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Q&A: Hitesh Oberoi, MD and CEO, Info Edge (India)

'The skill gap will make India uncompetitive'

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Kanika Datta New Delhi
Last Updated : Jan 21 2013 | 6:57 AM IST

Companies across the board are hiring like never before as the investment cycle picks up. But Hitesh Oberoi, 36, whose company owns the leading jobs site naukri.com, predicts that India’s growth could be constrained because of this, with companies struggling to find good-quality entry-level talent, attrition rates rising and salaries set to “go through the roof”. All of this could well make India uncompetitive beyond a point unless skill levels are upgraded, Oberoi, who took charge of the company he promoted in July, tells Kanika Datta. Excerpts from an interview:

Naukri’s monthly job index has been showing a steady year-on-year rise this year. What is the big picture that’s emerging?
The big picture is that hiring is back to 2008 levels and it’s very secular. Sure, one or two sectors have been affected recently – like insurance – but that’s because of policy uncertainties. In general, however, hiring is taking place across the board. But it is also true that it is very difficult to hire because people of the right skills are not available.

Yes, companies are talking about hiring thousands of specialists but where are they going to come from?
So, the established companies have established systems. If someone has been in the business 10, 20 or 30 years, they normally have a good campus-hiring programme, promote people internally and so on. But if you are a new company or want to expand or set up a new project or go to a new geography, it’s tough because you have to do lateral hiring, and that is expensive. So lateral hiring is a huge challenge across the board. Also, new companies don’t go to campus to hire because they want experienced people and they don’t have systems in place to go to campus, they don’t have a rapport in campuses, jobs are not well defined so that’s where the problem starts. And what we’re seeing now is the start of an investment cycle — that means new projects, new companies, new geographies, new markets, new products. Therefore, lateral hiring is going to take off. And it’s going to be very difficult for companies to find people.

What is this doing to salaries?
They’ll start going through the roof very soon. It’s already happening — companies, especially IT companies, have had to give a second round of increases because lots of guys are opting for their own start-ups. The thing about lateral hiring is that if you lose two, you have to increase salaries for 20. Say, you have a company with 1,000 people and you lose 10. You’re so scared of losing the others that you increase salaries for the remaining 990 as well. Now, it’s not as though the remaining 990 will all get jobs — but there is discontent and dissension so companies raise salaries to keep those people happy and motivated. Often, the people you lose are not your best people. Those who leave are usually those who are not doing so well — but when they go and get jobs outside at even higher salaries or designations, it has this impact on employees and companies are forced to raise salaries as a result.

It’s already happening. Take the call centre business. There’s huge pressure on call centres because voice processes especially are moving out of India. There’s a huge amount of attrition, people don’t want to work in call centres or in night shifts and so on. And other countries like the Philippines are becoming very competitive in call centre voice work.

What’s happening in the manufacturing sector?
Manufacturing is very broad, but the automobile sector is doing well. If infrastructure picks up then hiring in companies servicing those sectors – power equipment, cranes and so on – will also pick up.

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Is that actually happening?
It’s happening but not as fast as we think because projects get stuck and take a lot of time, so there’s a lot of talk but still not a lot of movement.

Any surprises in the jobs data?
If there’s a surprise, it’s that the index is very secular. Every company is hiring and every company is finding it difficult to hire. And there is a huge issue with entry-level talent. What is happening is that India is graduating a lot of engineers and MBAs, so to speak, but they don’t know much about engineering or management — they just have degrees. And virtually anyone you speak to will say not more than one-third or one-fourth or one-fifth of these guys are employable. They are being educated but they are not skilled. I have stories from cement companies saying they have plants ready but they can’t get crane operators. What do you do?

Considering that western economies are slowing down, do you get a lot of interest from overseas?
Not from westerners, that may be happening in parts here and there but it’s not a trend. But Indians, yes. Mostly in IT, product companies, tech companies. I honestly don’t have the numbers but I know people who have moved back with families in the last year alone. Overall, I would say it’s easily more than the number that moved back in the last ten years. People who are moving back are not Indians who have been abroad for 20 or 30 years, but those who went abroad after their studies in India and have been abroad for less than 10 years. They are the younger lot who, typically, don’t have school-going kids and they’re mostly in tech.

Will this have a significant impact on the jobs market in India?
No, because the numbers are not all that huge, and these are high-value people. See, at the lower end people still want to go abroad because somebody – say, a programmer from a tier-two institute – who earns $10,000 a year here can still earn $70,000 overseas. But at senior levels, the big story is that Indian salaries are now comparable to foreign salaries. Salaries are converging at senior levels. So in IT, let’s say you are a senior-level professional with 10 to 15 years experience. You could earn $130,000 which is about Rs 55 lakh. If you come to India, you can easily get a job for that amount. The salary ratio at the entry level is still about 6:1, but at senior levels it’s now 1:1 or 1.25:1. So there a chunk of people earning between $100,000 and $150,000 in the US who can now get jobs in India at senior levels.

What’s the prognosis for 2011, given that our GDP seems to be growing steadily every quarter? Will the rate of increase in hiring accelerate?
I have my doubts, but I have always been surprised by the GDP numbers. I think India doesn’t have the capacity to service a growth rate like this. At the end of the day if you don’t have people, if there is massive churn and employability is an issue, who is going to do the job? And this will start to hurt. Sure, you can take people and train them but that takes that much longer. But what’s the point of sending them to school if they don’t learn anything? Salaries will keep increasing as a result of this skill shortage and, therefore, beyond a point India will become uncompetitive. It has already happened in BPO. The reason we have become uncompetitive is that, one, you have to pay Rs 15,000 to Rs 18,000 a month; on top of that you have to provide transport, then you still have attrition. At the same time, billing rates are not going up. This is not going to happen in a year but it happens slowly, every year.

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First Published: Dec 10 2010 | 12:47 AM IST

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