The Indian services sector some day in the future will thank the global meltdown for helping it derive better value for its people advantage. It seems far-fetched now, even as the sector is grappling with the effect of the meltdown. But the services sector is sure to look back and mark the changes that were ushered in post the global meltdown. And the changes would sweep not just the export oriented sectors but also the inward focused sectors like retail, travel, real estate etc.
Services sector has been the lead player in the India growth story for nearly two decades now. In the early ’90s it began with IT and business services.
Beginning with a head start, IT/ITES sector did get to pick the best of the talent. Talent moved from across all other industries into this sunrise sector in huge numbers to the extent that the world believed that all Indians were software programmers!
Liberalisation in the late ’90s across the transportation, communication and insurance sectors led to a quick turnaround in these sectors. New airlines were launched, insurance JVs set up, new hospitality ventures announced and media houses expanded. Then came telecom, retail and realty that have been growing at a scorching pace as though making up for the late arrival.
All offered enticing career options for raw and experienced talent. The surge in demand for pilots, airhostesses, hotel staff and media professionals continued unabated until recently. The IT/ITES sector saw the tide of people turn the other way, leading to sky rocketing salaries and hard-to-manage attrition. There were serious concerns about the viability of India sustaining its ‘preferred destination’ status as the IT/ITES industry was fighting the twin battle of salary inflation and high attrition.
Giving credit where it is due, the Indian IT/ITES sector led the way in bringing the much touted demographic dividend to India with its focus on new age talent management. However, a considerable portion of this advantage has been eroded over the past couple of years due to the spiraling salary levels and discovery of the same talent pool by global MNCs.
Even as the established technology sector was fighting this trend in its own way, the other new service businesses too found the going tough. Until recently the talent grab across all sectors was fierce and the ‘war for talent’ was getting dirtier. Then came the global recession, which brought the much-needed pause and rationalisation of skill to salary matrix.
Post global meltdown, the challenge is not going away as India embarks on its next phase of growth sooner than we anticipated. In fact, this phase of growth will demand a different and more sustainable approach — newer business models which do not price talent on time and material basis, but focus less on job work and more on finished products, offering more services targeting the domestic market especially the bottom of the pyramid.
All these would require more innovation from our talent base, not just better execution. The change has to happen not just at the level of the senior management but across the enterprise. Now, as the economy takes a breather, could it be the best time to look at this transformation? Right approach to talent management is a make or break issue here.
The fundamental issues plaguing the services sector have been:
* Low productivity when compared to the West. The math has been — two in India for one in the US— two software engineers in India for every one in the US or two financial services specialists for every one in the US and the list goes on.
* Fast career growth resulting in lesser management bandwidth especially at the middle management level.
* Conventional hierarchical structures with overemphasis on designation and span of control unsuitable for knowledge-based industries.
* Global organisations with very little management capability to recruit and retain multi-cultural teams.
With a new approach, India could retain its people edge in global services sector and more importantly realise better value for its talent resources.
So, what is it the services sector needs to do on the talent front? Recently we have been seeing the smart moves of the Tata Group in the realty and hospitality sector. Even as the rest of the hospitality players were focusing on the top end of the tourist population, Tatas have quietly expanded their network of budget hotels. This strategy is a paradigm shift from a Group whose mainstay business has been to cater to the luxury clientele.
As the price point changes, so does the need to utilise manpower optimally. Indian services sector, especially the mid-sized ones need to shift gears at the strategy level and therefore needs leadership, which can think differently and further execute on transforming the existing approach to talent in the services sector.
to be a conscious effort to improve per capita productivity with a focus on utilising talent well at all levels. This demands a mindset where we move away from throwing out more people to training people to solve problems and demanding their accountability.
It calls for a relook at the organisational framework and have flatter empowered team structures with a conscious effort to move away from high brow designations. This will trigger a change in the social structure and push the new generation into a work environment which stresses more on meritocracy and less on entrenched power structures.
