Why Companies Aren't Getting the Employees They Need

By PETER CAPPELLI

Everybody's heard the complaints about recruiting lately.

Even with unemployment hovering around 9%, companies are grousing that they can't find skilled workers, and filling a job can take months of hunting.

Employers are quick to lay blame. Schools aren't giving kids the right kind of training. The government isn't letting in enough high-skill immigrants. The list goes on and on.

But I believe that the real culprits are the employers themselves.

With an abundance of workers to choose from, employers are demanding more of job candidates than ever before. They want prospective workers to be able to fill a role right away, without any training or ramp-up time.

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In other words, to get a job, you have to have that job already. It's a Catch-22 situation for workers—and it's hurting companies and the economy.

To get America's job engine revving again, companies need to stop pinning so much of the blame on our nation's education system. They need to drop the idea of finding perfect candidates and look for people who could do the job with a bit of training and practice.

There are plenty of ways to get workers up to speed without investing too much time and money, such as putting new employees on extended probationary periods and relying more on internal hires, who know the ropes better than outsiders would.

It's a fundamental change from business as usual. But the way we're doing things now just isn't working.

The Big Myths

The perceptions about a lack of skilled workers are pervasive. The staffing company ManpowerGroup, for instance, reports that 52% of U.S. employers surveyed say they have difficulty filling positions because of talent shortages.

But the problem is an illusion.

Some of the complaints about skill shortages boil down to the fact that employers can't get candidates to accept jobs at the wages offered. That's an affordability problem, not a skill shortage. A real shortage means not being able to find appropriate candidates at market-clearing wages. We wouldn't say there is a shortage of diamonds when they are incredibly expensive; we can buy all we want at the prevailing prices.

The real problem, then, is more appropriately an inflexibility problem. Finding candidates to fit jobs is not like finding pistons to fit engines, where the requirements are precise and can't be varied. Jobs can be organized in many different ways so that candidates who have very different credentials can do them successfully.

Only about 10% of the people in IT jobs during the Silicon Valley tech boom of the 1990s, for example, had IT-related degrees. While it might be great to have a Ph.D. graduate read your electrical meter, almost anyone with a little training could do the job pretty well.

A Training Shortage

And make no mistake: There are plenty of people out there who could step into jobs with just a bit of training—even recent graduates who don't have much job experience. Despite employers' complaints about the education system, college students are pursuing more vocationally oriented course work than ever before, with degrees in highly specialized fields like pharmaceutical marketing and retail logistics.

Unfortunately, American companies don't seem to do training anymore. Data are hard to come by, but we know that apprenticeship programs have largely disappeared, along with management-training programs. And the amount of training that the average new hire gets in the first year or so could be measured in hours and counted on the fingers of one hand. Much of that includes what vendors do when they bring in new equipment: "Here's how to work this copier."

The shortage of opportunities to learn on the job helps explain the phenomenon of people queueing up for unpaid internships, in some cases even paying to get access to a situation where they can work free to get access to valuable on-the-job experience.

Companies in other countries do things differently. In Europe, for instance, training is often mandated, and apprenticeships and other programs that help provide work experience are part of the infrastructure.

The result: European countries aren't having skill-shortage complaints at the same level as in the U.S., and the nations that have the most established apprenticeship programs—the Scandinavian nations, Germany and Switzerland—have low unemployment.

Employers here at home rightly point to a significant constraint that they face in training workers: They train them and make the investment, but then someone else offers them more money and hires them away.

The Way Forward

That is a real problem. What's the answer?

We aren't going to get European-style apprenticeships in the U.S. They require too much cooperation among employers and bigger investments in infrastructure than any government entity is willing to provide. We're also not going to go back to the lifetime-employment models that made years-long training programs possible.

But I'm also convinced that some of the problem we're up against is simply a failure of imagination. Here are three ways in which employees can get the skills they need without the employer having to invest in a lot of upfront training.

Work with education providers: If job candidates don't have the skills you need, make them go to school before you hire them.

Community colleges in many states, especially North Carolina, have proved to be good partners with employers by tailoring very applied course work to the specific needs of the employer. Candidates qualify to be hired once they complete the courses—which they pay for themselves, at least in part. For instance, a manufacturer might require that prospective job candidates first pass a course on quality control or using certain machine tools.

Going back to school isn't just for new hires, either; it also works for internal candidates. In this setup, the employer pays the tuition costs through tuition reimbursement. But the employees make the bigger investment by spending their own time, almost always off work, learning the material.

