Job loss? Not for Chartered Accountants and Lawyers

With the economy slowing down there is a definite fear amongst professionals of various categories of either loosing their jobs or facing a cut in their salaries. However, there is one category of professionals who continue to be in high demand and that is my tribe of warriors, namely Chartered Accountants. Despite the slowdown the world still has to compile its accounts (which are on increasingly complex IT systems) and get them audited and that is where the CA scores over a number of other professions in a slowdown.

Further, with the regulatory environment becoming stricter and more complex by the day there is a distinct need for more professionals with hands on experience of ERP systems, taxation, auditing and now with IFRS implementation looming on the horizon – persons with knowledge of IFRS.

Similarly, lawyers too are in a good position as with increased regulatory control and, businesses increasingly facing problems due to the tight money market conditions, legal issues are cropping up everyday which are generating more work for the profession. Increased amount of legal work being generated in the developed economies, due to the mortgage crisis, is also a good sign for the LPO (legal process outsourcing) Industry.

Nomura offers up to 130% retention bonus to Lehman employees in India

Despite tough market conditions retaining talent is still a challenge, especially if you are one of the failed Investment Banks.

Ensuring business continuity is the biggest challenge in a situation as the one faced by Nomura after its takeover of Lehman assets. However, with Investment Banking itself going through a tough phase it does take a lot of conviction and foresight to be able to take the calls as the ones taken by Nomura. Hats off to them as despite all the gloom and doom the world is actually not going to come to an end and these assets would pay off big time over the next few years.

Shortage of labourers plagues India's construction industry

The Wall Street Journal carried a timely story on the current shortage being faced by the India Construction and Infrasructure Industries. Till now it was the middle and senior level managerial personnel who were being wooed back and in what was labled as a 'reverse brain drain' but now we can see it happening at the bottom of the pyramid where some skills are in such short supply that the salaries have more than doubled!

Are global layoffs likely to benefit techies in India

As I have pointed out in my earlier post, Offshoring is good for America, and even Jack Welch has stated that Outsourcing Is Forever - Jack & Suzy Welch, thus this story, in the Econimic Times, which has a slightly different take, is worth a look. In the end, I Think,  it will come down to how effectively the Indian side handles the PR wrt this issue.

Global pink slips in the tech industry may end up benefiting India. As big-wigs like Intel, Sony, CA, IBM and Sun Microsystems announce the return of retrenchment, Indian HR honchos foresee a spurt in demand for low-cost, high-skilled destinations like India in the near future.
The chip-maker-in-distress, Intel, on Wednesday announced that it will reduce its global work-force by 10,500 by mid-07. But this is unlikely to have a huge impact on its India operations, which incidentally, is its largest development centre outside the US. The company refused to put any India numbers on the table, but indications are that investment commitments of over a billion dollars will stay, so the local layoffs may not be high. However, indications are that there could be a cap on hiring.

Indeed, with cost-cutting a major priority, Intel may outsource more to India, say market sources. “India could stand to gain from these global layoffs. Due to talent availability at cheaper costs in the Asia Pacific, Central America and East European regions, business processes are being restructured and shifted to these locations," says Pradeep Udhas, KPMG executive director and CEO, KPMG Resource Centre.

For instance, IBM, which announced axing of 13,000 jobs in Europe and the US, followed it up with plans to treble its investments in India over the next three years by pumping in $6bn towards its operations here.

Rakesh Malik, practice leader-global sourcing (India), Hewitt Associates, said: “With global competition fuelling restructuring efforts to attain greater efficiencies at low costs, firms are exploring different geographies outside the US.” A talent crunch in some markets further triggers the search for newer alternatives, he added.

Terming layoffs announced by Intel as a ‘correction’, Nasscom president Kiran Karnik said: “The industry goes through a business cycle. It is a temporary phase where the company is attempting to strike a balance between manpower and demand. As the business moves towards an upcycle, I am sure they will add people.”

Experts, however, point out that India Inc, through industry associations like Nasscom, needs to intensify efforts to manage its PR globally in order to deal effectively with the sensitive issue of job losses in countries such as the US.

AESC Member Search Firms Form Alliance

One has been talking (and writing) about the evolution of new
business models for the past year or so primarily because of my
exposure to similar trends in the CA profession, where due to the
exponential growth seen by clients it is increasingly becoming
untenable for smaller boutique firms to effectively service their
client's needs (sometimes on account of their lack of geographical
reach/size and at times due to paucity of management/domain
bandwidth). In view of the same, the said professional service firms are adopting new and innovative strategies to overcome their size/expertise limitation and one of the models being increasingly adopted is the formation of an "Alliance of Firms" which operates under one brand globally but firm retains its independent identity too.