It would help to have an open approach to talent from across the world, which could perhaps begin with overseas locations, so that there is increased learning through cross pollination of ideas and approaches. This will also give the Indian workforce a way to benchmark against rest of the world. Understanding where you stand in a global workforce goes a long way in fostering realistic expectation from employees.
Jun 4, 2009
It’s time for manufacturing to grab the people advantage
Indian manufacturing sector, which has been riding the wave of global growth, remained literally a full generation behind the services sector in the crucial issue of talent. Yet, this got glossed over by the run-away growth. Today, the recession is shining a light on the sub-optimal decisions made during those days.
Automobile industry, the poster child of manufacturing post liberalisation, saw the Toyotas, Hondas and BMWs making a bee-line for India. Old guard like Bajaj, Hero and Mahindra too gained tremendous mileage riding this wave. The growth happened despite the glaring lack of quality talent, especially in the management and leadership levels in the industry. The same was true across the entire manufacturing sector.
Even if the sector had a change of heart and looked to beef up senior management ranks, there was little recourse. Most of the young talent opted for the IT industry straight from college. A large band of the mid-level talent followed. The IT industry became more and more glamorous, even as the manufacturing industry paled. All through the ’90s, even as less and less opted to study mechanical engineering, manufacturing sector recruiters slipped in the priority list of most engineering graduates. In the new century, they almost disappeared from their shortlist. If this was the case with the engineers, CAs, HR execs and MBAs weren’t far behind.
The effect of the erosion has been continuous and insidious. The talent across levels is inadequate and woefully behind times. This is further accentuated by the change in skills required in manufacturing over the same period of time. With manufacturing becoming technology intensive, the sector has heightened requirements of two kinds—tech-savvy talent with ability to increase productivity leveraging technology and an increasing horde of service-focused people in sales, customer service and financial management. And especially at the leadership level, the benchmark for evaluation has become global as the manufacturing industry today is playing in a global field.
So, the focus of the Indian manufacturing sector today, as we transform in sync with the world has to be people and that too leaders. There are quite a few Indian corporations who are ambitious and have everything in their favour to join the ranks of the new MNCs in the making. No doubt, the MNCs have been at this for a lot longer than us, but in today’s globalised world, efficiency and fleet footedness pays off far faster than before. Indian companies with agility to fill the glaring gaps can take on the global biggies with confidence.
But the one key differentiator would be the quality of leadership in the manufacturing sector. The talent shortage over the last two decades means, that internal resources rising up to fill the need is quite impossible. There aren’t enough people and more importantly, the potential talent doesn’t come with the relevant exposure to increasing scale of operation. Some recent cases of unraveling global ambitions clearly point to lack of leadership talent pool. In our favour, the global meltdown has loosened up quite a few of the leadership talents from their perches and Indian manufacturing could easily feature in their choice.
The all round HR transformation needs to be anchored with the following cornerstones:
* Move away from the “labour management” oriented HR practices to a more modernistic talent management approach.
* Move towards flatter organisation, empowering management faster in their career. This will also enable employers to offer more attractive compensation for the key executives.
* Create a better work environment—today’s employee doesn’t want to come into musty looking ancient factory with an apology of a reception and even worse offices.
* Tranfuse global talent to invigorate the culture and bring in the strong global mindset.
* Actively build a leadership talent pool continuously by courting, evaluating and establishing relationship with a broad base of executives across all functions.
* Partner with individuals and firms that can help bring a neutral perspective to evaluating the organisation and initiate the necessary changes.
To achieve this, Indian manufacturing giants need not reinvent the wheel. A perfect role model exists in the form of the IT industry, which has been there, done that.
To think, a little over ten years back, programmers were a rare breed in India and engineering graduates did not see a computer till they got their first job!
The competitive strength of an Infosys or Wipro lies to a great extent in their ability to build, train and retain a ‘Dynamic Talent Supply Chain’ across all levels. Nasscom has played the role of facilitator ably, bringing the polity, academia and the industry together. Nasscom’s talent study with McKinsey was initiated way back in 2000 and continues as a relevant annual exercise till date. Manufacturing industry associations would do well to start afresh like Nasscom did when it came to the job. If Corporate India is serious about becoming a globally relevant player in manufacturing, the transformation has to begin at the top, focused on the future and not on the near term hurdles. The issue is people and the time is now!