Bring back aspects of apprenticeship: In this arrangement, apprentices are paid less while they are mastering their craft—so employers aren't paying for training and a big salary at the same time. Accounting firms, law firms and professional-services firms have long operated this way, and have made lots of money off their young associates.

Of course, a full apprenticeship model—with testing and credentials associated with different stages of experience—wouldn't work in all industries. But a simpler setup would: Companies could give their new workers a longer probationary period—with lower pay—until they get up to speed on the requirements of the job.

Promote from within: Employees have useful knowledge that no outsider could have and should make great candidates for filling jobs higher up. In recent years, however, an incredible two-thirds of all vacancies, even in large companies, have been filled by hiring from the outside, according to data from Taleo Corp., a talent-management company. That figure has dropped somewhat lately because of market conditions. But a generation ago, the number was close to 10%, as internal promotions and transfers were used to fill virtually all positions.

These days, many companies simply don't believe their own workers have the necessary skills to take on new roles. But, once again, many workers could step into those jobs with a bit of training.

And there's one on-the-job education strategy that doesn't cost companies a dime: Organize work so that employees are given projects that help them learn new skills. For example, a marketing manager may not know how to compute the return on marketing programs but might learn that skill while working on a team project with colleagues from the finance department.

Pursuing options like these vastly expands the supply of talent that employers can tap, making it both cheaper and easier to fill jobs. Of course, it's also much better for society. It helps build the supply of human capital in the economy, as well as opening the pathway for more people to get jobs.

It's an important instance where company self-interest and societal interest just happen to coincide.

Dr. Cappelli is the George W. Taylor professor of management at the Wharton School and director of Wharton's Center for Human Resources. He can be reached atreports@wsj.com.

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How HR is helping employees to re-wind ?

How HR is helping employees to re-wind ?

If you were told you could put your feet up and take a nap in office, would you think Santa Claus came your way a bit early in the year? In case you think one is spinning a yarn, be assured this is no dream.

Increasingly, Indian companies are opening their doors and minds to unconventional and even fun methods of unwinding that can bring the zing back in their employees. From power nap rooms, culinary workshops to raising your mug for beer, perks are not just about money. This New Year choose the concepts you would like your HR to introduce at your workplace, pronto.

Sleep at work

When Radhika Iyer, an assistant manager at CBay Systems, Mumbai, mentioned the Crash-out Room at her office where employees can take a quick nap, her friends thought she was a master storyteller. CBay Systems is a medical transcription, medical billing and coding services company which has round-the-clock operations. “I was taken aback when I first joined the organization and was told about it,” she recalls. “I had quit my previous software organization due to stress and here I was told, there is a room where I can sleep.”

Work is fun too: (clockwise from top) employees enjoy a game of foosball at the Chill Zone, RPG House, Mumbai; dartboard practice at Chill Zone, RPG House; 10-minute naps at the Crash-out Room refresh employees at CBay Systems, Mumbai; and co-workers learn to make chocolates at Broadridge Financial Solutions, Hyderabad.

The Crash-out Room has 20 bunk beds for employees to take a 10-minute nap when stressed at work or take a quick nap during lunch time (1 hour). But there is a rider: An employee wanting to take a nap has to inform his/her section head. No permission is required to take a nap during lunch hour.

Why it works: Sanjay Shanmugaum, vice-president, human resources, CBay Systems explains, “Employee health is a top most concern for us. With this objective in mind, we have set up Break-out Rooms (with recreational facilities such as table tennis and dart games) and Crash-out Rooms for our employees. They are aimed at relieving physical and mental stress.” The company has found that these rooms have proved to be a “hit” and has resulted in “an increased inter-employee interaction, thus increasing a sense of belonging with the company”. The high point, says Shanmugaum, is that “these rooms have projected a ‘we-care’ attitude for CBay Systems, thus aiding in higher (employee) retention”.

Project robot

When competitiveness at work transcends to play, it sharpens one’s game. And when there’s a cash award thrown in, there’s no reason to complain. Progress Software India (PSI), Hyderabad, holds BotWars (a game in which competitors make robots and then teams compete with each other’s robots) every quarter, called PSI Robocode competition and Age of Empires tournament. These are held not just for fun but also to pose a challenge to employees at computer educational games. Kiran Kumar, software engineer, who took part in the Robocode competition, says, “It is relaxation from work. As one is engrossed during after work hours at something that is intellectually stimulating, it is immensely challenging to be a part of such competitions at the workplace with one’s colleagues and teammates.”

