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Last Updated: Wednesday, 11 October 2006, 21:41 GMT 22:41 UK
Indian firms facing talent crunch
By Karishma Vaswani
Business correspondent, BBC News, Mumbai

Ankit Jain
India's brightest of the bright are in hot demand at global companies

Friday afternoons at the Indian Institute of Technology (IIT) in Mumbai are a time to relax for Ankit Jain, a final-year engineering student.

In between his rigorous exam schedule, Ankit takes some time off from competing with his friends in the classroom to compete with them on the basketball courts.

IIT is one of the hardest schools in India to get into. Every year, 200,000 of India's brightest students try and get into this school. Only 2% of them make it.

Ankit and his friends at the elite institute are considered some of the brightest brains in India. And they have found that they are in hot demand from Indian and foreign businesses.

"There are a lot of recruitment fairs on campus. IBM, Accenture, Google, UBS, Infosys, TCS - all the big companies, Indian and Western are here," Ankit said as he took a break from his basketball game.

"And the salaries they're offering us are amazing. American firms are offering us up to $100,000 (53,000) a year - and Indian firms are competing to hire us - with higher wages, housing incentives, car loans, the works."

Rush for talent

Ankit is one of 3 million university students that graduate from schools in India every year. Gone are the times when the only jobs in store for them were careers in the Indian civil service.

Prospects for the Indian professionals are on the rise, thanks to the boom in India's economy. The last set of growth figures showed that India's economy grew by almost 8% in the first quarter of this year - beating expectations.

Thousands of thousands of employees... are being hired in a really short space of time, and there just aren't enough skilled graduates in India to fill these jobs
R. Sankar,
Mercer Human Resource Consulting

This has led to a rush for talent. ICICI Bank, one of India's biggest private lenders, is planning to hire 40,000 people over the next few years.

Reliance, India's biggest conglomerate, has announced its gargantuan retail plans - it will be setting up a chain of supermarkets Wal-Mart-style across India - and is poaching the best and the brightest employees from other firms.

But the frenetic pace of expansion in Indian businesses is leading to a very real problem: there are not enough bright Indian school-leavers to fill the vacant spots in India's corporate payrolls.

'Not enough graduates'

According to Mercer Human Resource Consulting's country head in India, R Sankar, India is facing an imminent talent shortage.

"Just look at the technology sector," he says. "Look at the numbers they're trying to achieve. Thousands of thousands of employees - Tata Consultancy Services has over 70,000 employees - are being hired in a really short space of time.

"And there just aren't enough skilled graduates in India to fill these jobs."

L&T Chief Financial Officer YM Deosthalee
Keeping India's workers interested is key, Mr Deosthalee says.

India's software trade body, Nasscom, says that there could be a shortfall of half a million professionals in the IT sector by 2010.

And it is not just the technology sector that is experiencing a talent crunch. Keeping good staff is a challenge for many other Indian companies too.

The country's top construction and engineering firm, Larsen & Toubro, has seen a 10% drop in employees, losing workers to the fast growing technology and retail sectors.

Those industries are tempting workers with salaries that are a third higher than they were used to. But L&T's Chief Financial Officer, YM Deosthalee, said his firm had found a solution.

"We provide our employees with challenging, dynamic work - work that will keep them interested in what they do," he said.

"It's one of the ways for us to retain competent staff - but it is a challenging environment. Besides the financial ones, 0pportunities to be trained and to travel, though, and work on big projects is what we offer in terms of incentives."

'Curious'

And it is these opportunities that are drawing foreign workers to India's shores. They are being recruited to help offset the challenges of India's talent crunch.

Denis Mercier, TCS
India's booming economy is attracting a lot of foreign interest

Denis Mercier came to Mumbai a year ago to work for the country's biggest software firm, Tata Consultancy Services. He is one of thousands of TCS's foreign employees, many of whom are from Eastern Europe, Brazil, Germany and the UK.

"Every day when I would read the front page of my newspaper in France, I would read about the Indian economy," 24-year-old Denis said, as he lunched with a mixed crowd of foreign and Indian TCS workers in their canteen.

"I was curious - what is happening in this culturally vibrant, fast-growing country? I wanted to find out for myself. And now, to have Indian experience on your resume looks really good too."

Importing skilled workers may be one way for the Indian economy to solve its talent crunch, but it cannot be the solution for long.

The irony is that there are millions of Indians who remain unemployed, working in the informal economy, on odd jobs in construction and building.

The big question is whether India can solve its growing labour crisis by finding a way to get them trained and into the formal labour market, alongside Ankit and his friends.


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