At the recently concluded World Economic Forum (WEF) meet in Davos, HCL Technologies vice-chairman and CEO Vineet Nayar said, It would be a major shift to create jobs in the US and Europe, as there are many global companies shipping jobs outside the US, but we Indian companies would be creating jobs in those markets. Striking a similar note is Sid Pai, partner and managing director at TPI Advisory, who says that while MNCs are busy shifting jobs to India, Indian companies are creating jobs in the US.
Indian IT companies have been hiring at a faster pace in the past few years and the top players have raised their headcount from 5,97,000 to 8,40,000 in the last three years. On the other hand, MNCs have raised their headcount from approximately 8,50,000 to 9,00,000 employees in the same period. It is easier for Indian IT companies to add employees as they have most of their
delivery centres in India and labour is cheaper in emerging economies. Says E Balaji, CEO at HR firm Ma Foi Management Consultants,Indian IT sector employs roughly 2 million employees. There is a 10-12% wage difference between Indian IT companies and MNCs. It is easier of Indian IT companies to hire at bulk when compared to MNCs. On the other hand, MNCs have about 30-40% of their global headcount in India and hire far more PhDs or consultants as compared to plain coders.
It is surprising that though the $60 billion Indian IT sector was haunted by slowdown fears and lower contract values, there was no compromise on adding headcount. TCS, the countrys largest software exporter exceeded its annual hiring targets by crossing the guideline of 50,000 new hires in FY 2012. So was the case with others. Infosys too reached almost 45,000 annual hiring. Though companies like IBM and Accenture have stopped
reporting numbers of their Indian headcount, in the last two years it is Indian IT players who are hiring at a much faster rate, to catch up with these MNC employers who are also pressurised with protectionism issues.
Analysing the hiring trend of MNCs versus Indian IT companies, Pai says, Indian IT firms have a smaller base and are more aggressive in adding employees whereas MNCs had significant growth over the last few years. Thus, they are hiring at a slower rate even in India.
Change of hiring mix
Indian IT companies are now more cautious with hiringwhether it be existing talent in India, or going to the US or Europe for recruiting. While most of the companies follow a mix of fresher and lateral hiring, 2011 also saw rising demand of talent with entrepreneurial background, says Amneet Singh, vice-president at Everest Group. He adds: Employers feel that such entrepreneurs have learned to appreciate profit and the downside of risk; a valuable experience especially at a time when economic growth is winding down. Infosys, Wipro and Tech Mahindra are among the few companies which are keen to hire failed entrepreneurs with IT and BPO background.
Moreover, while employee cost is on a constant rise in India, so is not the case in Europe and the US. Pai says that as Indian IT firms are in a job creation mode, non-Indian players are in a job shifting mode. Earlier MNCs shifted more output to India and thus hired bulk here. They ended up hiring more in India than Indian IT firms. But now they are shifting jobs from the US to India rather than adding headcount in India, he adds.
In addition, Indian IT companies are realising that if they need to increase their revenues per employeeit has to be by either hiring consultants or by shifting their employee base onshoreUS or Europe. They call it the non-linear model where revenues are not dependent on addition of employees.
Recently, HCL Technologies announced that it will create 10,000 jobs in the US and Europe in the next five years. The first step we are making and I hope many other companies follow the trend. That would help making Indian companies appear much more mightier, and also as those willing to solve local problems and socially-responsible enterprises, Nayar remarked recently. HCL feels that partnership with the educational institutes, local governments, communities and customers would help in keeping the costs affordable.
Even Indias third largest software services exporter, Wipro aims at having 50% of its employees overseas from the respective local regions in the next 2-3 years. The ratio across the world is about 38%. A year back, it was 31%. And we will take it up to 50 %, Wipro chairman Azim Premji mentioned during the recent company results.
Thus, Indian IT sector needs to be more careful in hiring the right kind of talent and at the right cost, to compete at a global level.