Why it works: Sachin Hejip, director, centre for enterprise in progress division, PSI, explains: “As a product company, we need to find ways to think on our feet and out of the box. We are also very self-driven and expect a lot in terms of communication from our team members. These events, organized by the employees themselves, help to improve soft skills—providing employees excellent opportunities of learning and growth outside of their regular work. We also give cash awards to the winners ranging from Rs10,000-20,000, depending on the event.”

Hobby central

If it is games for some organizations, then it is about developing hobbies for others. Broadridge Financial Solutions (India) Pvt. Ltd, a financial services company, Hyderabad, organizes creative workshops where employees can learn the art of origami and calligraphy and how to make chocolate, pots anddiyas, and puppets. The families of employees can take part too.

After every workshop, employees fill up a feedback form, sharing their experiences and also give recommendations on how to improve these workshops. The company organizes future workshops based on this feedback.

Why it works: These initiatives are conducted on Sundays to ensure employees can come with their families,” says Rajita Kumar, head, human resources, Broadridge Financial Solutions. “The aim is to explore new creative ideas and spend time together.”

Let the beer flow

Most organizations throw parties quarterly, half yearly or annually. But NetApp India, Bangalore, organizes a beer bash every Friday evening with unlimited beer on the tap for its employees. Needless to say, it is the most awaited day of the week. “We look forward to the lively, chilled-out social evenings for a heavy dose of fun, laughter, camaraderie and office chit-chats. It is a great way to de-stress, unwind and connect with the fellas,” says Keith Dias, workplace resources director, NetApp.

Why it works: S.R. Manjunath, senior director, HR, NetApp India, says: “We have social evenings over drinks and snacks where employees can unwind and connect with their colleagues at an informal level, irrespective of their designations. This helps in narrowing the gap between employee and employer. We also have Nintendo Wii, table tennis, and other indoor games. Initiatives like these build camaraderie within the employees and strengthen team-building initiatives.”

Chill Zone

From a mixed bag of games (adventurous ones too for the sporty types) to listening to music to even enjoying a quiet read, the Chill Zone at RPG House (earlier known as Ceat Mahal), Mumbai, has something for everyone. There is a music station, a video games section with an LCD television and recliners, a mini library (books, CDs, DVDs), a pool table, chess and carrom sets, a table-tennis board and a dart board too. Interestingly, the zone also has a punching bag to vent out your anger, when the going gets tough. Employees can use the facilities anytime during work hours and even after work. Vinod Kumar, head marketing, Ceat, who plays games at the zone every day, says, “The range of games available is exciting. I also feel it helps in bonding with team members, as the informal atmosphere here helps in having work-related discussions in a relaxed and open manner.”

Why it works: The Chill Zone is a perfect example of how the organization trusts its employees, says Arvind Agrawal, president and chief executive, corporate development and HR, RPG Enterprises. “While there will be no negotiations on deliverables by allowing employees to use office time for recreation, it re-emphasizes its trust on the fact that employees are responsible human beings who know what is expected from them and are focussed on deadlines. It also provides them with the much needed stress-buster, making RPG a fun place to work for.”

Isn’t it time you send your wish list to your HR?

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Indias hiring rising !

Corporate India's [ Images ] hiring activity is likely to increase around 30 per cent this year, with banking, information technology and fast moving consumer goods sectors leading the industry, global workforce solutions provider Kelly Services has said.

"Overall, across the main 7-8 key verticals studied by us, an average 30 per cent rise in hiring activity is likely this year as compared to the last year. Expansion plans of firms, revival in attrition rates and taking on board recruitment managers indicate a strong recruitment phase in the next six months," Kelly Services managing director Kamal Karanth told PTI.

Kelly Services on Wednesday released a study on employment conditions and salaries across key sectors, which aims to guide organisations in their workforce planning.

The Employment Outlook and Salary Guide 2010-11 revealed there is an increased demand for talent at mid-senior levels and even fresher levels, particularly in banking, IT and FMCG sectors.

"Fresh recruitments in banking and IT industry are likely to increase by 40-50 per cent this year compared to the last year, while FMCG may see a 20-30 per cent growth in hiring."

The main factors propelling the upbeat hiring sentiment include strong domestic demand coupled with country's fast economic growth as well as revival in the US economy.