I had shared my experience in this regard with some TPRs and some of them had shown preliminary interest in the said model. In the meantime I have come across this "press release" and I would solicit the views and interest of all the members on whether they too feel there is potential in creating such an alliance and what could be the key stumbling blocks/ road blocks in actually creating an alliance of this nature. I am sure others would have had some experiences (or would have heard some war stories) in this regard and it would benefit everybody in case they shared these with the other readers.

As Peter F Drucker pointed out:

"Business once grew by one of two ways: grass roots up, or by
acquisition. Today businesses grow through alliances - all kinds of
dangerous alliance, joint ventures, and customer partnering, which by the way, very few people understand."

Although Mr Drucker is no longer with us in this world, his words of wisdom continue to provide deep insight into this continuously
evolving business paradigm.

Looking forward to all inputs.

Why people leave an organisation

Here is a message sent to me by someone which I would like to share. How true!

Every company faces the problem of people leaving the company for better pay or profile.

Early this year, Arun, a senior software designer, got an offer from a prestigious international firm to work in its India operations developing specialized software. He was thrilled by the offer.
He had heard a lot about the CEO. The salary was great. The company had all the right systems in place employee-friendly human resources (HR) policies, a spanking new office, and the very best technology, even a canteen that served superb food.
Twice Arun was sent abroad for training. "My learning curve is the
sharpest it's ever been," he said soon after he joined.

Last week, less than eight months after he joined, Arun walked out of the job. Why did this talented employee leave ?
Arun quit for the same reason that drives many good people away.

The answer lies in one of the largest studies undertaken by the Gallup Organization. The study surveyed over a million employees and 80,000 managers and was published in a book called "First Break All The Rules".

It came up with this surprising finding:
If you're losing good people, look to their immediate boss. Immediate boss is the reason people stay and thrive in an organization. And he's the reason why people leave. When people leave they take knowledge, experience and contacts with them, straight to the competition.

"People leave managers not companies," write the authors Marcus Buckingham and Curt Coffman.

Mostly manager drives people away?

HR experts say that of all the abuses, employees find humiliation the most intolerable. The first time, an employee may not leave, but a thought has been planted. The second time, that thought gets strengthened. The third time, he looks for another job.
When people cannot retort openly in anger, they do so by passive
aggression. By digging their heels in and slowing down. By doing only what they are told to do and no more. By omitting to give the boss crucial information. Dev says: "If you work for a jerk, you basically want to get him into trouble. You don't have your heart and soul in the job."

Different managers can stress out employees in different ways - by being too controlling, too suspicious, too pushy, too critical, but they forget that workers are not fixed assets, they are free agents. When this goes on too long, an employee will quit - often over a trivial issue.

Jack Welch of GE once said.

A company's value lies "between the ears of its employees".

Economy's racing but talent is still hard to come by

It’s been 10 weeks now and Marut Sikka is still on the lookout. The Delhi-based food expert is looking for a chef for his client since June. “They are just not available,” he says. With the changing lifestyle and rising disposable income, the food and restaurant business in India is growing rapidly. The organised restaurant business, pegged at Rs 21,000 crore has been growing at 25-30%in the recent past. Big restaurants in Delhi alone, Mr Sikka estimates, would need up to 35,000 chefs.
But where will they come from? India does not have a single training institute for chefs. Most chefs who are good were trained on the job, and most have been picked up by international outlets. “Indian food and chefs are in demand,” he says. It’s the most serious issue for the industry, adds Mr Sikka.
This isn’t just about chefs. Add masseurs, hair stylists, event managers, interior decorators, florists and many more services professionals to the list. Garment exporters are looking for merchandisers. The auto industry is looking for design engineers. Infrastructure companies are looking for urban and town planners. A rapidly growing economy is creating plenty of jobs — but mostly in the services sector. But there aren’t enough trained professionals to take those jobs. “Employment and educational infrastructure — both haven’t kept pace with the economy,” says B Santhanam, CEO of Saint Gobain and chairman of CII HR committee. The scramble for talent is making headlines when 45m Indians are unemployed and many more underemployed as agricultural labour.
Clearly, an agrarian economy has leapfrogged to turn into a services-led economic engine — today, services sector provides over 60% to India’s GDP while agriculture and industry provides around 19 and 10% respectively. But the employment patterns are just the reverse. Over 56%of India’s workforce today is employed — often underemployed — by the agricultural sector. “It’s no rocket science — going forward industry and services will create jobs in future. To make that work, agrarian workers will have to migrate,” he says. Through training and skill development China has successfully managed to migrate 9m workers from agriculture to industry.
If India does not wake up its a time bomb ticking. The Teamlease Labour report estimates that if things continue the way they are, India will have anywhere between 8.4 crore and 21 crore (see table) unemployed workers in the country, depending on the rate of employment growth. Of course, literacy levels will matter. Given the trend growth in the 1990s, India’s working age population will have 233m uneducated and 157m primary school pass people. Hopefully the Left-backed government will go on a literacy overdrive to tackle that. But this isn’t just about literacy levels.

