As part of Global Economic Symposium’s and Towers Watson’s broader initiative of developing better data and research to understand economic performance and its key drivers, a study was conducted to get better understanding of business sentiments in India and its drivers of growth. The study covers the views of over 300 industry experts across Indian and multinational companies spanning 23 sectors; it solicits their views on rising workforce costs, changing supply of a skilled workforce, attraction and retention, and wages and inequality.
The study reflects a positive business sentiment; corporates in India are upbeat about growth prospects in the economy and are of the view that the critical drivers which will steer industrial performance forward would be a conducive economic, financial, tax and regulatory eco-system, followed by skills and talent of the workforce.
While economic sentiment is buoyant, availability and access to quality talent continues to be a serious impediment facing organisations. Paucity of talent is likely to continue to pose a problem over the next 5 years. About 64 per cent of the respondents are of the view that attracting and retaining key talent is likely to be a major obstacle to the growth of industry across sectors. India is betting big on manufacturing through the promising ‘Make in India’ initiative. However, the problem of attracting and retaining quality talent will remain a challenge for the manufacturing sector as well.
Recognising the importance of talent as a critical asset for steering the next wave of growth, companies have indicated that there are four important factors related to skills and talent which can potentially hinder growth over the next five years; these include workforce costs, lack of skilled workforce, slow labour reforms and stagnating workforce productivity.
With regard to the workforce scenario in the next five years, a majority of the respondents anticipate widening of the wage gap between the highest and lowest earners across industries. Around 60 per cent of the respondents from small organisations and 54 per cent from large organisations believe this wage inequality will increase over the next five years. What is interesting to note is that while the wage gap is widening, the majority expects wages to rise above the inflation level in next 5 years especially for senior positions or high earners; however, not so much would be disbursed at mid-level or junior positions. On a positive note, expectations rise with respect to creation of jobs mostly at junior levels; the most promising sectors being Capital goods and Transportation and Financial services.
“This insight-based research highlights crucial workforce trends and its role in defining the future of work and driving business growth. While attraction and retention of quality talent continues to remain a challenge, the future envisages a tougher business ecosystem in light of rising wage costs, potentially an inadequate supply of skilled talent and workforce productivity. Initiatives like ‘Make in India’, ‘Digital India’ and other public-private partnerships around ‘skilling’ will aid in improving talent supply and enhancing productivity. However, the onus of nurturing and investing in talent will remain a critical organisational imperative,” said Mr. Vivek Nath, Managing Director, Towers Watson India.