Other key sectors expected to see strong hiring growth include telecom, engineering and real estate, the study said.

The study highlighted that in the banking sector there was a constant demand for banking and finance professionals and high quality customer-oriented services.

The current 'hot job' in the banking sector is that of relationship managers to provide advice and financial planning.

In the business process outsourcing sector, managers are expected to be in high demand as the focus is on process improvement and cost efficiency.

"Sales and marketing executives are likely to be in hot demand with companies across sectors want to market themselves aggressively to expand their businesses," Karanth added.

The study also stated that attrition rates across various sectors are on the rise with the revival in the job market.

The banking and IT sectors are likely to see an attrition levels of 15-16 per cent this year, while FMCG and telecom may see 10 per cent turnover rates on their large bases.

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Employee Retention Strategies to curb attrition

Bangalore: Desperate to rein in high attrition levels, India’s top information technology (IT) firms are offering mid-term hikes, promotions and even restricted stock (shares that are locked in for a fixed period before they can be sold) to keep employees from hopping on to rival companies.

Most IT firms had cut perks and frozen salary hikes during the downturn of 2008-09 as business from customers had slowed.

But with the economy improving in the US—the largest market for Indian IT firms—customers are offshoring more work to save costs and remain competitive.

Graphic: Paras Jain; photo: Madhu Kapparath/Mint

To meet this spurt in demand, IT firms are scouting for experienced employees who can deliver quality codes to their customers.

Much of this requirement is at the three- to seven-year experience level, the segment where most IT firms are losing employees.

Some “85-90% of IT-ITeS (IT and IT-enabled service) companies now are looking at off-cycle compensation-related interventions such as retention bonuses, off-cycle salary increases and equity-based incentives to control this situation,” said Sandeep Chaudhary, performance rewards consulting practice, South and West Asia, for US human resource consultancy Hewitt Associates.

Infosys Technologies Ltd, India’s second largest IT firm, has given two salary raises —8% and 13-17%—since October. In June, it gave at least five shares to each employee to commemorate the beginning of its 30th year.

These measures, though, haven’t cured it of its troubles yet. In the June quarter, Infosys lost 15.8% of its employees—its highest attrition since 2002.

Chief executive officer S. Gopalakrishnan isn’t daunted. “We expect attrition to subside in the next two to three quarters” as the churn settles in the industry, he said.

Wipro Ltd, the third largest IT firm in the country, gave promotions to 20,000 employees earlier in July—more than double its typical number in a year—and handed out restricted stocks (securities locked in for five years) to 8,000-9,000 middle and senior managers.

“Typically, promotions are given to 7-8% of the workforce,” says Saurabh Govil, senior vice-president, human resources, at Wipro Technologies, the firm’s IT services arm that has some 112,925 employees.

“Steep hikes are not the only answer,” he said. Staff would also be given options to work onsite or in different roles. Wipro’s attrition in the June quarter was 23%.

Tata Consultancy Services Ltd’s (TCS) attrition at 13.1% was the lowest among the big three. India’s largest IT firm gave promotions and average wage hikes of 10% in April, after a gap of one year. Its focus now is on non-monetary components: rotating jobs more often, not just within projects but across technologies, verticals and locations; and encouraging more first-time managers to take up people management courses.

“Retention is the focus today,” said Ajoy Mukherjee, vice-president and head of global human resources at TCS.

He ruled out a mid-term pay hike, but the variable pay component distributed every quarter, he said, would help retain people.

Chaudhary, too, does not favour excessive hikes. “While compensation may seem to be the most obvious cause of the current attrition, excessive usage of compensation-related interventions is not recommended as this will actually intensify the problem of wage inflation.”

The IT biggies, meanwhile, are adding to the churn in the industry.

Infosys has raised its hiring forecast for fiscal 2011 to 36,000 from the 30,000 it announced in April. TCS plans to hire 40,000 people. And at least a third of these hires would be experienced professionals from rival firms.

poornima.m@livemint.com

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Offshoring creating more jobs in India

Offshoring and outsourcing in services from call centres to accountancy and medicine have created good jobs in terms of pay and working hours in developing countries, according to a study published on Monday.

But the International Labour Organization (ILO) study found that improved work practices in the outsourcing industry could reduce excessive rates of staff turnover.

The study gives the lie to claims that outsourcing of such work has created "cyber-coolies" or "electronic sweatshops", said Jon Messenger, an ILO researcher and main editor of the study.

