Experts agree that the job outlook for 2014 is looking great. But what are the sectors which are driving this hiring trend? People Matters spoke to several HR service providers to understand what is driving recruitment in some sectors and not in others, the reasons for the same, and how that is going to affect the race for talent. We also explore how the prospect of general elections for the Lok Sabha, which will be conducted in two months, is going to affect the hiring plans of companies.
The cross-section of service providers that I spoke to for the story agreed that the sectors that were generating the maximum number of jobs this year were Banking, Financial Services and Insurance (BFSI), Information Technology and Information Technology Enabled Services (IT-ITeS), Fast Moving Consumer Goods (FMCG), Healthcare and Infrastructure. Apart from the above biggies, another emerging sector is e-retailers, which is creating job opportunities.
A slight hike of 2 per cent is expected in hiring in 2014, according to Mancer Consulting CEO Satya D. Sinha. “Engineering , travel and hospitality and healthcare industry can see a rise in hiring this year. Hiring is expected to be brisk in several services sector as well including IT and ITeS with both Indian and global MNCs, slowly unfreezing their recruitments.”
Vijay Sivaram, Director, Recruitment Services, IKYA Human Capital Solutions, said that compared to last year the numbers have significantly changed. “2014 is going to be the year when hiring will be back on track and we are gearing up to make sure that we meet the demand.”
CareerBuilder India Managing Director Premlesh Machama said besides IT and ITeS, banking, finance and insurance, pharma, healthcare and retail sectors, the hospitality industry will also generate large number of jobs due to two major factors: India has become a cheaper destination thanks to the rupee’s depreciation and the government has launched a visa-on-arrival scheme for tourists from 180 countries. “In my opinion, the July quarter will show the direction we are heading into. Companies have their plans and strategy ready, but the execution is on hold,” he added.
Antal International, a leading global search and selection specialist, in its latest survey AGS 15 of over 10,500 organizations in nearly 40 countries has found that employment markets at managerial and professional level around the world are stabilizing. Mayank Chandra, Managing Partner, Antal International, said AGS 15 has indicated that the job outlook for 2014 remains positive for sectors like luxury goods, FMCG and retail banks.
“The pharmaceutical sector is slow due to regulatory excesses as well as redefined Drug Price Control Order (DPCO) guidelines, but is recovering this year. The Indians’ appetite to move up the value chain is immense. Add to that the presence of many new entrants in the luxury sector, this sector is looking up. FMCG is growing due to increased demand from rural households, which have more disposable income. Additionally, new banks are coming so hiring in this sector is also improving. On the other hand, telecom has seen the worst and will bounce back especially keeping in mind factors like imminent launch of 4G spectrum and the demand for 2G spectrum, especially in cities like Mumbai and Delhi,” Chandra said.
Navnit Singh, Chairman and Regional MD India, Korn/Ferry International said many consulting and technology companies are hiring to build their talent pool. Telecom sector, which has been stagnant until now, will show more growth in the digital media space as 4G spectrum will soon be rolled out. “I think overall it is an optimistic scenario.”
Rajaram Agrawal, Managing Director, Talent Ahead India Pvt Ltd., says, “Our survey suggests that 2014 would be much better than the last few years. From the large base sectors banking, IT-ITeS & FMCG are likely to get maximum job growth. However, stock brokerages are not doing well and are in contraction mode. The growth sectors are likely to witness maximum attrition and hence companies will offer higher increment to retain the talent.” TalentAhead specialize in identifying, assessing and recruiting suitable candidates for their clients and belongs to the Astute Group, which is the Indian member of RSM International, the sixth largest international organization of accountants and business advisors.
But, Vidur Gupta, Director, Spectrum Talent Management, said issuance of new banking licences will lead to massive hiring in the banking sector, while healthcare, agri-business, infrastructure, retail and education sectors are also likely to witness robust hiring trends. Spectrum Talent Management is a headhunting and manpower recruitment firm.
A lot of hiring is also expected in the infrastructure sector as aggressive efforts are being made to improve infrastructure throughout the country. Hiring will definitely gear up in several services sector as well, including IT and ITeS with both Indian and global MNCs, slowly unfreezing their recruitments. The fastest growing segments of employment by function in 2014 will be sales, customer service and logistics. The hiring in heavy industries will be for consumer goods, healthcare, education, consumer durables, retail, and agriculture inputs.
2014 is more likely to see cyclical employment rather than a structural one. Expecting formal hiring to be at least 25 per cent higher than in 2013, Gupta said the new government has to tackle structural barriers for creating more jobs. Otherwise, “2015 might return to the employment famine of 2013”, he said.
