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People problem! - Views on News from Equitymaster
 
 
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  • Oct 5, 2005

    People problem!

    India has arrived! India's century! India shining! Wait! Stop here! And start thinking! Has India really arrived? Is India really shining? The way the Indian economy is growing, and the way competition is getting hotter, India Inc. is facing a crisis of sorts - something that was never a point of consideration for Indian companies in the past. The crisis relates to 'people' and despite boasting of the second largest population in the world, India Inc is facing 'people problem'.

    We know of companies that have large war chests (cash), having the ability of paying world-class salaries and still not being able to find good project managers to take over the growth mantle. And we know of other companies that are leaders in their respective sectors and are still are not able to retain key personnel being carried away by the lures of foreign shores and dollar dreams! So, where is the people power to carry India on a path of sustainable growth and development?

    Well, the people problem lies not only with the Indian IT/ITES companies but has now spread across the gamut - also affecting the old economy companies. The issue is especially grave for some of the leading engineering companies in the country that are seeing engineers leaving in droves. In fact, attrition rates in the Indian engineering sector have soared to around 15% and in some cases, to 20% levels. Engineering is a high skill-intensive industry and like a software company, it needs skilled people to grow larger and scale up for taking bigger and more complex contracts. The problem has now become so grave that while people are leaving in hordes, companies are finding it difficult to get due replacements. Also, most of the people, as we gather from some of the managements, are leaving to work for new economy technology firms.

    As a top official in India Inc puts it, "The problem earlier was retrograde government policies, the problem now is talent shortage. The future war will be fought based on who's got the best talent. Our biggest challenge is to attract talent laterally and to retain our talent pool."

    Considering these facts, we wonder that if this kind of exodus of talent continues from leading Indian engineering companies, who will build India's roads, ports and bridges. Just who will? And how will the economy chug along on a sustainable growth path (ironically) to align itself to the 'sky-high' expectations from the stock markets?

     

     

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