"The jobs being created in offshore business services in developing countries are reasonably good quality jobs by local standards in terms of wages and working conditions," he said.

The book looks at outsourcing in the two biggest markets, India and the Philippines, and two growing Latin American centres, Brazil and Argentina.

A study by the United Nations Conference on Trade and Development (UNCTAD) last year found the global market for information technology-enabled services was about $54 billion in 2008. The industry includes companies such as India's Infosys Technologies (INFY.BO) and Wipro (WIPR.BO).

100 PCT TURNOVER

Wages are below those for similar jobs in rich countries -- one of the main motives for companies to outsource operations -- but average pay in the sector in India is nearly double that in other areas of the formal economy, the ILO study found.

In the Philippines they were typically 53 per cent higher.

The study found that average weekly hours were 46-47 hours in India and 45 in the Philippines, whereas one fifth of workers in developing countries work more than 50 hours a week.

But negative factors such as frequent night work to handle customers' different time zones, and demanding targets enforced by electronic monitoring resulting in a low level of worker autonomy, led to extremely high levels of staff turnover.

Sometimes the turnover rate in the typically young and well-educated workforce could exceed 100 per cent a year, and rates of 30-40 per cent are not unusual.

"A few key changes in policies and practices could actually make these good jobs even better while simultaneously helping to reduce staff turnover which would benefit businesses," Messenger told a briefing.

These could include steps to improve health and safety for night workers, such as regular check-ups, and more flexibility for workers to organise their time and to meet targets.

Naj Ghosheh, an ILO researcher and the other editor of the book, said governments would want the industries to develop and innovate to move up the value chain rather than simply replicating imported processes. They would also want to retain skilled workers at home rather than encouraging them to emigrate.

The industry is highly influenced by language skills, with India and the Philippines serving English-speaking countries, Argentina serving Spain and Mexico building up operations to serve Spanish-speakers in the United States.

Africa is relatively underdeveloped although Nigeria's computer-literate population gives it potential.

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Persistence Pays !

We tend to link brains, beauty, luck and capital with highly successful business people.

However, a new study shows that exceptional performance need not depend on special talent, experience or even sheer luck.

Instead, it is the result of sustained, intense and deliberate practice in a particular area, says Robert A. Baron, professor of management and psychology in the University of Iowa who led the study.

The study authors show that most people work only 'hard enough' to achieve a certain performance level, acceptable to themselves and others, with no further gains.

The path to true excellence can be attained through perseverance, says the study.

Entrepreneurs can acquire new capacities that can assist them in starting or running a new venture or allow them to adapt to unforeseen circumstances, says a statement from the University of Iowa.

These factors help secure a positive outcome: preparation, repetition, self-observation, self-reflection, and continuous feedback on results. And these efforts lead to a healthy self-efficacy.

The study was published in the March issue of Strategic Entrepreneurship Journal.

IANS

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40% Employees wish to change jobs !

A significant number of employees are planning to switch their current jobs within the next six months mainly due to prospects of higher salary in other companies, a survey by employment portal TimesJobs.com said.

According to the survey conducted by TJ Insite, the knowledge and research wing of TimesJobs.com, employees across various experience groups are planning to switch jobs within the next six months and may even change functional areas for better prospects.

"Over 40 per cent of India's workforce will quit their current jobs within the next six months. Employees are already mentally prepared to move out of their organisations, industry and even plan to switch functional areas for better job prospects," the survey stated.

The survey conducted over 20,000 employees stated that "salary is the main driver pushing a majority of the workforce to look for new job opportunities." It also revealed that almost 50 per cent of the workforce does not see significant salary hikes within their current organisation, many don't see it within their current industry even for employees with up to 20 years of experience, it added.

"For HR managers, this is an important point to be flagged. You must be ready to loose your good workers not only to competitors within your industry but just about anybody in the job market," TimesJobs.com VP Vivek Madhukar said.

Though salary is the main motivation for job changes, once employees decide to move the main consideration is the new work profile they are moving to. Freshers and mid level managers, who were the most affected by the market downturn of 2009, are also planning to change their present industry for the same reasons.

Workforces in Bangalore, Chennai, Hyderabad and Mumbai especially, are found to be looking at job switches outside their current industry, the survey revealed. Almost 60 per cent of the workforce, currently employed with manufacturing, automobiles, business process outsourcing (BPO) and call centres, is planning to change to jobs outside their industry.

