It is a job-seeker's market, ahoy!

By Rajas Kelkar and Sunainaa Chadha

A construction company in Bangalore wanted to hire a fresh candidate for an accounting job. A chartered accountant who cleared his exam in the first attempt was considered ‘right’ for the position. The company found that the candidate expected a salary that was 20 percent more than the typical annual salary the company paid such an employee.

The same company hires migrant labour and skilled workers for jobs at construction sites. The cost of labour has gone up by 50 percent over the past two years. One of the big contributory factors to this wage price inflation is the government’s National Rural Employment Guarantee Scheme.

[caption id=“attachment_30972” align=“alignleft” width=“380” caption=“Getting the right people at the right cost is emerging as the biggest challenge for corporate executives. Reuters”] [/caption]

Two illustrative examples - from different ends of the employment spectrum, but with a common thread.

Increasingly, companies are finding it hard to fill skilled positions at a manageable cost.

A Mumbai-based boutique investment banker feels that many small and medium enterprises are not taking strategic decisions due to talent or labour-related issues. He cited the situation in Gujarat where migrant workers from UP and Bihar made up for the demand for labour.

Getting the right people at the right cost is emerging as the biggest challenge for corporate executives.

A survey by McKinsey Global Institute , a thinktank affiliate of consultancy firm McKinsey, suggests that although hiring expectations remain tepid globally, 37%of all respondents - and nearly half the respondents in China, India, and other developing markets - say their companies have had job openings they couldn’t fill for six months or more. A key reason for this is high wage expectations.

“Sixty-nine percent of all global respondents say there are some positions for which it is particularly difficult to find qualified applicants,” the survey reveals.

Across regions, the positions most often cited as difficult to fill are managerial and technical jobs at the mid-level.

Indian companies appear to be tacklingthis challenge in different ways.

Engineering and construction group GMR is concerned about finding people to operate the over 4,000 MW power generation capacity the group is building. Aruna Jayanti, CEO at Capegemini India, too has felt the pinch. In an interview, she says she spends about 25 percent of her time finding talent-related activities such as employee satisfaction, retention and training.

“I believe that every talent comes with a price,” said Deep Kalra, CEO of MakeMyTrip. The trade-off between skilled talent and high wage expectation does exist, and is a valid one, he acknowledges . “Talent comes with a price but we ensure that we maintain a parity across the organisation as well as in the market,” he added.

According to a February 2011 survey of global CEOs by PriceWaterhouseCoopers , 66 percent of respondents say that there is a limited supply of candidates with right skills. It suggests that companies the world over are likely to overhaul their people strategies.

Kishore Biyani, Group CEO of Future Group and MD at Pantaloon Retail, doesn’t quite agree with the survey and says this is more of a Western phenomenon. Shortage of the right talent is not the real issue; harnessing that talent is the challenge, he says. For mid-level jobs, especially managerial positions, one can go to the IIMs and IITs. “If you want to retain talent, you not only have to give them good salaries but also intellectual knowledge and most importantly power and an identity.”

About 72 percent of CEOs in Asia-Pacific plan to use non-financial rewards to retain staff against 65 percent in the whole world. A key strategy would be to deploy staff on international assignments. In Asia-Pacific, 65 percent of CEOs plan to do that.

GMR is allowing bright engineers manage projects. A spokesperson at GMR said that the group is concentrating on upgrading skills of workers. It has engaged an Australian firm for the purpose. “GMR Foundation also supports courses for diploma holders in skill upgradation,” the spokesperson said.

Tata International, the unlisted arm of Tata Group, is another example. According to media reports the company is creating independent business verticals and injecting fresh talent from India to spearhead expansion plans abroad.

Already, companies have begun paying more to employees. Global powerhouse Siemens in June announced a special one-time payment totalling Rs 1,900 crore to its employees worldwide. Titan paid its employees ex-gratia to acknowledge their commitment toward exceeding sales targets when the company was going through a rough patch.

An analysis of employee costs as a percentage of revenue for the year ended March 2011 of BSE 500 companies suggests that over the past five years, employee costs rose by 3-4 percent for fast-growing sectors like metals, auto, cement, construction, financial services, power generation and pharmaceuticals. Infrastructure companies need engineers while pharmaceutical companies are looking to produce new drugs or sell more prescription medicines each year. In the financial services space, all companies are battling with each other to sell you new credit cards, car loans, home loans and other loan or insurance products.

The IT services sector, which has the highest employee cost to revenue ratio has managed to hold on to to the cost. The average employee cost to revenue is 41% for the year ended March 2011 against 43% five years ago. However, the pace of revenue growth has also slowed down after a spectacular run for more than a decade.

As long as companies see quarter to quarter profit growth the going definitely looks good for employees. The minute there’s that old slowdown stench, the tune will certainly be different.