India's educational infrastructure has to be completely hauled up. Today professional orientation is very low — Of the total college enrolments, 84% in ‘04-05 is in arts and commerce or sciences. Only 16%of students were enrolled in professionals courses. Even in the small base of 16%, there is an issue of employability — barely 20% can be directly hired by the industry. “Training infrastructure set up by corporates will play a critical role,” says Vineet Kaul, director, HR Philips Electronics. Capacity building at colleges will be important. But they will also need to impart softer skills, introduce new courses and attune syllabus closer to the industry needs.
Not just at the high end, India Inc will need many more at the low-end in jobs like plumbing, brick laying, electrician, tailoring. "ITIs today offers training in only 40-45 trades, overlooking many other skills that the industry may need today," says Shailendra Sharma, former advisor, employment and training, Planning Commission. ITIs will have to evolve — already in five-six states, private sector is chipping in streamlining operations and training programs.
But migrating over 200m agrarian workers to other sectors of the economy will hold the key. “Private sector is willing to partner training in most areas but here the government's role will be critical,” says Mr Santhanam. CII is already piloting a project for the Tamil Nadu government where Rs 550 crore is being invested in grassroot training. At a national level, it expects Rs 5,000 crore annually will suffice to train 50 lakh agrarian workers. “It may sound big — but this investment will have a multiplier effect for the nation and the economy,” he said.

Source: The Economic Times

Court passes restraining order on Poaching

The High Court of Delhi has passed a restraining order restraining Wipro Biomed's longtime partner Beckman Coulter from luring away its employees. Beckman Coulter is said to be preparing the ground for an independent foray into the Indian market.

With an acute shortage of talent being faced in sectors like Life Sciences, Aviation, IT and BPO this would establish some kind of a benchmark in the Indian scenario where where there is still no clarity on the validity of non- compete agreements.

In industries like Aviation considerable investments are made in training the Pilots and in case such a non-compete clause is missing then as per Capt Gopinath, Air Deccan Managing Director, "one fine day you see key people not having reported for work, and there you have a grounded aircraft. We spend considerable amount of money on training our crew."

Source: Times of India

Retention becoming a major issue

As the Indian IT Industry gains further momentum and comes closer to achieving its goal of US $50 billion the stakes are becoming high for the small and medium sized companies who are now finding it increasingly difficult to retain trained staff. As is evident from the statistics revealed by Nasscom, the IT industry body in India, the top 10 software companies are growing much faster than the rest and the number of professionals being added to their teams, every quarter, is phenomenal. Where are these people coming from? Whereas some are off course from the IITs, RECs and other training institutes, however, a significant portion are being poached from the smaller companies by promising better projects and a higher salary.

 

Just the other day I was in a meeting with the promoter of one such company, having around 200 employees across the world, who related an experience which corroborates this viewpoint. He had appointed a software engineer who was earlier drawing Rs 4 lacs per annum at a salary of Rs 6lacs. Within 15 days the employee was back saying that he had got an offer from one of the top 10 companies for Rs 8.5 lac per annum and he would be taking up the offer immediately. The Brand as well as the Salary offered by the Top 10 company won the day. How is the smaller company, as well as all the other such companies in the industry, supposed to tackle such situations?

 

Are we headed for a situation where most of the offshore work will consolidate behind the top companies and the smaller ones will either be bought out or close? OR is the Supply side going to change significantly in the near future to take care of this problem ?

Employee Recruiting and Retention Ranks as Top Priority - Accenture Study

Here's an interesting study by Accenture which finds that the Topmost priority of the Top Management today is “Attracting and retaining skilled staff”. People issues have dominated the Top 10 concerns of management. This is good news for Recruiters as with “Talent Acquisition” being centre stage their services would be in greater demand for locating high performing candidates through headhunting and their networks. The other Top 10 priorities too are an interesting read.

The study, which Accenture conducts annually, comprised interviews with 425 senior executives at leading organizations in North America, Europe and Asia to identify and prioritize the issues of greatest concern to senior management, understand how their priorities shift over time and identify key forces behind the issues.

Workforce improvement-issues dominated the top priorities, comprising 4 of the 10 most-selected concerns, including the top 2. For instance, the greatest number of respondents, 35 percent, selected "attracting and retaining skilled staff," followed by 33 percent who selected "changing organizational cultural and employee attitudes." Other workforce issues in the top 10 are "improving workforce performance" (selected by 28 percent to rank 7th) and "developing employees into capable leaders" (selected by 26 percent to rank 10th).