However, those employed with construction, information technology (IT) and software are looking for job shifts within their own industry. Besides switching across industries, employees are also looking at changing their job specialisations or functional areas.

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HR Policy - Reflections on Infosys

For over a decade, Infosys has been seen by many as the epitome of employee friendliness. That reputation has now taken a big knock. Several measures taken over the past few months - partly an attempt to correct what the company saw as excesses of previous years - has had many employees seething with anger.

That's reflected in hundreds of comments made in response to articles about Infosys on the internet in recent weeks, and in conversations TOI had with employees. Even the official internal blog is said to have been used to convey the discontent.

The biggest grouse relates to an HR initiative called iRace - Infosys Role and Career Enhancement - that was rolled out last year. The initiative was designed by consulting firm Mercer with the idea of mapping positions with experience and skill levels.

Previously, positions and promotions were often given arbitrarily, based on an employee's bargaining strength, which often was substantial considering jobs were aplenty. Many were given managerial responsibilities within three to four years, often leading to clients complaining about their lack of technology skills.

While iRace's objective appeared laudable, it suffered in its implementation, the worst of which was to make it applicable with retrospective effect. Many employees were demoted on the ground that they did not meet iRace's experience standards. So, senior project managers went down to project managers, project managers to technical leads, some even went down two levels.

"Designations are so important for everybody. And if the management found somebody good enough for a certain position earlier, how can they now say that he is not? What makes it worse is that, all those affected were at lower levels. Nobody in the senior delivery manager and higher positions were affected," said an employee.

Nandita Gurjar, global head for HR in Infosys, said about 5% of Infy's employees would have been impacted by designation corrections and demotions. Infy has a little more than 1 lakh employees, so that would mean about 5,000 being impacted.

She also added that salaries had been protected and that 95% of the company's employees had taken the iRace "career architecture" well. But some employees insist that's not the case

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Attrition Management - Infy Way

A strong rebound in the economy and rising job prospects, peculiarly, seems to have the top management of Infosys worried as hard facts of employee attrition hit home. The software major is going out of way to woo employees while setting the pace for pay hikes and promotions.

So much so that S. Gopalkrishnan CEO and managing director of Infosys shot off a mail to Infoscions last week seeking to assuage hurt sentiments, obliquely admitting that the management was willing to address some of the critical issues that employees are not happy about.

"I understand that you would like me to look at some of the concerns you have raised seriously and resolve them," said Gopalkrishnan in his letter. He added that the organisation believes that employees are key and the force behind every success.

"We have formed a task force to look into and champion employee engagement in every unit," he said.

Officially, Infosys says its attrition level is 11.6 per cent for Oct-Dec 2009. However, industry sources say the current quarter, whose figures will be disclosed only next month, has been a matter of concern for the company in view of a higher-than-expected departure of employees. Company officials are not giving details.

Infosys's policy mandates its employees to be physically present for a little more than nine hours a day in the campus. It also has a new iRACE policy that requires an employee to spend a minimum number of years before consideration for promotion.

The company has also introduced new certification exams linked to promotions and salary increases. An employee is expected to clear two such exams in a year.

Company insiders and ex-Infoscions are hardly surprised by the latest letter from Gopalakrishnan.

"Resentment has been brewing for over a year against certain HR initiatives of the company. With the recession waning away and more employment opportunities coming up people are opting out," said Devesh (name changed) a software engineer at Infosys.

The management, however, sought to downplay the issues, stating the company has been continuously changing its HR policies to keep the troops happy and motivated.

"We have a robust feedback mechanism in the company and policies are not static. Based on feedback and context, we have been modifying and tweaking policies for best results," a company spokesperson said.

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Temp Staffing Industry in India

