At a fast pace- India Inc’s bullish hiring outlook
The opportunities and the threats that arise from the rapid technological adoption by the corporates have been much debated. The positives are often pitted against the job displacing negative effects to assess the overall impact of such technological shifts in everyday work. Although in a country like India such an adoption rate either remains low or mostly localized to specific sectors, its impact has been visible over the last few years. In sectors such as IT, major Indian players had to let go of portions of their staff as a direct result of adopting newer technologies that have now made many portfolios obsolete. In addition to this, many thousands in the sector are faced with the need to reskill or suffer a similar fate. Such factors are now also beginning to impact other tech faring sectors like Banking and E-commerce.
As businesses delve further into the realm of automation, AI, the use of digital platforms and some of the key factors reshaping modern workplaces and skill requirements, one would expect certain ‘risk averting’ behavior by business heads when it comes to hiring. Given how rapidly skill preferences are evolving, a general sluggish approach towards hiring can be expected. But according to recent reports on projected job growth, that doesn’t seem to be the case.
With favorable business conditions like strong market demand and increasing customer base, a recent survey by UBS found that companies are in fact willing to raise their staff levels, this too at a pace which would be faster than last year. According to UBS Evidence Lab's C-suite survey that reached out to 247 C-suite executives including CEOs, CFOs, and directors from strategy and finance departments, the hiring outlook of companies is relatively robust, with around half of the surveyed firms expecting the pace of hiring to be faster compared to last year. The report also expects four million jobs to be created per annum over the next five years, up from two million per annum in the past five years.
This is refreshing news in times when the labor market is still growing year after year, all while there seems to be no concrete proof of job growth within the country. Instead of resorting to the use of different methodologies to showcase job growth, positive hiring intent creates a better state of employment within the economy. Noting a similar trend, the Naukri JobSpeak Index also anticipates an increase in overall hiring number across industries like automobile, heavy machinery, even the BPO industry. The India Skills Report, at the beginning of the year, had marked a ‘positive’ hiring outlook for 2018 noting that hiring would grow up by 10-15 percent. So far this has held true. A Michael Page India report titled India Salary Benchmark 2018 highlighted the role of India’s growing demand and a ‘progressive economy’ would create the need for professionals that fill highly specialized job roles. The report also highlights three key areas where growth and technological adoption are going to reshape much of what defines “skills in demand” and as a result their economic viability, chief in these areas being technology, digital, and analytics, procurement & supply chain, and banking & financial services. The report further highlights that the implementation of domestic job-creating policies like ‘Make in India’ provide a robust framework and support to the Indian economy to be able to manufacture more in India, thus improving hiring numbers. Although the progress on this front has been slow, the policy, in league with other policies like ‘Digital India’ and ‘Startup Standup India’ have led to the improvement of hiring numbers in the organized sector. This along with labor market legislations have helped certain sectors like e-commerce to grow significantly and contribute to job creation.
But how long can India’s labor markets solely survive on robust demand patterns for growth, and by its virtue, an increase in hiring numbers, especially when tech-driven business disruption is yet to impact many parts of the economy? The UBS study pointed out that currently, the expected rise in hiring numbers also comes from many sectors that are yet to be impacted by the overwhelming business applications of modern technologies. Although many have gone through, or are currently going through a state of adoption of digital platforms, many still remain either unaffected or unaware of the implications of labor displacing technologies like Automation and AI. The survey noted that many firms were unaware of artificial intelligence/blockchain, and many others have not invested in these areas. "New automation techniques have yet to impact hiring plans," it noted.
Although skillsets preferences have been evolving, reports suggest that automation will accelerate such shifts at a rate that the Indian economy hasn’t seen over the past 15 years. Research1 by Mckinsey’s finds that the strongest growth in demand will be for technological skills, the smallest category today, which will rise by 55 percent and by 2030. This surge is expected to affect the demand for basic digital skills as well as advanced technical skills such as programming and machine learning. The report also reveals that the demand for social and emotional skills such as leadership and managing others will rise by 24 percent, while basic cognitive skills, which include basic data input and processing will decline by 15 percent, and demand for physical and manual skills which include general equipment operation, will also drop by 14 percent.
Most firms expect an increase in the number of employees (7 percent average increase), and their hiring plans are in line with expectations of changes in demand
In light of such anticipated and unanticipated changes, positive hiring intent comes as a short-lived relief. As benefits of scale begin accruing and industry-specific tech solutions become available, more companies would begin restructuring their business processes. Although this might still lead to businesses to keep their hiring numbers up, in most cases it would be in areas where highly specialized skill-sets are required. It comes as a little surprise that most of the job growth in the last two years has happened through the rise of temporary jobs and often contract based gigs. The International Labour Organization (ILO) recently stated that there has been a significant rise in employment numbers but a large portion of such an increase falls under what they define as “vulnerable employment”. As a result, the benefits of a positive hiring intent across C-suite and sectors projected to have comparatively higher percentage of hiring than last years is good news in light of strong business demands. But sooner or later, many parts of the economy are going to head towards technological transformation and it will be critical to possess the right skills to ensure employability. Many reports have suggested that although the advent of such technologies is still going to create jobs, entrants to the labor market would require possessing up-to-date skills to find the right jobs. That becomes the real point of contention moving forward.