Talent deficit can derail Make in India programme

An article in Financial Chronicle talks about Indian industry facing a chronic shortage of talent in the manufacturing sector, derailing the Make In India programme; along with inputs from Sonal Arora.

Despite the government’s ambitious target to make manufacturing account for 25 per cent of the GDP by 2022 from current 16 per cent, Indian industry finds that a chronic shortage of talent in the manufacturing sector can derail the Make In India programme.

The government has set a target to create 100 million jobs by 2022, centred of its “Make in India” initiative, but least estimates suggest that the manufacturing sector has created only four million jobs since 2010. This, despite 30 per cent to 40 per cent talent deficit on the shop floor that accounts for almost 80 per cent of jobs in the manufacturing sector.

“This deficit can go up to 50 per cent to 60 per cent, if investments speed up in new facilities,” said Sonal Arora, vice president at hiring agency Teamlease. In India, manufacturing accounts for 11 per cent of employment against 40 per cent in China. To reach the official employment target, this must go up to at least 25 per cent, though the government has not set industry specific targets or a roadmap to achieve this.

Experts say India does not face scarcity of manpower, but skilled labour, with only 2 per cent of the population comprising skilled workforce, as per government data.

“Today, there is increasing automation the world over. Manufacturing requires a higher level of skill to operate sophisticated machinery. Any unskilled worker cannot get into factories, as was the case a few years ago,” said Arora. According to her, post recession, companies have been increasingly focussing on cost control and productivity. Hence, they have become selective about inducting talent.

What’s worse, there are very few institutions to train people for manufacturing. The ITIs still have pedagogies that do not match up with current requirements. “The curriculum that they follow has not changed much in the past 70 years,” said Suman Rudra, India HR leader at NCR Corporation.

“There are issues with regard to the talent passing out from the training institutes and colleges and this is not just specific to ITIs, but engineering colleges and management institutes as well. The teaching methodology, content and the delivery method in these institutes do contribute to mediocre output,” said Aditya Narayan Misra, CEO and director at CIEL HR Services.

For sometime now, the National Skill Development Corporation (NSDC) has been preparing training modules in collaboration with industry segments, but in many cases, the requirement and skill sets would have changed by the time it identifies the requirement in a particular sector, prepares a module and trains people.

This expectation and delivery mismatch is not only an issue with the industry, but also with the employees. “The job profile, ecosystem and the remuneration might not match employee expectations. As a result, at least one-third of the hired workforce drops out,” said Rudra.

Of late, the industry has been shifting its reliance on talent made available by the government, with several large companies running their own training programmes.

“But we too have our limitations, without the government initiating reforms in labour laws. We cannot induct too many people without changes being made in the Industrial Disputes Act or those that allow units to close due to financial loss. Several automobile and telecom companies have been in trouble due to labour problems,” said Rudra.

The pay structure in the manufacturing sector too is not very attractive for people to migrate from villages to industrial hubs. “After meeting all the expenses of relocating, the job provides very less opportunity to save. Social security schemes and job guarantee schemes in the villages tempt them to stay back,” said Misra.

The expectation-delivery mismatch is not limited to the jobs on the shop floor alone. “There are jobs in sales, customer service and operations. But employability and productivity expectations have gone up. A few years ago, companies used to hire three out of four candidates we sent. Now, hardly one gets hired,” said Arora.

A study by Singapore-based Emeritus Institute of Management suggests that India Inc has been struggling to source the right talent even for middle managers that align with current requirements and for future growth. The companies are unable to hire, retain and upgrade existing talent to take on new roles in a competitive business environment.

The study says that almost 90 per cent of the respondents in the manufacturing sector found that retaining good talent affected organisational growth.

“One of the key challenges of India Inc is locate able middle management talent to lead, manage and mentor employees with varying skill sets and work experiences. Assuming a 1:10 ratio between managers and low-skilled jobs, India will still need to groom 3-8 million managers in the next 10 years. This middle management represents 30 per cent of the entire workforce,” said Ashwin Damera, the institute’s executive director.

This expectation and delivery mismatch is not only an issue with the industry, but also with the employees. “The job profile, ecosystem and the remuneration might not match employee expectations. As a result, at least one-third of the hired workforce drops out,” said Rudra.

Of late, the industry has been shifting its reliance on talent made available by the government, with several large companies running their own training programmes.

“But we too have our limitations, without the government initiating reforms in labour laws. We cannot induct too many people without changes being made in the Industrial Disputes Act or those that allow units to close due to financial loss. Several automobile and telecom companies have been in trouble due to labour problems,” said Rudra.

The pay structure in the manufacturing sector too is not very attractive for people to migrate from villages to industrial hubs. “After meeting all the expenses of relocating, the job provides very less opportunity to save. Social security schemes and job guarantee schemes in the villages tempt them to stay back,” said Misra.

The expectation-delivery mismatch is not limited to the jobs on the shop floor alone. “There are jobs in sales, customer service and operations. But employability and productivity expectations have gone up. A few years ago, companies used to hire three out of four candidates we sent. Now, hardly one gets hired,” said Arora.

A study by Singapore-based Emeritus Institute of Management suggests that India Inc has been struggling to source the right talent even for middle managers that align with current requirements and for future growth. The companies are unable to hire, retain and upgrade existing talent to take on new roles in a competitive business environment.

The study says that almost 90 per cent of the respondents in the manufacturing sector found that retaining good talent affected organisational growth.

“One of the key challenges of India Inc is locate able middle management talent to lead, manage and mentor employees with varying skill sets and work experiences. Assuming a 1:10 ratio between managers and low-skilled jobs, India will still need to groom 3-8 million managers in the next 10 years. This middle management represents 30 per cent of the entire workforce,” said Ashwin Damera, the institute’s executive director.
Innovation and strategic thinking is the most notable skill gap in middle management. They also lack a global mindset to take the organisation to the next level and efficiency in leading people and team.

“Attrition is a problem in the industry. Retaining talent depends on how the organisation treats the employee as an asset and what he feels about the company. The manufacturing industry, especially the consumer durables and telecom sectors, is fast evolving. Manpower too has to be constantly upgraded,” said Eric Braganza, president, Haier Appliances.

This article was published in Financial Chronicle

Author

Sonal Arora

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