TeamLease Services releases India's most comprehensive temporary staffing industry salary guide - Temp Salary Primer 2010 - covering temp staff working across 264 different Job profiles, 13 Industries and 8 Functional Domains in 14 major locations in India KEY FINDINGS OF THE STUDY * Infrastructure and essential services, as well as the IT/ITES industry - sectors that largely employ skilled labour and knowledge workers - are expected to raise salaries. The raise is expected between 7.5% - 15%. * Manufacturing industries and traditional services sector business (except for Retail), that mostly employ relatively less skilled / semi-skilled workforce, are not likely to increment payouts. * Salary realization is a felt need and the industry would continue to take baby steps towards being more generous in rewarding talent during 2010. * HIRING GAINING SPEED: Following a brief period of lull after last year's meltdown, employers have started hiring again. Hiring was overcautious though, as businesses were taking on new practices that evaluate candidate capabilities. There are indications, however, that numbers would be stepped up from the current 11% - 14% to about 18% over the first quarter of 2010 as the new practices mature. * SALARY GROWTH FROZEN: The flip side to the growth in hiring is that most industries have slackened increment structures and kept salary revisions and growth to the minimum - a few even brought the numbers down. In general, organizations kept salary growth at very modest single digits, the median growth statistic being 5.25%. The good news, however, is that a significant number of employers have rewarded select profiles with a fairly large dosage of increment. * SKILLS WIN BIG: This trend, perhaps, is shaping the future more than any other. Salary Growth is appreciably higher for profiles with sought after skills. What this means is, industry is handpicking highly skilled profiles and paying them much higher increments than the rest. For instance, Agriculture / Agrochemicals businesses in Bangalore have rewarded many of their Sales profiles with increments in excess of 10%. Likewise, many an Engineering and a Blue Collar profile received similar hikes across multiple cities from Automobile companies. * TELECOMMUNICATION AND ENERGY ARE THE NEW GROWTH ENGINES:Telecommunication and Energy stepped up hiring by about 16% (combined - and which beats the average quarterly market growth by a wide 4%) and increased salaries by 7.5% or more. Telecommunication companies in Bangalore, Chandigarh, Delhi, Mumbai and Pune as well as Energy businesses in Hyderabad, Mumbai, Pune and Bangalore upped the ante and doled out a 10% plus increment for several profiles. * IT PUTS UP A LACKLUSTER PERFORMANCE: Salary Growth stays down, just about breaching 7%, in the Information Technology sector.The sector remains cautious in terms of salary growth, but has begun hiring just as most other industries have. However, IT businesses in Ahmedabad, Bangalore and Pune have rewarded select profiles with increments in excess of 10%, just as in case of other industries. * THE SERVICES SECTOR STARTS EARLY: The Services sector is providing a much needed fillip to salary growth, with an average 6% growth, contrasted with the rather low, sub-5% salary growth average for the Manufacturing sector. Telecommunication, Healthcare and Information Technology - in that order - have been driving this growth. Energy, Automobile & Allied and FMCD - in that order - are the only Manufacturing sector industries to drive salary growth at 5% plus levels. * A CLUTCH OF INDUSTRIES REMAINS CONSERVATIVE: Agriculture / Agrochemicals, BFSI, FMCG, Hospitality, Manufacturing and Retail maintain sub-5% increments at an aggregate level. The increments vary by city and by profile and so at specific city levels increments could still be high. For instance, Agriculture / Agrochemicals pays well in Bangalore and Kochi, Manufacturing in Bangalore and Pune and Retail in Bangalore and Mumbai. * CITY TRENDS SEE SIGNIFICANT CHANGE: Bangalore (6.4%), Mumbai (6%) and Chennai (5.75%) lead growth, with Chennai dislodging Delhi from the top three high growth cities from the previous year. Indore, Jaipur and Ahmedabad are cities with the lowest growth rates in salary. * ATTRITION UNDER CONTROL: Most industries have brought attrition under check and across most profiles. Across industries and cities, attrition rates are a shade below 8%, while for industries such as BFSI, FMCG and Manufacturing, the number is just above 6%. Indore, Jaipur and Ahmedabad see the least attrition (about 6.5% on an average) while Bangalore and Chennai have the highest levels of attrition (about 8.7% on an average). * SKILLS REWARDED EQUALS BETTER LONGEVITY: Businesses that structure incentives right are able to better retain highly skilled profiles. Sans a few exceptions, such as Industrial Manufacturing & Allied and BFSI, industries that have higher payouts for better skilled people are the ones that are able to retain them better. Agriculture / Agrochemicals, ITeS and Retail are cases in point. TeamLease Services Pvt. Ltd, India's largest staffing company, today released their annual Temp Salary Primer 2010. The TeamLease Annual Temp Salary Primer 2010 is a comprehensive report on a variety of attributes that govern the dynamics of the employment market - skills, salaries, increments and longevity (which is a measure of the time period for which a profile would stay in a job - the inverse of attrition). Data points covering these attributes for temp staff working across 264 different Job Profiles, 13 Industries and 8 Functional Domains in 14 major locations in India have been processed and analyzed for this purpose. According to the study, the temporary job market is not yet very generous in incrementing salaries across the board. However, rewarding valuable skills will be the silver lining for the coming year and special skills sets are likely to be highly valued. The report further states that the hiring numbers would be stepped up from the current 11% - 14% to about 18% over the first quarter of 2010 as the new practices to gauge capabilities mature. The Skills are in demand and this could be seen from Agriculture / Agrochemicals businesses in Bangalore who have rewarded many of their Sales profiles with increments in excess of 10%. Likewise, many Engineering and Blue Collar profiles received similar hikes across multiple cities from Automobile companies. According to Rajesh A R, Vice President, Temporary Staffing, TeamLease Services, "The Indian temp staffing market is fast maturing and employers are giving valuable skills due recognition and rewarding them well. There is evidence that people retention and longevity is positively impacted by a fair distribution of salary increments in tandem with skill levels." "With the organized sector recognizing temping as a key people staffing strategy, temp staffing practices have evolved considerably. Not only are businesses narrowing the margin of difference between temp staff and permanent staff salaries, they are also rewarding the best sought after skills disproportionately. Now that salary increments are back, a 7.5% to 15% raise for temp staff, based on capabilities, is seen to be well in order to retain well-skilled people," added Rajesh.