Automobile industry, the poster child of manufacturing post liberalisation, saw the Toyotas, Hondas and BMWs making a bee-line for India. Old guard like Bajaj, Hero and Mahindra too gained tremendous mileage riding this wave. The growth happened despite the glaring lack of quality talent, especially in the management and leadership levels in the industry. The same was true across the entire manufacturing sector.
Even if the sector had a change of heart and looked to beef up senior management ranks, there was little recourse. Most of the young talent opted for the IT industry straight from college. A large band of the mid-level talent followed. The IT industry became more and more glamorous, even as the manufacturing industry paled. All through the ’90s, even as less and less opted to study mechanical engineering, manufacturing sector recruiters slipped in the priority list of most engineering graduates. In the new century, they almost disappeared from their shortlist. If this was the case with the engineers, CAs, HR execs and MBAs weren’t far behind.
The effect of the erosion has been continuous and insidious. The talent across levels is inadequate and woefully behind times. This is further accentuated by the change in skills required in manufacturing over the same period of time. With manufacturing becoming technology intensive, the sector has heightened requirements of two kinds—tech-savvy talent with ability to increase productivity leveraging technology and an increasing horde of service-focused people in sales, customer service and financial management. And especially at the leadership level, the benchmark for evaluation has become global as the manufacturing industry today is playing in a global field.
So, the focus of the Indian manufacturing sector today, as we transform in sync with the world has to be people and that too leaders. There are quite a few Indian corporations who are ambitious and have everything in their favour to join the ranks of the new MNCs in the making. No doubt, the MNCs have been at this for a lot longer than us, but in today’s globalised world, efficiency and fleet footedness pays off far faster than before. Indian companies with agility to fill the glaring gaps can take on the global biggies with confidence.
But the one key differentiator would be the quality of leadership in the manufacturing sector. The talent shortage over the last two decades means, that internal resources rising up to fill the need is quite impossible. There aren’t enough people and more importantly, the potential talent doesn’t come with the relevant exposure to increasing scale of operation. Some recent cases of unraveling global ambitions clearly point to lack of leadership talent pool. In our favour, the global meltdown has loosened up quite a few of the leadership talents from their perches and Indian manufacturing could easily feature in their choice.
The all round HR transformation needs to be anchored with the following cornerstones:
* Move away from the “labour management” oriented HR practices to a more modernistic talent management approach.
* Move towards flatter organisation, empowering management faster in their career. This will also enable employers to offer more attractive compensation for the key executives.
* Create a better work environment—today’s employee doesn’t want to come into musty looking ancient factory with an apology of a reception and even worse offices.
* Tranfuse global talent to invigorate the culture and bring in the strong global mindset.
* Actively build a leadership talent pool continuously by courting, evaluating and establishing relationship with a broad base of executives across all functions.
* Partner with individuals and firms that can help bring a neutral perspective to evaluating the organisation and initiate the necessary changes.
To achieve this, Indian manufacturing giants need not reinvent the wheel. A perfect role model exists in the form of the IT industry, which has been there, done that.
To think, a little over ten years back, programmers were a rare breed in India and engineering graduates did not see a computer till they got their first job!
The competitive strength of an Infosys or Wipro lies to a great extent in their ability to build, train and retain a ‘Dynamic Talent Supply Chain’ across all levels. Nasscom has played the role of facilitator ably, bringing the polity, academia and the industry together. Nasscom’s talent study with McKinsey was initiated way back in 2000 and continues as a relevant annual exercise till date. Manufacturing industry associations would do well to start afresh like Nasscom did when it came to the job. If Corporate India is serious about becoming a globally relevant player in manufacturing, the transformation has to begin at the top, focused on the future and not on the near term hurdles. The issue is people and the time is now!
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