"The most powerful theme emerging this year is a strong and consistent focus on people," said Peter Cheese, global managing partner of Accenture's Human Performance practice. "Even though the business conversations have centered on global competition and the need for execution, business leaders are increasingly aware that nothing happens unless people-talent is engaged in the right way."

Customer-retention issues also occupy top spots on executive agendas. Both "acquiring new customers" (32 percent) and "increasing customer loyalty and retention" (29 percent) were popular responses across all countries surveyed.

Innovation also rose on the executive agenda, ranking relatively higher and making it back into the list of top 10 issues on executives' list. "Developing new processes and products to stay ahead of the competition" is the fourth-highest-ranked executive concern, selected by 29 percent of respondents. Another top 10 issue is "being flexible and adaptable to rapidly changing market conditions," selected by 26 percent.

"Innovation, like expansion, seems to be an issue that rises in importance when the economy improves. That may be natural, but it is also short-sighted," said Cheese. "Innovation should never be out of mind - possibly even more so in tough times."

The only IT issue in the top 10 is "using IT to reduce costs and create value," selected by 27 percent of respondents to rank 8th, a sharp decline from its number 2 ranking in each of the past two years. "Although ranked relatively lower, the use of IT continues to be a major focus, as businesses are becoming more demanding in driving value from IT in the form of improving employees' productivity, engagement and capabilities," said Cheese.


Top 10 current business issues for senior executives

1.Attracting and retaining skilled staff 35%
2.Changing organizational culture and employee attitudes 33%
3.Acquiring new customers 32%
4.Developing new processes and products to stay ahead of the competition 29%
5.Increasing customer loyalty and retention 29%
6.Managing risk 29%
7.Improving workforce performance 28%
8.Increasing shareholder value 27%
8.Using IT to reduce costs and create value 27%
10.Being flexible and adaptable to rapidly changing market
conditions 26%
10.Developing employees into capable leaders 26%

About the study
As part of an annual study to identify senior executives' top concerns, Accenture conducted a survey of 425 senior executives at many of the world's largest organizations across all major industries and the public sector in the United States, United Kingdom, Germany, France, Italy, Spain, Japan and Canada. Respondents included executives at the highest levels of senior management ("C-suite" executives) as well as heads of key functional areas, such as human resources. Fieldwork was conducted from October 2004 through January 2005.

The Hunters and the Hunted

Today’s Corporate Dossier in the Economic Times carries a story on the Recruitment Industry and how the war for talent is helping hunters make a killing. It does, however, lament the lack of talent availability resulting in the Hunters becoming the Hunted. I have been mooting the idea of an organized training program being conducted by our profession for quite sometime now and we have discussed the same in the association (NAESCON) too over the past few months, however, things are moving a bit slowly. I think this article reinforces the crying need for such a structured programme in India and I feel that all members of the fraternity who can contribute to help bring this idea to fruition should come forward and lets create a steady stream of fresh talent for the industry. This is starting to happen in the BPO Industry, so why not in this niche area ? Poaching from each other is definitely not the solution

Oil Price and Shortage of Jobs

Just the other day Business Today carried a story on Skyrocketing Salaries and things could not have been looking better. However, experts tell us that everytime there has been an oil price surge in the past it has been followed by a recession leading to a shortage of jobs. Should the Recruiting Industry be concerned - as the oil price has crossed US$ 60 and as per the Goldman Sachs warning, issued earlier this year, it could cross US $105. Experts have said that a small blip in the production could have a dramatic impact on oil prices as a small demand supply imbalance could heighten the actual effect.

Being an optimist and a believer in the fact that there are still some good and intelligent men and women at the helm of affairs of this world, I hope the situation will not go out of hand and we Recruiters will not be left chasing clients and consequently jobs, as well as the skyrocketing salaries, would not just vanish.

How are the others reading the future ?

Something’s phishy – Wakeup Call for Recruiters !

One of the leading lawyers of India, Diljeet Titus, has analysed, in the Economic Times, the landmark judgment in the case of National Association of Software and Service Companies vs Ajay Sood & Others, delivered in March, ‘05, wherein the Delhi High Court declared `phishing’ on the internet to be an illegal act, entailing an injunction and recovery of damages. The case involved a placement agency involved in head-hunting and recruitment.

Without reproducing the whole article, the operative part that is most relevant to our profession is given hereunder. Sourcing being and integral part of our profession, I would request comments from all as to what they are doing to adhere to such norms and what we could do, as a profession, to incorporate certain self-regulatory norms so that we do not end up like the telemarketing companies – who are now being regulated excessively the worldover.