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Payment of Gratuity Act - Amendments 2010

The Cabinet on Thursday approved an amendment to the Gratuity Act to raise the ceiling from Rs 3.5 lakh to Rs 10 lakh. The Bill to amend the Act will now go to Parliament, a government official told FE.

Every salaried person, who has completed five years of government or private sector service, is eligible for half a month's salary as gratuity for every completed year of service. But the gratuity pay of those with higher salaries is now limited at Rs 3.5 lakh. The proposed amendment raises this to Rs 10 lakh. Every employer with more than ten salaried workers is mandated to provide gratuity to the eligible employees. Many companies, however, do not keep the gratuity liability adequately funded. That is, they make provisions for future payment, but do not set aside funds towards the future payment. Listed companies are expected to disclose their gratuity liability.

Meanwhile, the Cabinet Committee on Economic Affairs (CCEA) approved a proposal of India Infrastructure Development Fund Ltd (Mauritius) to raise contributions from international investors and invest in the India Infrastructure Development Fund. The proposal, earlier approved by the FIPB, will result in FDI exceeding Rs 750 crore.

The Cabinet approved the proposal of the shipping ministry to declare Andaman and Nicobar set of ports as major port and establish the Andaman and Nicobar Port Trust with its headquarters at Port Blair.

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Indian Biggies eye Software Product and R & D Thrust

By fe Bureaus

Major IT companies in India like Infosys (INFOSYS.BO : 2623.4 -37.25), Cognizant and Accenture are gearing up for a big pick-up in the IT product development market, according to a Forrester report. The report, which covers the positions of the three IT companies in cashing in on the R&D-based product development market, says Cognizant now looks at

offshore products as another growth engine in order to be a top offshore service provider.

Over the past 18 months, Cognizant's R&D practice grew nearly 30% and it now has 6,500 resources across various sub-areas like software products, online platforms and industry-focused software products. The firm is now substantially larger than many many firms which specialise in these segments. Cognizant recently announced an Invensys partnership, in which the company re-badged more than 520 resources from Invensys' Hyderabad facility and secured two labs, as well as expertise in more niche product engineering areas like process control software and a railway operation management platform.

Infosys is another IT major looking to make it big in the product engineering development market. The company has already started modifying its product engineering divison's leadership and offshore delivery management with extended management and investment support. The company is building skills and capacities in new areas such as medical equipment, green, sustainability and network products and is also aligning this practice to its vertical-focused manufacturing and telecom sales team in order to achieve better internal support and position services in more-client situations.

To make the offerings complete, Infosys has also merged its mechanical engineering service practice with its product engineering practice to create an integrated engineering unit suitable to a large set of verticals that span across automotive, aerospace, healthcare, energy and various other high-tech verticals. While Infosys is yet to see a huge success in this space, it is clearly investing more to become a recognised player.

Riding the innovation wave

through investments in R&D expansion, Accenture will continue to invest substantially to create several innovation centres in Bangalore, New Jersey and Rome and generate intellectual property assets in domains such as enterprise mobility, user experience and convergence of device technologies and intelligent homes.

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