The Indian economy, after several years of stagnancy, is showing signs of buoyancy. By all indications, the country seems poised to return to a high growth path. One area where the overall positive sentiment is likely to be felt most overtly is the job market. Employment seekers will have it better than in the last few years, with openings up for grabs in several key sectors.
India Ratings and Research, a Fitch group company, expects fiscal 2016 gross domestic product to improve to 7.7 per cent, driven by a further pickup in private consumption demand. Total consumption demand is expected to expand 8.1 per cent in FY16 (FY15: 7.1 per cent and FY14: 6.2 per cent).
A significant moderation in inflation and inflationary expectations are likely to boost consumer sentiment, if only gradually. The share of private consumption demand in GDP is around 60 per cent. Even investment and government expenditure would provide adequate support to consumption-led GDP growth. Industrial growth is estimated to improve to 6.5 per cent this fiscal from 5.9 per cent.
Exports are likely to continue to grow through this entire fiscal due to the economic recovery happening in the US and the euro zone. Hence, industries such as IT/ITeS and pharma are looking at better prospects this fiscal.
Rural demand, too, is likely to remain strong in view of the robust growth last year. Stable agricultural growth and industrial recovery are expected to result in services growth to 9.9 per cent. The manufacturing industry stands to gain because of this recovery and hence is expected to add more jobs. Healthcare and banking are the other two upbeat sectors where the demand has only been growing through the last several years.
According to the Institute of Human Development, the overall population to labour force ratio (in the age group of 15 years and above) is around 56 per cent. About 92 per cent of the force is employed in the unorganised sector. Only the remaining 8 per cent comprises the formal job market in India. The upward or downward trends in this meagre portion of the total workforce impact the economy at large.
“Consumer demand and recovering economic activity will help employers hire in certain sectors like manufacturing. IT and pharma will meticulously acquire valuable skills, thus pushing hiring in 2015. One of the noticeable trends that stood out in 2014 was the explosion of e-commerce which saw the maximum traction with regard to talent acquisition. This sector will potentially create 30,000 to 50,000 jobs in 2015. Significant employment opportunities will also be generated in hospitality and travel sectors followed by banking, financial services and insurance sectors,” said Kamal Karanth, managing directory at Kelly Services India & Malaysia.
He, however, cautioned that pharma and life sciences would face a dearth of skilled talent due to which there would be a visible gap in supply of workforce. “The gap is much larger and visible for mid-level lateral hiring in the areas of pharma R&D, regulatory affairs, quality, intellectual property and other specialised areas within the domain,” Karanth added.
FC presents its annual overview of the five sectors that are the most optimistic in terms of hiring during the financial year. This list is in no particular order. The information was culled from recruitment agencies, including Randstad, Naukri, PeopleStrong, Kelly and Monster. Each organisation has its own methodology, metrics and classification of industries. We have grouped and ungrouped the sectors and numbers wherever necessary to come to a neutral and meaningful conclusion.
It is no surprise that this sector is among the largest recruitment process outsourcing companies in India in the country. The Indian IT-BPM sector directly employs nearly 35 lakh professionals with an annual addition of over 2.3 lakh employees last year. However, changing market dynamics are now forcing IT players to move from the traditional linear growth model (more employees translate into more revenues) to the outcome-based business model. The industry may not hire in large numbers like it used to in previous years, but it will continue to be among the top hirers.
IT representative body Nasscom has projected export revenue to grow at 12-14 per cent for FY2016. The domestic market revenue, fuelled by e-commerce, is expected to be up by 15-17 per cent. Last financial year, the industry met the lower end of the guidance at 13 per cent growth to earn $146 billion. Out of the total revenue, the exports segment was $98.5 billion.
The industry is going through a fundamental and structural transition. Though traditional outsourcing services will continue to be the bread and butter of IT players, growth would come only from newer services including digital.
R Chandrasekaran, executive vice chairman of Cognizant India, said: “One of the key opportunities is emanating from the shift towards digital, which is a priority for our clients, because it is a priority for their end customers. Having worked with clients on hundreds of digital projects, it is clear to us that winning in the new digital era requires a new engagement model. Clients need partners who can bring new capabilities in design, data science and digital technology in addition to a deep understanding of their business, operating model and technology landscape. Clients recognise that they often do not have in-house capabilities in all these areas and are looking to deepen relationships with partners who have invested in the digital landscape.”
What is interesting and important to note is that the shift to a digital enterprise is driving demand for our traditional services as well. No digital transformation is complete without integration with an enterprise’s legacy systems and business processes. Existing IT infrastructure, systems and applications, as well as business processes often need to be retooled to accommodate the explosion of users, data, devices, and sensors that often accompany digital deployments.
