Challenges in Talent acquisition industry in Indian market

New economic sectors and businesses in India are throwing up an unprecedented demand for workers with skills and capabilities not hitherto required. Labor market in India is characterized by both oversupply of labor and failure to meet the demand for labor. This situation is a result of a booming higher education sector, which has failed to maintain a quality expected in today’s global market. This has thrown up several unique challenges for talent acquisition processes in India.

The first challenge is to find the right talent. In just 5 years, the number of engineers and engineering colleges nearly doubled[1]. A similar increase was seen in the management graduate numbers[2]. Very few of them are however employable[3]. The recruiters need extensive procedures to search for the best workers suited for their industry. The task is made tough by the spread of engineering colleges in districts with limited communication and transport infrastructure. As the pool of quality labor is limited, the very ability to maintain a competitive edge in global arena is under threat for some sectors[4].

The second challenge for the talent acquisition industry is training of workers. Most of these workers are trained keeping in mind only one industry-IT& ITES. Recruiters have to spend significant amounts in re-training, and making the graduates employable. Infosys spends close to 6000 US$ over a period of 6 months for training each new hire. It has kept the starting salary levels for new recruits at a little over INR 3 lakhs since 2007. This is because of the high investment it makes on graduates to equip them with technical, personal and organizational skills required for the company.

The third challenge is engaging the acquired talent. Worker attrition rates are high in different sectors[5]. These rates are highest in IT&ITES sectors and are more pronounced at junior management levels. Workers cite better compensation and better career prospects as primary causes for leaving organizations[6]. The limited availability of the skilled workforce pushes up the competition to get them. The entry of foreign companies, with deep pockets, looking for world-class talent has increased the opportunities at junior management levels. This provides people with ample opportunities to shift from one organization to other. Recruiters are forced to create a lucrative salary and incentive structure in order to control the attrition rates.

The fourth challenge is to maintain job satisfaction for the employees. The recruiters have to ensure that employees are able to find work-life balance; they are deployed on projects making best use of their skills and their ambitions are accommodated well within the organization. As the economy has become more sophisticated, there is an ever-greater demand for diverse skills sets, but the supply does not match this demand diversity. This problem is acute in sectors like pharma, biotechnology, health, education and banking & finance[7].  The skill-mismatch causes job dissatisfaction and hurts the employee productivity and efficiency. Unsatisfied employees often leave in search of lucrative opportunities.

The fifth challenge is building a leadership pipeline for the organizations. Organizations need employees who can be groomed into future potential leaders. The leaders have to absorb the organizational culture, corporate values and work ethic. They should be able to innovate, maintain the competitive edge and keep the organizations dynamic. They should be good at maintaining stability within the organization but also adapt it to the demands of the marketplace. High attrition rates hit the process of leadership development in an environment where large numbers of organizations are looking to recruit from the same talent pool. Employees leave organizations for slightest reasons. MNCs also pose threat in this process, as many of them are looking at Indian talent pool for their global leadership positions, depriving Indian recruiters of future leaders.

The response to these challenges has not been systemic. Companies have developed their own coping strategies. IT sector is especially known for its huge training academies. Government has recognized the skill shortage and has started a national skill development program, but this is targeted at making unskilled workers semi-skilled or skilled.

The skill mismatch problem will continue to pose challenges for recruiters in India and its severity will depend upon the course and speed of the economic development.

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[1] http://articles.economictimes.indiatimes.com/2013-06-18/news/40049243_1_engineers-iit-bombay-batch-size

[2]http://www.business-standard.com/article/management/only-10-graduates-employable-despite-robust-mba-demand-assocham-113013000223_1.html

[3] Ibid.

[4] http://www.techrepublic.com/blog/cio-insights/indian-outsourcing-why-skills-shortages-persist-despite-the-graduate-glut/

[5] https://www.deloitte.com/assets/Dcom-India/Local%20Assets/Documents/Deloitte_Compensation_Trends_2013.pdf

[6] Ibid.

[7] http://dget.nic.in/WorldBank/FICCIPr/PPT4SkillshortageFICCI.ppt