In terms of key challenges that companies will face as they scale up, Singh said that organizations suffer the most not in terms of money or manpower or technology but due to the flip-flop of the government’s policy. “You can see this most in the infrastructure side be in the construction of highways, or acquiring land.”
Elections to affect hiring plans
On the other hand, Rajiv Burman, Managing Partner, Lighthouse Partners, felt that the job outlook for 2014 will depend on the outcome of the upcoming general elections. “The government that comes into power will be under pressure to perform on the economic front in order to meet the aspirations of the very large populations of young voters. Hence, we can expect the government to give a boost to the economy and thereby the job market.”
Companies are in a wait-and-watch mode because of the elections, says Chandra. “Right now, recruitment in terms of expansion is relatively slower but of course attrition is happening so replacement recruitment is happening in companies.”
Gupta said fresh job opportunities are expected to be created in various sectors. “A lot actually depends on the economic policies set by the government coming in,” he added. IKYA’s Sivaram agrees, “The upcoming elections will definitely have an impact on the industry. Any company in the services industry or impacted by the public policies of the government such as greenfield projects will definitely be impacted.”
“I very doubt if the Lok Sabha elections are going to affect the hiring plans of companies. If the companies are dependent on the government policy, then they will be affected,” Singh said.
Salary hikes on the anvil?
However, experts are divided over how much hike the employees will get this year – single digit or double digit. While Burman said most of the hikes are going to be in single digits this year and mostly in pharma, BFSI and infrastructure sectors while Gupta said there are indications that there will be a positive hike in salaries mainly in IT, pharma and analytics.
Companies are expected to offer double-digit salary hikes to deal with the challenge of attracting and retaining critical talent. People with specialized roles in these sectors will get an added advantage. Most of the companies will restructure their compensation package as well, he added. “High performers can expect a hike of 12-15 per cent or even more depending upon their skill set. This figure may not exceed beyond 10 per cent in the case of an average performance,” Gupta said.
However, Mancer’s Sinha said middle to senior level professionals are likely to get a salary rise between 10 per cent and 20 per cent, while bonuses may increase up to 20 per cent. Senior level management can expect an average salary hike of 15-17 per cent this year. This number will be 10-12 per cent for middle level management.
According to Mancer, the expected salary hikes for other sectors are:
Manufacturing and engineering : 11-12 per cent; Real Estate: 14-16 per cent; Pharma: 14- 16 per cent; IT-ITeS: 10-12 per cent; Media: 10-11 per cent.
Significantly, Kamal Karanth, MD, Kelly Services India, said this year will see more employment being generated by public sector undertakings. “In 2014, significant employment opportunities will be generated in sectors like manufacturing and retail. With the disinvestment in certain PSUs, we can see more employment being created in these sectors. PSUs have been recruiting and this trend will increase with disinvestment. In 2014 the sectors that are likely to drive the job market include IT, healthcare, education, and development.”
Regarding the downward trend in the auto sector, Karanth said the excise cuts mentioned by the FM in the Interim Budget will bring some relief to the sector. But if the trend continues, then “we can expect a lot of temporary workers to get affected in the space, workers who are largely employed in maintenance jobs. We also see a trend towards automobile companies hiring more of temporary and contract workers”.
Emerging recruitment trends
Burman said there will be more opportunities for women as gender diversity becomes a key point of focus for most companies. “Most of the jobs will be at the entry, junior and mid-levels. Jobs at senior levels will continue to be under pressure due high cost rationalization focus.” With the demographic profile of the workers changing, more and more companies will have to use social media to effectively attract large numbers of Gen Y.
Recruitment experts also see the shortage of talent and retention of critical talent becoming a core issue this year. While pointing out that key skills such as energy and life sciences, analytics, IT, and other technical skills will be in short supply in 2014, Gupta said companies will be left with no other option but to restructure their recruitment plans so that they can find the skills they need. This may lead companies to expand their sourcing and recruiting to a global level. For example, in order to find the right talent they might even relocate work.
“The shift in hiring this year would be an increase in the number of lateral hires. IT and ITeS will continue to grow but research and development will be carefully planned. Companies would be cautious on cost-intensive roles and upbeat about revenue-intensive roles. We are also seeing companies adding capacity in frontier technologies such as SMAC,” Sivaram said. The main challenges that companies will face while scaling up to meet growth expectations are hiring quality talent and the turnaround time taken. The fulfillment of the position will be longer as most organizations are holding back on the notice period, he added.