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Hiring Holds Steady

Retail and FMCG join the hiring rush, as ITES slips, reveals a BT-TeamLease survey.

Saumya Bhattacharya | Print Edition: October 31, 2010

If business sentiment improves sharply, so will the hiring plans of companies. At least that is what human resource bosses will tell you. However, in the latest BT-TeamLease Employment Outlook Survey for the October-December 2010 quarter, while the business sentiment has increased substantially (by 10 percentage points to 71), hiring intentions have seen a cautious uptick (by four percentage points to 68). In fact, over the last two quarters, the Employment Outlook Index has been trailing the Business Outlook Index for the first time in nine quarters.

This implies that employers are being cautious about hiring while continuing to emphasise productivity and efficiency well after the slowdown. As a result, hiring plans have risen but only slowly and steadily. Says Sangeeta Lala, Vice President of Sourcing at TeamLease Services: "We have witnessed a shift in the hiring intent. Earlier, both business and hiring sentiment were moving hand in hand. This quarter shows the business sentiment improving, but the hiring intent lagging behind marginally."

This trend reflects the maturity of Indian business. Indian companies are now very conscious of keeping the middle line trim and feasible while eyeing business growth. "After the economic slowdown last year, companies have started putting in place adequate performance measures around expansion and investments made. As a result, we may see some positive impact on profitability of organisations. However, this may not have any influence over the employment market as it did in the past," explains Ranjan Mishra, HR Head at SBI Life Insurance.

Spread across eight cities - Mumbai, Delhi, Bangalore, Kolkat a , Chennai, Pune, Hyderabad and Ahmedabad - the survey drew responses from 624 companies (see Methodology) across eight sectors - Information Technology (IT), IT-enabled Services (ITES), Financial Services, Retail and FMCG, Infrastructure, Manu facturing and Engineering, Telecom, Health Care and Pharma. The ebullient yet stable hiring sentiment and therefore deceleration of the Net Employment Outlook Index has clear patterns across sectors as well as cities.

Retail and FMCG is the only sector with a significant improvement in the Net Employment Outlook Index (by eight percentage points) during the October-December 2010 quarter even as there is a significant drop in the index (by six percentage points) for ITES.

Explains Sunil Goel, Director of GlobalHunt, an executive search firm: "The Retail and FMCG segment depends more than 90 per cent on the local market. India is a growing economy and there is huge consumption of FMCG and durable products. An upward hiring sentiment in Retail and FMCG is led by buoyancy in the economy."

The same holds true for the ITES sector, which has an overwhelming dependence on the global market (more than 80 per cent), which has not improved as much as the domestic economy. Also, a drop in hiring in the ITES sector is driven by protectionist measures in the West. Financial services, too, is gaining strength with an increase of five percentage points to 65 index points. SBI Life Insurance is hiring in volumes. Last quarter, the company opened 118 branches, recruited 830 employees and added over 5,000 insurance advisors. Hiring during the October-December 2010 quarter will be mainly of sales professionals for SBI Life branches opened this financial year. "We plan to add around 600 more people into our sales force during this quarter," says Mishra, who is also looking for domain specialists to occupy middle management slots.

FMCG company Samsung India is also in the hiring mode. "This year the hiring sentiments were strong and we have been hiring all through the year in sales and manufacturing functions. The sentiment remains healthy," says Sanjay Bali, Vice President of Corporate HR. The company plans to add around 200 software engineers at its research and development centres in Noida and Bangalore. "In the sales and marketing areas, we are adding positions in keeping with our plans for next year," says Bali.

Even though the hiring intent does not vary appreciably across locations or functions, some significant variations have emerged this quarter in terms of hierarchical positions. Entry level hiring is set to be more marked this quarter (with an increase of nine percentage points to 41), while middle level positions are set to take a beating with a drop of five percentage points to 41. Entry level numbers are always high as that is the pool through which most companies build their bench strength whereas middle level hiring is always based on need and is very specific, so the variation in numbers will always be visible, points out Goel. At Samsung, for example, fresh graduates are in demand in R&D and manufacturing areas. "However, in sales and marketing functions, where we need to establish market leadership, we hire middle level managers," says Bali.

Among cities, Mumbai, with an increase of seven percentage points, recorded the most significant improvement in the index value. The sentiment across all the other major cities remains stable at best with incremental increases of not more than five percentage points. While the metros are in a stabilisation mode, Tier-II and Tier-III cities and towns are snapping at their heels with a steady increase in the hiring intent. However, the hiring intent trends are incremental and it could take a while for the lesser privileged parts of India to make a difference.

Talent market watchers say that organisations look for Tier-II towns to host back office operations because of the very low attrition rate, the attractive cost per individual and the fact that they can train resources according to their own need. So going forward, the potential of more Tier-II cities will be used and there will be more investment in these cities. Hiring has increased in Tier-II cities such as Baroda, Surat, Indore, Bhopal, Ranchi, Patna, Mysore, Kochi, Vizag, Chandigarh and Dehradun, according to GlobalHunt's Goel.

 Methodology

The BT-TeamLease Employment Outlook Survey, which follows a rigorous, statistically validated process, was conducted among 624 companies. These were selected from the Kompass Directory, which lists 70 per cent of all registered companies in the organised sector, from NASSCOM for information technology, or IT, companies, from companies registered with www.bpoindia.org for IT enabled services companies, and the National Stock Exchange (NSE). Care was taken to ensure a good mix of large, medium and small companies as also an equitable representation across industries to remove any bias or variation that might be attributable to a particular industry. The target respondents at these companies were the HR heads or decision makers in the hiring process. Given the concentration of companies in Mumbai, Delhi, Kolkata, Chennai, Bangalore, Pune, Hyderabad and Ahmedabad, the study was restricted only to companies with a presence in these cities. A random sampling was drawn from each city with due weightage to size. Two indices, the Employment Outlook Index and the Business Outlook Index, were computed to elaborate and analyse the trends that emerged from the data.

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