The Delhi HC stated that even though there is no specific legislation in India to penalise phishing, it held phishing to be an illegal act by defining it under Indian law as “a misrepresentation made in the course of trade leading to confusion as to the source and origin of the e-mail causing immense harm not only to the consumer but even the person whose name, identity or password is misused.” The court held the act of phishing as passing off and tarnishing the plaintiff’s image. The plaintiff in this case was the National Association of Software and Service Companies (Nasscom), India’s premier software association.

The defendants were operating a placement agency involved in head-hunting and recruitment. In order to obtain personal data, which they could use for purposes of head-hunting, the defendants composed and sent e-mails to third parties in the name of Nasscom.

The high court recognised the trademark rights of the plaintiff and passed an ex-parte ad interim injunction restraining the defendants from using the trade name or any other name deceptively similar to Nasscom. The court further restrained the defendants from holding themselves out as being associates or a part of Nasscom According to the terms of compromise, the defendants agreed to pay a sum of Rs1.6 million to the plaintiff as damages for violation of the plaintiff’s trademark rights. The court also ordered the hard disks seized from the defendants’ premises to be handed over to the plaintiff who would be the owner of the hard disks.

This case achieves clear milestones: It brings the act of “phishing” into the ambit of Indian laws even in the absence of specific legislation; It clears the misconception that there is no “damages culture” in India for violation of IP rights; This case reaffirms IP owners’ faith in the Indian judicial system’s ability and willingness to protect intangible property rights and send a strong message to IP owners where they can do business in India without sacrificing their IP rights

Skyrocketing Salaries – Good times ahead !

Yesterday I was speaking to someone and found that he had missed this issue of Business Today which I feel all of us definitely need to go through as it has a number of great nuggets wrt our profession as well as the Industry at large. One thing is for sure, we cannot complain of inflation as it gets adequately taken care of when we get paid our fee on a percentage basis (specially on enhanced remuneration numbers !)

Other than talking in detail about some of the High Growth Sectors such as Aviation, Financial Services, Engineering/Manufacturing, IT-Enabled Services, IT Services, Pharmaceuticals, Real Estate, Retail, Telecom it also goes on to list the skill sets which are in demand and says that the professionals, with those skill sets, are commanding a premium as there are not enough of them there to meet the demand.

Indeed, execs at headhunting companies (some insist they be called HR consultants focussed on recruitment; others are happy with the more prosaic search firms) rattle off a list of executives who have recently moved jobs and the impressive salaries at which they have moved. R.S. Prasad moved from Dr Reddy's to head Chennai-based Orchid Chemicals and Pharmaceutical's formulations business at a salary of Rs 1.5 crore a year; Lloyd Mathias left Pepsi where (page 53) he was Executive Vice President (Marketing), to head the marketing function at Motorola India at a salary significantly higher than the Rs 50-60 lakh-a-year he was earning at the beverages major; Sanjay Viswanathan moved from igate (he was head of Europe) to GECIS as Managing Director, Europe, at a salary of $300,000 (Rs 1.32 crore); and Padma Ravichander signed on as head of Perot Systems India (from Oracle) at a salary of $325,000 (Rs 1.43 crore). "Indian salaries, especially for senior managers, is fast racing towards the $250,000 (Rs 1.1 crore) mark," says Venkatesh Shastry, Associate Director, Stanton Chase, a headhunting firm. "This is comparable to the compensation in the us for middle-to-senior-level positions." The Indian salaryman has arrived.

It's celebration time for salaried professionals with salaries nudging the magical Rs 1-crore-a-year mark. The good news - things can only get better.

Where is Online Recruitment headed ?

eBay Google Look to Lists

Here is an interesting article from Red Herring. Although it talks about eBay too, however, the moot question is - Where is the Online Recruitment business headed ? It would be interesting to see what would be the impact on online Portals such as monster, dice, hotjobs, naukri etc.

As revenue growth slows in other areas, big Internet companies take a lesson in success from sites like Craigslist. Internet companies have woken up to the fact that listings may be theroute to a larger audience and fatter profits.

While eBay has alreadywet its feet, Red Herring has learned from sources close to Google that the search giant plans to get into listings as early as next month.

Online and print classifieds make up a $100-billion global industry,according to estimates from Classifieds Intelligence, an interactiveadvertising consulting and research firm. It's a market thelarger search and e-commerce giants could easily tap.

"All these companies are trying to create new communities ofpeople who didn't advertise before," said Jim Townsend,editorial director at Classifieds Intelligence."You can argue `these are free,' butmost of them have schemes for up-selling to advertisers."

For Google, listings would be a natural progression, as it has single-handedly transformed online advertising into an integral part ofmarketing campaigns for small- and medium-sized businesses.Regardless of what kinds of listings it gets into, it would beanother stream of revenue. Google declined to comment on its plans.

Many newspapers have begun to offer certain categories of onlineadvertisements for free, in an attempt to draw the audience thatfound newspaper classifieds too expensive in the past (see TechSpin:Papers Fight Google).

