Employment, business outlook dip: Report

Last Updated: Wed, Dec 26, 2012 11:23 hrs

Bangalore, Dec 26 (IBNS) The sluggish overall economic growth seems to have had its impact on the hiring sentiments in the forthcoming quarter, states the TeamLease- IIJT Employment Outlook Report for the quarter January - March 2013.

According to the report, both the net employment and the business outlook have registered a 2 and 1 point drop in their indexes respectively indicating stagnant hiring outlook in the forthcoming quarter.

On the functional front, Engineering and IT seem to be bearing the brunt of negative growth. However sales, marketing, and blue collar will be the most sought after functions over the next three months.

From a sector perspective, with an exception of Infrastructure, IT & ITes the employment outlook seems to be flat across most of the sectors.

According to the report, with 3 and 1 point dip in the employment and business outlook indexes, Bangalore has been reported as the worst affected city in terms of employment as well as business outlook. The employment outlook in Bangalore has depreciated from 75 in the last quarter to 72 in the current quarter.

Further, the report reveals that though the employment outlook is largely muted across most of the sectors and functions, there is a growing demand for superior or better quality skills. For instance companies have expressed an interest in hiring skills such as accounting, book keeping, administrative and legal experts.

According to the report, though attrition has been brought under control, job hopping is still prevalent pushing companies to incorporate various performances based rewards as well as career enhancement activities.

Commenting on the report, Sangeeta Lala, Senior Vice President & Co-Founder TeamLease Services, said, "The slow GDP growth rate coupled with the recession in international market seems to be taking its toll on the employment scenario.

"Most of the sectors have reported stagnant growth in terms of hiring intent in this quarter. However the recent reforms announced in the various sectors is expected to lift the market and result in more employment in the future. We are confident that the outlook for the next quarter cannot be extrapolated for the entire 2013-14 fiscal."

"We have seen earlier also that business and employment sentiments can change significantly over two quarters if the macroeconomic factors play their part. A perception of strong domestic growth that can be triggered by monetary policy easing as well positive global cues can change this current sentiment," she added.

TeamLease- IIJT releases the Employment Outlook Report every quarter after a survey conducted with HR managers and senior management of leading companies in India.

The study, which covered 640 companies in the latest round, focuses on the employment growth potential, the business outlook and hiring forecasts with relation to the location and the company profile.

Outlook for 2013

According to TeamLease-IIJT, Year 2012 was mostly stagnant both in terms of employment as well as business outlook.

The Net Employment Outlook for Jan- March '12 was 71% and for the quarter Oct- Dec '12 was 79%, indicating a rather slow growth in net employment.

From a sector perspective, except for healthcare and pharma, retail &FMCG experiencing quarterly spike, most of the sectors had registered a rather stagnant growth in the current year.

However, one of the positive trends noticed was drop in attrition across sectors bringing in stability to the organizations.

Another trend that was witnessed was HR re-structuring at IT companies.

Apart from the niche technologies that were in demand there was a 50-60 % increase in demand for sales professionals in IT companies. Also, the year gone by saw companies laying stress on off-campus placement rather than campus placement.

Though the outlook for the immediate quarter (Jan-March 2013) is rather sluggish, it will be momentary and the net employment would improve for the year 2013.

The recent reforms announced in various sectors like retail, banking, etc. is expected to cheer the market and pull the employment outlook upwards.

Infact, the year 2013 would see a burgeoning demand for niche skills like analytics, telecom, design and profiles like R&D. Sectorally, retail, consumer durables, engineering, real estate, construction, biomed &pharma are likely to hire more. Retail is expected to experience a 20- 25 % growth in hiring.

However, from a salary perspective, it would be more realistic. Barring few exceptional performers who can expect a double digit pay hike, most industries will be rewarding talent with single digit increments only.

Executive Summary

The Net Employment Outlook Index falls by 2 points after experiencing a positive growth in all the previous three quarters. The Net business outlook index fluctuates over the previous three quarters and loses marginally by a single point. The forthcoming quarter, January-March 2012-13, foresees a stagnant outlook in the job market.

Bangalore, with 3 point and 1 point dips in the employment and business outlook indexes, respectively, is the only city to lose out on both the employment and business outlook indexes. The indexes for the rest of the cities either increase/decrease marginally or stay flat in the upcoming quarter.

Sliced by sectors, the analysis reveals a flat employment sentiment for 5 out of 8 sectors. Sole exceptions include IT (2 points down), ITeS (2 points down) and Infrastructure (3 points down) respectively.

In the case of business sentiment, the decline in indexes are marginal for IT, ITeS, Infrastructure and Financial Services (1 point each) respectively and a stable outlook across the other sectors.

Hiring intent decrements a little for Entry, Middle and Senior levels (1 point each). Geographically, Metros see a minimal decrease of 1 point, while the rest post flat numbers.

Sales and Blue collar functions see a marginal increase of 1 point each in their hiring intents; however, IT, Engineering and Support(Accounts/Finance and Administrative/HR/Office Service) functions are slightly less favoured (1 point drop) in the forthcoming quarter.

Literature review findings paint an interesting picture- For the quarters, Q2 and Q3 of FY 2011-12 and Q1 of FY 2012-13, our employment and business outlook forecasts and the GDP growth rates are in step with each other. There could be an interesting relationship between these two trends that can help us predict hiring trends / sentiments.

Results of the in-depth survey point to demand of skills as a driver of hiring.

With salary, being the most common cause of attrition, talent retention practices such as rewards and recognition and career growth oriented programs prevail in organizations.

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