Article: FDI reforms - The execution difference


FDI reforms - The execution difference

P. Dwarakanath, Director, Group Human Capital, Max India
FDI reforms - The execution difference

to be written


FDI reforms have been brought by the cabinet however; many approvals are required before the reforms can actually be implemented. The impact would be different in each sector post implementation of reforms.

Reforms in FDI is a boon for Indian retail, both for the consumer and the potential employees, because it will bring much needed cash flow for the industry, increased choices for consumers, and more opportunities for potential employees. While we are very good in the retail market in India, we do not have multi-brand retail management system and therefore, we need overseas operational expertise, with respect to people who have worked in countries where multi brand retailing is prevalent. Further, the value chain of India will undergo a quantum change and the Retail organizations need to invest in systematic induction and training processes to ensure effective assimilation of new joiners in the system. Significant efforts are required for robust manpower planning coupled with skill building in order to meet the talent demand. Organizations, depending on their requirements perhaps will need to setup training schools to build talent to address the increasing needs of employees at the front end. We have seen such precedents in the hospitality sector when ITC, Taj & Oberoi set up their own finishing schools.

In aviation sector, we can expect fierce competition due to increased number of players which will result in war for talent due to limited availability of talent as it demands specialized skills in this sector. Consequently, high attrition coupled with salary inflation could prove to be major challenges which the sector needs to confront as it happened to some of the other service sectors earlier.

In the Insurance sector if the measures go through, this may lead to a similar situation like what had happened to the telecom sector earlier. At present there are approximately 24 players, and once the FDI goes through, the insurance industry which is currently very fragmented will undergo consolidation and number of organizations which operate in this sphere may come down to 11-12 operators, and the stronger ones will exist / survive. However, it may not be as drastic as the telecom sector, because there is a significant opportunity / huge potential for growth in the insurance sector. Similarly, once FDI ceiling is lifted, there will be tremendous opportunities for people to grow in the organization and I do not see any issue regarding dearth of skilled / capable manpower in this sector as it is a very matured and these organizations have been operating for more than a decade and the people processes relating to training, induction, capability building etc., are very robust and reliable.

To conclude, there are many advantages both for the industry and for people if the proposed reforms go through. However, one concern area is that the current generation has lower level of tolerance which results in people changing jobs more often, and with increased number of opportunities the probability is higher. To counter loss of talent to competitors, organizations need to have very effective People / Talent management processes in place with good goverence processes. FDI is a welcome change if it gets implemented, and is good for everyone. However there is much that needs to be done to experience positive results. Things are most likely to get better from here but we need to wait and watch, and hope for the best.

Disclaimer: The views expressed are those of the author and do not necessarily represent the views of Max Group.


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Topics: C-Suite, Strategic HR

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