Many Internet companies, hampered by a deceleration in revenuegrowth, are betting on listings, too. eBay, for one, has zeroed in onlistings as a new source of revenue to combat its slowing growth overthe past year.

eBay made its most aggressive foray last week when it boughtShopping.com for $620 million. But it had stepped into the field in2004 when it dished out $415 million for Rent.com and also took a 25percent stake in locally focused listings site Craiglist.org.

eBay also bought Dutch classifieds web site Marketplaats.nl for $290million and German vehicles listings site Mobile.de for $149 million.

In March, eBay launched Kijiji.com, a group of web sites carryingclassified listings across more than 90 cities outside the UnitedStates. It's a concept similar to Craigslist, but implementedabroad. Kijiji expanded last month, too, through its purchases ofclassifiedweb sites Gumtree.com and Loquo.com.When it announced its acquisition of Shopping.com, the online auctionhouse said it wanted to reach a wider audience. Shopping.com had 22.6million unique visitors in April, according to comScore Media Metrix.That might be a small number when compared to eBay's 63.8 millionin the same time frame, but it's a number that reflects anincrease of 15 percent over the past year, compared with eBay's6 percent.

When it announced its acquisition of Shopping.com, the online auctionhouse said it wanted to reach a wider audience. Shopping.com had 22.6million unique visitors in April, according to comScore Media Metrix.That might be a small number when compared to eBay's 63.8 millionin the same time frame, but it's a number that reflects anincrease of 15 percent over the past year, compared with eBay's6 percent.

Jobless Growth in todays Globalised World

Commenting on “Jobless Growth” The Finance Minister, Mr P Chidambaram, had this to say in his Budget Speech this year.

“In the last Budget, I had rejected the idea of jobless growth. As I unfold the vision of the UPA Government, Hon’ble Members will note that the central theme that runs through the various schemes and programmes is creation of jobs. Assured irrigation facilities to an additional 1 crore hectares of land over a period of five years will generate employment for an additional 1 crore people at the rate 1 person per hectare. The food processing industry is growing at a rate which generates 2.5 lakh jobs every year. The textile sector alone has the potential to create 1.2 crore jobs over the next 5 years. The information technology (IT) industry is expected to offer an additional 70 lakh jobs by 2009. Construction industry is also expected to throw up lakhs of jobs. Sectors with potential for generating employment will receive the highest attention of the Government.” This is what is called “reform with a human face”.

It is all very well to reject the idea of jobless growth, however, the ground realities need to be factored in. As per news reports, Mr Juan Somavia, director-general, International Labour Organisation (ILO), has said that the growing gap between wealth generation and job creation is becoming a serious threat to international security, development and democracy and needs to be addressed urgently. Further, the ILO chief said at the ILO’s 93rd International Labour Conference “This global jobs crisis is the most pressing political issue of our time,”. Illustrating the contrast between a healthy global growth rate of 5 pct and a disappointing expansion in employment of only 1.7 pct in 2004, Mr Somavia said, “World output increased by nearly $4 trillion, yet global unemployment was reduced by only 500,000.” The imbalance between globalisation and growth and job creation was illustrated by the fact that about 1.4 billion people are unemployed or considered working poor, with almost half the world’s labour force living on less than $2 per day.

In todays increasingly globalised world job growth is very much dependent upon external factors within each sector and cannot just be controlled by launching schemes within the national borders.

In the face of such challenges can India’s political and bureaucratic establishment rise up to the occasion and come up with innovative policies for the upliftment of the working class. We have to wait and see.

Recruitment Firms - limited only by their Vision and Resources

Looking at today's robust economic environment and the fact that the real action, on the economic front, over the next few decades is going to be in the Asia Pacific region, I believe that the Recruitment Outsourcing business is headed for good growth and the winners will be the ones who have the vision and the resources to implement the same.

Janaki Krishnan writes in the Business Standard that even as India emerges as a hub for critical talent, not only in software but also other sectors, recruitment and placement agencies are gearing up to meet this challenge. In the recruitment space, managed services is seen as the next big wave.

Managed services essentially refer to recruitment process outsourcing, where companies will be outsourcing their entire process recruitment which will essentially be a mix of on-site recruitment, temp staffing and managed services.

Tarun Bali, managing director of ABC Consultants, among the largest placement agencies in the country, is extremely bullish about the recruitment scene in India.

“With the economic environment so robust, the recruitment industry will grow even faster.” He however cautioned that the only impediments to growth would be in the quality and volume of recruiters.

Job seekers can take heart from the fact that compensation levels will approach client standards.

Clients themselves will go back to working with a few partners which means that recruitment and placement firms will have to increase their delivery capability. “Only these kinds of firms will grow,” Bali said.