For last year, the engineering R&D and product development segment was the fastest growing at 13.2 per cent, driven by higher value-added solutions from existing players and expansion of the GIC (global in-house players) landscape. Digital solutions around social, mobile, analytics and cloud (SMAC) — upgrading legacy systems to be SMAC enabled, greater demand for ERP (enterprise resource planning), CRM (customer relationship management), mobility and user experience technologies is driving growth in IT services. Infrastructure outsourcing and software testing segment also outpaced the industry growth rate last year. The BPM (business process management) sector is being driven by greater automation, expanding omni-channel presence and application of analytics across the entire value chain.
The year also witnessed hyper-growth in the technology startup and product landscape. India already ranks as the fourth largest startup hub in the world with over 3,100 new companies in the country.
Exports to the US — the largest market — grew above the industry average, aided by an economic revival and higher technology adoption. Demand from Europe remained strong during the first half of the year, but softened during the second half due to currency movements and economic challenges. Manufacturing, utilities and retail growth remained strong as clients increased discretionary spend on customer experience, digital, analytics, ERP updates and improving overall efficiency.
According to the Monster Employment Index, the production and manufacturing sector saw 62 per cent growth in hiring (estimated through increase in online job opportunities) during April 2015 compared to the same period last year. The overall job opportunity index grew by about 26 per cent. The automobile sector, which accounts for nearly 22 per cent of India’s manufacturing gross domestic products is said to be the most upbeat.
“The 62 per cent increase in production and manufacturing opportunities is encouraging and is quite a symbolic change with the government’s efforts towards reenergising the India growth story. With the impetus on Make in India, the ultimate goal is to boost employment and our index has been showing perceptible signs of positive momentum reinforcing the government’s agenda,” said Sanjay Modi, managing director of Monster.com (India/West Asia/South East Asia/Hong Kong).
Production and manufacturing saw dramatic growth in opportunities from the year ago last month despite a marginal one per cent growth month-on-month. Online hiring activity has exhibited significant growth in the last 12 months, he added. Online recruitment activity in automotive/ ancillaries/tyres was up 3 per cent and exceeded the year-ago level last month following a 7 per cent drop in March 2015. The pace of growth in the sector slowed in early 2013 and has been unsteady since. However, there are signs of revival in the past few months. The sector has recorded positive three-month growth rates consistently since December 2014.
Hiring trends in the sector, according to India Skills Report 2015 prepared by Wheebox, PeopleStrong HR services and LinkedIn in association with CII, expects an increase of 58 per cent in hiring in this sector with an average of 234 candidates recruited every month.
India is the seventh largest car manufacturer in the world with an average annual production of 17.5 million vehicles and targets to sell 60 million-plus vehicles annually by 2020. The auto sector is one of the biggest job creators and the government of India’s Make in India initiative will further propel the growth of automobile and ancillary sectors in the country, adds the report.
The government’s automotive mission plan 2006-16 envisages turning India into the world’s destination of choice for design and manufacture of automobiles and auto components with output reaching a level of $145 billion, accounting for more than 10 per cent of the GDP and providing additional employment to 25 million people by 2016.
Fresh graduates from existing colleges and new institutes would be most in demand as employers across the sector prefer a younger workforce with almost 62 per cent demand for candidates in the age group of 24 years and less, followed by 22 per cent for those between 25 and 30. The gender diversity is starkly visible in the automobile and auto component sector with 81 per cent males and 18 per cent females.
The Naukri Job Speak Index for the month of April 2015 stood at 1,736, recording a 9 per cent increase in hiring activity over April 2014. The banking and financial services institutions led the pack with the maximum year-on-year growth of 75 per cent. However, hiring sentiments in the insurance sector was down 23 per cent.
Information technology, banking and financial services. It looks like good times are ahead for jobseekers as there is a huge war for high quality talent in some of these sectors.”
The overall outlook for the sector looks promising for the rest of the year. However, despite treasury gains on the back of falling interest rates, the banking industry is grappling with the twin challenges of high non-performing assets (NPAs) and constrained availability of growth capital. Distinct earnings pressures are projected for the PSU banks, especially the smaller and mid-size ones and also those which have a disproportionately large infrastructure book.
However, private sector banks, especially the ones with strong retail lending book and well managed/diversified and limited infrastructure exposure, are expected to report superior earnings growth, said Kishore Gandhi, managing director at India Ratings.
He said: “We believe that the down-cycle for many large NBFCs may also have bottomed out. The sector will be driven predominantly by continued growth in volumes, relatively improved economics of the borrowers of commercial vehicle financing companies due to improved freight rates and lower fuel costs, improving credit costs and the recent proposal in the Union budget to treat NBFCs registered with RBI and having an asset size of Rs 500 crore and above as financial institutions under the SARFAESI Act, 2002, which will bolster the recovery efforts of these NBFCs and favorably impact the asset quality and credit costs going forward.”
The healthcare industry is one where growth and need for trained manpower remains a constant. In the number of nursing staff alone, India is said to face a 40-50 per cent shortage due to a misalignment in demand and supply. The Indian healthcare industry is growing at a rate of 15 per cent CAGR and there is a growth dearth of trained manpower. On the other hand, the pharmaceutical sector is also growing at a comparable pace and is projected to create close to 45,000 jobs in 2015.
