The Talent Shift

One thing good the slowdown did to the IT industry is that it took attrition
levels to historic lows, if you do not count involuntary attritions or layoffs
as common people like us call them. No surprise, with the positive changes in
the global economy and a brighter outlook, the problem is back.

What has not exactly helped the IT companies are reports after reports
suggesting that India is at the forefront when it comes to hiring plans and pay
hikes. A recent Manpower survey puts India on top among thirty-six countries in
terms of employment outlook. It says that Indias net employment outlookthe
difference between percentage of companies who would add employees and those who
would reduce headcountfor April-June quarter is 39%, up by 4% points from JFM.
Recruitment companiesmany of which were without significant businessare back
with brisk business.

What is more, an annual Hewitt salary survey projects that India will lead
the Asia Pacific in raising salaries for employees. India, Inc will hike
salaries by 10.6% as compared to Chinas 6.7%, the Philippines 6.4% and Japans
2.1%.

While these findings are not too surprising, what the IT industry should
worry about is a confirmation by the same Hewitt survey of something that all of
us have been guessing about: that IT will lag behind most sectors when it comes
to hikes. The survey reveals that employers in sectors such as energy, telecom,
pharma, engineering and auto sectors will hike salaries of their employees far
more than what IT companies will do.

This means other industries would effectively compete for talent with the IT
industry, especially at the crucial lateral hire levels. That is not good news
for an industry which is finally looking at building leadership among the middle
level.

However, I am not too pessimistic. With all due respect to the studies like
Hewitts, what one must point out is that they are surveys of employers based on
their existing plans. And, the problem is that the huge exports industry in
India often hides many interesting trends in smaller but more dynamic local
industry. So, the IT industry may be a laggard in salary hikes, but my guess is
that the domestic part will see a significant increase in hiring and salary
growth.

It is also good news for the local IT services industry as with better growth
prospects in both salary and career (even if the absolute level may still be a
little lower), many young engineers would look at serving in India rather than
go to a phoren country.

It may also be good news for users who are struggling to hire good manpower
for the internal IT teams. With the CIOs profile continuously going up in the
corporate hierarchy, career in a user company is no more a second choice. I hope
we will see some influx of good IT guys with international experience into user
companies in India.

In the meanwhile, I hope the exports industry will tackle this challenge as
it has done with many others, especially as many of them would themselves be
active players in the local market.

Shyamanuja Das

The author is Editor of Dataquest.
shyamanujad@cybermedia.co.in