At present, delivery is a big issue with clients. Working with multiple partners - as many as 30 in some cases - client organisations are forced into this situation owing to lack of concern for quality, time lines and weak candidate management by recruitment partners.

There is shortage of quality recruiters which is still not considered an attractive industry to work in.

Industry watchers said that another turned which would emerge is that recruitment firms will have to tap into emerging employment sectors such as retail, Information Technology and IT enables services.

Bali estimates that retail is expecting 20 lakh new jobs in six years. While in the case of IT and related sectors there will be gaps in specific areas.

“Therefore recruiting partners need to work with the industry in identifying potential sources and partner with them in training and workforce management,” Bali said.

Multinational recruitment agencies are already in India and the result of this is that staffing will approach western standards in three years, while level of employees “deputed” to employers will move up, more and more senior executives will begin to work “flexi”.

“Recruiting firms in India will have greater opportunity of working with clients overseas in their quest for Indian talent, as India becomes hub for critical talent,” said Bali.

For niche segments such as biotech, animation, IT product development, research and development in auto sectors there is not enough talent available in India.

Here the recruiting challenge will be the ability to attract critical talent from overseas. Thus both client brand and recruitment firm brand will determine who will get the talent first. This will require firms to work on building their employer brand.

The challenge will be to tap talent in B and C class towns especially for sectors like retail, insurance, call centers and so on.

Bali pointed out that recruitment agencies will be limited only by their own vision and resources. “This is the time to think Big,” he said.

Women outnumber men in Recruitment Firms

Running my own Recruitment Frim and being the founder member and Treasurer of NAESCON (National Assciation of Executive Search Consultants) I wholeheartedly agree with the insights brought out by Barkha Shah in this news item, however, I would like to differ somewhat when it comes to the gender equation vis-a- vis the leadership of the Recruiter Firms. We seem to have more 'men' owners than 'women' owners.

Barkha says that this is one industry where women beat men hands down. Not only in terms of sheer numbers, but also in terms of quality of work that they provide. The recruitment firms hiring talent for companies across various sectors is another area where women better men.

The "boom" in the job scenario across verticals like information technology, retailing, banking, insurance and financial sectors has led to a spurt in the number of recruitment firms being set up in the country.

If estimates are to be believed, there are more than 10,000 such firms today. While some have a nation wide presence, others are basically run as a one-man or, shall we say, a one-woman show.

However, the one similarity among all such companies is that men are a minority in this industry. So much so, that Bangalore-based TeamLease Services Private Limited, is into recruiting, training and "temping" across industry verticals, is now planning to recruit more men than women to bridge the "gender-gap".

Says Nirupama V G, associate director, TeamLease, "Within the next six months, we will be setting up centres in another four cities and will, therefore, be recruiting internally in good numbers." TeamLease hires 400-odd people across its 14 centres, which includes a centre at Hyderabad too.

"Earlier, around 90 per cent of our total employee numbers comprised females. Now, it is around 70 per cent and we are trying to reduce this gap in the male-female ratio further," Nirupama adds. At present, TeamLease hires 100 people internally, every quarter. So what makes this sector a women's domain? According to Shyam Suryanarayanan, director, S2 Management Consulting, a manpower consultant, women are more people-oriented and have better soft skills than men. "Besides, women have patience, which is an essential requirement in this job," adds Praveen Singh, also a director with S2. The Bangalore-based firm has around 25 employees working for it with 19 out of them being women.

Sushmita, a recruiter with Hyderabad-based Goose Technologies, that has clients like Microsoft, Virtusa and Oracle among others, feels that men are basically restless and that's why are generally not preferred for such jobs.

"This job requires concentration and women fare better in this regard," she adds. Stability is another reason why women are being banked upon in this industry. "Women tend to stick around with an organisation for a longer period. Some men use this kind of a job as a stepping stone to get into the corporate world," Shyam says.

Incidentally, this job promises good "moolah" as it offers target-based incentives. While the basic salary for an executive is Rs 10,000-Rs 12,000, according to Nirupama, there have been executives in her company who have earned even Rs 100,000 as incentives in a quarter.
"Besides, we also offer overseas trips and star performer awards as other add-ons," she says.

So what does a recruitment firm look for while hiring internally? For some companies, although an MBA is a requirement, there are some who do not mind taking in raw graduates as well."We just look for firebrands with people-skills," says Shyam. "It is communication skills that is the real deciding factor," adds Sushmita

Service Tax implications for Recruiters - Budget 2005

Service Tax implications for Recruiters - Budget 2005

Well it’s a mixed bag for the Recruitment Industry. Lets take up the relevant points one by one:

Service Tax Notification No. 6/2005 exempts taxable services of aggregate value not exceeding four lakh rupees in any financial year from the whole of the service tax leviable thereon under section 66 of the said Finance Act:

Provided that nothing contained in this notification shall apply to,-

(i) taxable services provided by a person under a brand name or trade name, whether registered or not, of another person; or
(ii) such value of taxable services in respect of which service tax shall be paid by such person and in such manner as specified under sub-section (2) of section 68 of the said Finance Act read with Service Tax Rules,1994.