As per a PwC study, Indian pharma industry is likely to be in the top 10 global markets in value terms by 2020. The overall credit for this development goes to growth factors such as new market creations, growth in the SME sector, enhanced medical infrastructure, pace of innovation in business models and rising consumer incomes.
However, with these growing trends the industry is facing many challenges such as need for better talent, rising customer expectations and restricted discovery and developing process.
According to global consultancy McKinsey, the pharma industry in India has immense opportunities and has a projected market growth of $24 billion by 2015 and $55 billion by 2020. Metro and tier-I markets will make significant contributions to growth driven by rapid urbanisation and greater economic development. Rural markets will grow the fastest, driven by the increase in penetration.
Though jobs created may be lower than the other sectors, the pharma industry will see the highest salary increases this year, says a survey by Deloitte. Pharmaceuticals, life sciences and healthcare industry continue to lead the pack with companies projecting average increments of 12.1 per cent for the current financial year, whereas infrastructure and real estate is a close second with 12 per cent. Retail and logistics industries continue to lag the other industries with conservative projections of 9.4 per cent and 9.8 per cent respectively.
Vishalli Dongrie, senior director at Deloitte in India, said: “The increase of 40 basis points (bps) in the projection over last year’s actual figures is guided by a conservatively positive market sentiment. While the attrition rate for financial year 2014–15 is higher than the preceding financial year by 30 bps, the hiring outlook for the current year looks promising.”
According to Randstad India, FMCG and retail is the second most preferred sector by employees after IT. India is among the top five retail markets in the world in sheer economic value and accounts for close to 15 per cent of the country’s GDP. It is the second largest employer after the government.
Said Preeti Reddy, senior vice president at IMRB One, IMRB International: “Consumers in urban India, across socioeconomic groups, are striving to move beyond necessities to affordable indulgence. They are experimenting, adopting new products, aspiring for more for themselves and their children. Yet sustained inflation is forcing them to tighten their belts. They are battling to maintain lifestyles and are adopting strategies to strike the balance between rising costs and rising aspirations —or example, they have reduced eating out, but are bringing the experience home by increased consumption of ready-to-eat foods. Rural India, too, has similar aspirations.”
The biggest clincher for the sector’s growth, though, is the exponential increase in the e-commerce business. The sector has been growing with the backing of private equity funding and the prospects look positive in the coming years given the increasing demand for the services.
Said Manish Sharma, managing partner at India Opportunity Advisors: “E-commerce has been the one bright spot of the Indian economy in the otherwise bleak past five years of business. The sector has been witnessing a growth of almost 100 per cent year on year. The sector has the potential to spur manufacturing for make in India, create 7 lakh jobs and also attract investment of $25 billion if the government opens up inventory-led B2C e-commerce to foreign direct investments.”
Apart from these five sectors, the Union budget also laid out the foundation for creating more jobs in the country. The government has announced schemes that give incentives to employers and sops to startup entrepreneurs. Moreover, it has brought in the long awaited changes to the salary structure of low-income employees, which will bring more people into the formal sector through permanent employment. The government has come up with steps to create an ecosystem for fostering startups, which will in turn create jobs. An initial corpus of Rs 1,000 crore has been allocated in NITI Aayog to establish a mechanism called SETU (Self-Employment and Talent Utilisation). A majority of startups in India belong to the technology sector and hence SETU will serve as a techno-financial, incubation and facilitation programme to support all aspects of startup businesses and other self-employment activities, particularly in technology-driven areas.
Pankaj Bansal, co-founder and chief executive officer of PeopleStrong HR Services, said: “With the focus on infrastructure (an increase of Rs 70,000 crore from last year that will ably support Make in India); entrepreneurship; ease of doing business and pin-code level job generation (increased investment in MNEREGA scheme that will support rural job creation), the budget on one hand has the potential to generate 10 million jobs. On the other hand, it will also help in increasing organised workforce as it encourages first generation entrepreneurs through SETU and MUDRA bank).”
Moreover, the budget has also facilitated technology inflow for new entrepreneurs by reducing rate of income tax on royalty and fees for technical services from 25 per cent to 10 per cent. To further generate employment in the SME sector, the government has proposed to extend the benefit of deduction for employment of new regular workmen to all business entities. The eligibility threshold of minimum 100 regular workmen is being reduced to 50.
The most concrete step to increase formal employment in the country has come in the form of relaxation of mandatory salary deduction rules. Low-income earners have now been given the power to save in the way they choose.
Rituparna Chakraborty, president of the Indian Staffing Federation, said: “By giving employees three choices on whether they would like to give their contribution of PF to EPFO or not, whether they would like the employers contribution to go to EPFO or to NPS and whether they would like to make their ESIC contribution to ESIC or to any IRDA regulated insurance, the government has created incentives for our youth to join the formal sector and curb the decade old trend of growing informal workforce.”
This article was published on mydigitalfc
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