age of 15-59 years will rise from 57.7 per cent in 2001 to 64.3 per cent in 2026. India is a young nation, as 54 per cent of its current population is aged 24 years and less, as per Census 2001. Between 2001 and 2026, the total population is projected to increase by 371 million and 83 per cent of the increase will occur in the age-group of 15-59 years. That's India's long-term demographic dividend. By 2020, the country is expected to represent 17 per cent of the world's working age population.
Employability of the workforce was one of the biggest challenges of India Inc. in the last decade and there's no let-up in sight. The IT and ITES industry, which trains thousands every year to bridge the skills gap, has been one of the worst hit, and is set to remain so. Says Som Mittal, President, NASSCOM: "Today Infosys, Wipro and TCS are training thousands of their employees and that is a strain. Our challenge in the next decade is: Can we move it (training) back to colleges?"
Mittal is also worried about where he will get his future IT workforce from. According to Nasscom projections, the industry is expected to employ close to 10 million people by 2020 from around 2.2 million at present. "At present, we have 95 per cent of work happening in six cities, but that's not where people are. We have been encouraging people to set up offices in 43 cities in the next tier, but the infrastructure in these cities is a challenge again... How do we scale beyond these six cities?" he asks.
The paucity of right, trained talent also triggered a phenomenon that caught managements by surprise. For most of the last decade, barring the two slowdowns, employee became a wanted, fussed-over commodity. Says D.K. Srivastava, Corporate VP-Global HR Head, HCL Technologies, which started the "Employee First, Customer Second" initiative five years ago: "As employers, we have been placed in the unenviable position of needing to market our companies to our employees each and every day. If we neglect to engage our own employees, hundreds of other opportunities await."
In fact, the relationship between the employer and employee (particularly star performers) has undergone a maturing process, with both taking accountability for an individual's progress now. Gita Dang, Founder-Director, Talent Advisory Services, who has closely observed the talent industry, calls this "a talent storm caused by business changes." In India, it essentially had a larger number of executives recognising that they, and not the company, were responsible for their career growth, earning opportunities, monetising of skills and experience. "I believe this was the sharpest wake-up call for learning how to "stay relevant" in today's world," she says.
Says Manish Sabharwal, Chairman, TeamLease Services, a staffing firm: "Employment in the last decade moved from being a marriage to a contract. Companies that will differentiate in the next 10 years will be those that ready and train their own employees. Retaining talent will be the toughest challenge. Companies may increasingly lose talent to the entrepreneurial ecosystem as well."
The advent of knowledge economy meant that intellect was more valuable than bricks. And that was reflected in employee costs. Businesses went global and compensation followed. "In the last 5-7 years, very few companies could afford not to look at global compensations," says Govind Iyer, Managing Partner, Egon Zehnder, a search firm. Another creation of the last decade has been the high variable pay at senior levels.
Says Dang: "There is much greater comfort with and understanding of variable pay or pay for performance today." In fact, according to Gangapriya Chakraverti, India Business Leader (Information Product Solution), Mercer India: "The link between pay and performance is being established for every job there is and the lack of this link is being questioned even in corporate boardrooms."
So, what lies ahead for the talent? "The top 1 per cent of Indian talent will grow much faster. An inevitable consequence of India's growth will be emergence of superstar CEOs. The bottom-rung may not grow as fast," says Sabharwal. And there will be increased competition, too, in the form of global executives seeking the "India experience". "Global talent has started looking at India seriously," says Tanuj Kapilashrami, HR Head, HSBC India. The bottom line: It won't exactly be a smooth ride at the workplace for the Indian employee in times to come. For employers, it could be much worse.