Hiring in India to continue at a strong pace in the first quarter of 2013

By Rajeshwari Sharma
17/12/2012

Indian employers expect hiring activity to remain strong for the first three months of 2013. However, job opportunities are expected to be considerably fewer than they were a year ago at this time.

According to the latest Manpower Employment Outlook Survey of 4,496 employers across sectors in India, the employment outlook remains at +27percent after removing seasonal variations from the data, unchanged from the prior quarter (Q4, 2012) and 18 percentage points weaker year-over-year.

However, job prospects remain healthy in the majority of industry sectors surveyed, particularly in the Services sector (+30 percent) and in the Wholesale and Retail Trade (+29 percent). Employers in the Public Administration and Education (+14 percent) sector report India’s weakest hiring pace. Hiring intentions are positive in all seven industry sectors (Finance, Insurance & Real Estate, Manufacturing, Mining & Construction, Public Administration & Education, Services, Transportation & Utilities, Wholesale & Retail Trade) and all four regions – North, East, South and West.

“Despite the continuing impact of the global macro-economic situation and the uncertainty around the economic and political environment in India, employer hiring intentions remain positive in all seven sectors, primarily driven by ITeS and IT sectors where employer hiring sentiment appears to be improving. The Outlook is also positive in all the geographical regions, with employers in the West reporting the region’s strongest Outlook,” says Sanjay Pandit, Managing Director of Manpower India.

“However, employers are notably more uncertain about their hiring plans in the first three months of the year compared to last year at this time; nearly three out of every 10 employers tell us that they simply do not know whether they will add or subtract from their payrolls in the first quarter,” adds Pandit.

Headhunters and recruiters confirm that the hiring pace has slowed down in certain sectors. Some of the reasons for the slow hiring market cited by recruiters include, the government’s internal policy on the economic growth pattern, cautious hiring and investment in the talent pool, and a shift in approach to get the required talent pool, where organizations are relying more on promoting talent from within as a way to reduce hiring costs. However, hiring activity is not witnessing a complete slowdown. “There is a lot of optimism for 2013, by when the effects of the latest economic reforms should start kicking in. By the second quarter of 2013, there seem to be definitive indications on the overall hiring picking up,” says Joseph Devasia, Managing Partner, Antal International, Mumbai.

Sectoral Trends

Positive forecasts are reported by employers in all industry sectors. The most optimistic hiring intentions are reported in the Services sector. Solid headcount gains are also forecast in the Wholesale and Retail Trade, Finance, Insurance & Real Estate (+28 percent)  and Mining & Construction  (+27 percent) sectors. “Retail, which was sluggish, has seen a pick up in the last quarter coinciding with the festival season as consumption seems to have perked up,” says K Sudarshan, Managing Partner, Asia Emerging Markets, EMA Partners India Pvt Ltd, a leading executive search firm.

 “Sectors like Financial Services have seen a slowdown, especially in the areas of capital markets, retail broking and investment banking. Global trends are being replicated in sectors like financial services and in general, in multinationals, we see that the local subsidiaries are impacted because of decisions made at their head offices, irrespective of the state of their India businesses. We believe these are temporary and expect things to look up in the first quarter,” adds Sudarshan.

On the other hand, Indian companies, which have committed huge investments in the core sectors including infrastructure, power, roads, ports and metals, are continuing to recruit selectively at the top.

The Outlook for the Manufacturing sector stands at +26 percent. In terms of quarter over quarter comparisons, employers report stronger hiring prospects in all seven industry sectors.

The Outlook for the Transportation & Utilities sector improves by nine percentage points and increases of six and five percentage points are reported in the Services sector and the Wholesale & Retail Trade sector, respectively.

When compared with the first quarter of 2012, hiring plans weaken in all seven industry sectors and in all four regions. The Mining & Construction sector Outlook declines by a steep margin of 21 percentage points, and Outlooks decrease by 20 percentage points in both the Finance, Insurance & Real Estate sector and the Services sector. “There has also been a slowdown in hiring activity by about 3-4 percent in sectors such as Pharmaceuticals, Automotive, Oil & Gas and Infrastructure. The main reasons are inflation, economic sluggishness, the overall global economic situation and to some extent, government policies,” says Marcel Parker, Chairman at IKYA Human Capital Solutions Ltd, a leading HR solutions company with specialized service offerings in Executive Search, Recruitment Solutions, Staffing Services, Training and project-based RPO hiring.

Regional Trends

In a quarter-over-quarter comparison, employers report stronger Outlooks in three of the four regions, with the most notable improvement of 10 percentage points reported in the West.

The most optimistic hiring plans are reported in the West, with a Net Employment Outlook of +28 percent. Active labour markets are also forecast in both the South and the North, with Outlooks of +25 percent and +24 percent, respectively. Meanwhile, employers in the East report cautiously optimistic hiring intentions with an Outlook of +10 percent.

Worldwide, hiring expectations are strongest in Taiwan, India, Brazil and Mexico. On the other hand, opportunities for job seekers are expected to be weakest in Greece, Italy, Spain, Slovenia, Slovakia and the Netherlands where Dutch employers report their weakest hiring plans since the survey started in that country nearly 10 years ago.

The year ahead

After a weak run of hiring in the last three to four quarters, there is an overall optimism across sectors. However, employers are likely to walk the hiring line cautiously and avoid the excesses witnessed during the boom as they increasingly focus on managing margin and cost pressures. Recruiters predict that employers will be seen adopting newer staffing strategies in the wake of new business realities. “No new employer will be willing to take on board a new employee at a high premium,” according to Achla Ali, Practice Head at Nacre India, a temporary and permanent staffing company.

One will see an increase in temporary hiring too, as some organizations will be looking at flexibility to tide over an uncertain period, says Ali. Ali adds that the industry anticipates the temporary staffing segment to grow by at least 15 percent in the next six months.

Unsurprisingly, niche skills and top talent will continue to be in great demand. Senior executives will remain sought after by headhunters. Sudarshan says there is great demand for CEOs, specifically those who have managed scale and complexity in sectors like metals, infrastructure and energy. “CFOs with a solid track record in managing large balance sheets, capital raising and restructuring experience are in great demand,” he adds.

Rajeshwari Sharma is Editor at SHRM India.