The exemption contained in the said notification shall apply subject to certain conditions laid out therein, one of which is noteworthy i:e

(viii) the aggregate value of taxable services rendered by a provider of taxable service from one or more premises, does not exceed rupees four lakhs in the preceding financial year.

Further an Explanation to the said notification clarifies as under:

Explanation.- For the purposes of this notification,-

(A) “brand name” or “trade name” means a brand name or a trade name, whether registered or not, that is to say, a name or a mark, such as symbol, monogram, logo, label, signature, or invented word or writing which is used in relation to such specified services for the purpose of indicating, or so as to indicate a connection in the course of trade between such specified services and some person using such name or mark with or without any indication of the identity of that person;
(B) “aggregate value not exceeding four lakh rupees” means the sum total of first consecutive payments received during a financial year towards the gross amount, as prescribed under section 67 of the said Finance Act, charged by the service provider towards taxable services till the aggregate amount of such payments is equal to four lakh rupees but does not include payments received towards such gross amount which are exempt from whole of service tax leviable thereon under section 66 of the said Finance Act under any other notification.

This notification shall come into force on the 1st day of April, 2005.

Service Tax Notification No. 7/2005 has made some amendments to the Service Tax Rules, 1994, whereby all invoices are to be issued not later than fourteen days from the date of completion of such taxable service or receipt of any payment towards the value of such taxable service, whichever is earlier.

This is fine so far as raising invoices for services rendered is concerned, however, this could create an issue where the payment is received as an ‘advance’ against the services to be rendered. An Invoice would still have to be issued within 14 days of the receipt of the advance and Service Tax paid thereon. In case later, for some reason, the service is not rendered it would create an anomaly where the Tax would have been paid but no service rendered.

· Further, the same Notification provides that where an assessee is providing a taxable service from more than one premises or offices and has centralized billing systems or centralized accounting systems in respect of such service, and such centralized billing or centralized accounting systems are located in one or more offices or premises, he may, at his option, register such premises or offices from where such centralized billing or centralized accounting systems are located. This is definitely going to ease the process and paperwork at the Service Provider’s end.

· The Rules for payment of Service Tax have been amended so as to give the following effect, namely:-

The service tax shall be paid to the credit of the Central Government by the 5th of the month immediately following the calendar month in which the payments are received, towards the value of taxable services:

Provided that where the assessee is an individual or proprietary firm or partnership firm, the service tax shall be paid to the credit of the Central Government by the 5th of the month immediately following the quarter in which the payments are received, towards the value of taxable services:

Provided also that the service tax on the value of taxable services received during the month of March, or the quarter ending in March, as the case may be, shall be paid to
the credit of the Central Government by the 31st day of March of the calendar year.”.


The scope of certain services has been extended and one them is wrt manpower recruitment services which would now include the supply of manpower, temporary or otherwise.

The Recruitment Function

‘HR needs to play a Strategic Role’ or ‘HR should be
a business Driver’ in any company has been a case
of more ‘talk the talk’ than ‘walk the talk’.

All these shortcomings of HR(perceived or otherwise)
need to be delinked from the Recruitment function and
this can be achieved by forming a separate department
for Recruitment which, I am sure, will find immediate
recognition and acceptance from the line managers –
as their own success depends upon finding the right
candidate for the job within their department..

As Human Capital actually becomes the core of every
organisation - and the main differentiator between
competitors which has the potential of creating and
sustaining competitive advantage- the importance of the
Recruitment Function rises manifold. Now the
Recruitment function needs to become part of the various
business processes that the company relies upon to
successfully and consistently deliver quality output,
competitively. Consequently, it has to start taking
responsibility, like any other line function, and stop
playing a supporting role.

Having said that, can we outsource such a Strategic
or ‘Core’ Function ? Outsourcing has increasingly become
Strategic and more and more companies are Outsourcing
different processes today than ever before, however, what
is being outsourced are non-core functions only and nothing
that forms the core activity of the Company.

The benefits of outsourcing I don’t think need to be
repeated here and it need only be said that some part
of the Recruitment process can definitely be outsourced
effectively and advantageously.

I believe that the way forward is in segregating the
sub-functions of ‘Search’ and ‘Selection’ within the Recruitment
process and further segmenting the hiring basket and adopting
a different approach, as well as hiring sources, for backend
or support staff and a different approach and sources for top/
critical/ strategic positions.