Siddharth Srivastava
Indian workers will pocket the world’s highest-percentage salary increases in 2007, according to an international survey, thanks to a severe manpower shortage combined with strong economic growth.
A spokesman for ECA International, which surveyed 45 countries, said: “Indian workers are set to receive the highest raises, with firms forecasting annual salary hikes of 12%, resulting in a real wage increase of 7%, once inflation has been taken into consideration.”
Wage rises in Hong Kong are forecast at 1.5%, while those in Japan, Taiwan, South Korea and Malaysia are likely to be between 2% and 3.5%.
Indonesians, along with mainland Chinese, are expected to record a real wage increase of about 6%, while the Philippines and Thailand, with a hike of 4% each, come in at fourth and fifth respectively.
Vietnamese managers are expected to receive the lowest real wage increases in Asia, with high inflation canceling out a sizable salary increase, the survey said.
The talent shortage in many Asian economies is most evident at senior management levels, where the most significant salary increases are occurring, leading to a widening gap between junior and senior management levels, the survey said.
The salary hikes in India and China at all management levels are exceeding increases in more developed Asian economies, such as Singapore and Japan.
“While one does not expect senior salary levels to be in line with more mature economies in Asia within the next couple of years, the fast growth of salary levels in the rapidly developing markets in Asia presents a huge challenge to human resources,” ECA International general manager Lee Quane said.
ECA, the world’s largest membership organization for international human-resources professionals, establishes actual and predicted salary hikes in local markets around the world, and multinationals use the survey to benchmark future wage hikes.
The ECA report follows similar assessments. According to the 2006 Salary Guide issued by Kelly Services India, the country has the highest average salary increase at 13.9 %, with employees in the information-technology (IT) industry receiving the highest increase across all five groups surveyed at 17.9%. Earlier, surveys by Hewitt Associates and Mercer Human Resource Consulting on projected salary increases in the Asia-Pacific region found that India came out on top.
In India, sectors such as IT, manufacturing, banking and financial services, infrastructure, human resources, marketing, retail and hospitality are likely to see the biggest raises.
Indeed, an acute manpower shortage has resulted in a peculiar situation of unrelated sectors competing with one another. For example, software giant Infosys chief Nandan Nilekani recently said the IT industry is facing tough recruitment competition from the financial services sector.
Nilekarni said that the two sectors are driving up the demand for entry-level people, though IT continues to hire the largest number of new employees. “Right now, the retail industry is hiring, but they are not able to get employees,” Nilekani said.
It is expected that the IT industry will hire about 400,000 people this year, while financial services will need 75,000-100,000 new hires.
“With the industries competing for the best talent, financial services could offer a slightly higher wage to grab them,’’ Nilekani said.
The salary hikes are in the wake of a severe manpower shortage. The National Association of Software and Services Companies (NASSCOM), in its study with management consultancy firm McKinsey, has said that only 25% of technical graduates and 10-15% of general graduates are suitable for employment in offshore IT/business processing and outsourcing (BPO) industries.
According to NASSCOM, more than 3 million students graduate from Indian colleges every year and the country produces 400,000 engineers annually, but “of this only a very small percentage is employable”.
The IT/BPO sector in India is poised to grow at an annual rate of more than 25%. Currently, India accounts for 28% of IT/BPO talent among 25 low-cost countries, but NASSCOM projections indicate a potential shortfall of nearly 500,000 qualified employees.
One strategy has been firms setting up institutes related to their core area, for internal hiring and also to create a talent pool for the entire industry.
Thus Gujarat State Petroleum Corp’s Institute of Petroleum Technology and Petroleum Management is being set up; ICICI Bank-NIIT’s Institute of Finance, Insurance and Banking opened recently; and telecom company Bharti has started a school of telecommunication and management in collaboration with Indian Institute of Technology-Delhi.
Motorola University in the US is tying up with various vendors in India to provide specialized training.
Market estimates say the Indian IT industry needs to spend up to US$3 billion in training an additional 1 million professionals over the next three years to make them employable.
The IT industry is trying to work with the education system in India. Software major Infosys recently announced plans to invest $176 million on expanding its global education center in Mysore over the next year. The firm plans to set up a new 9,000-seat training facility, which would enable training of 13,500 individuals in a single sitting.
To keep tabs on quality of manpower, as well as check growing instances of data theft, NASSCOM has announced the national roll-out of its assessment and certification program, the NASSCOM Assessment of Competence. The NAC seeks to fulfill two aims: checking technology-related crime and ensuring there is a sufficient pool of talent.
Wipro Technologies has the capacity to train 7,000 people a day. TCS has training facilities at Thiruvananthapuram and Hyderabad in addition to smaller training centers in each of its offices across the country. It already has 170 regular training faculty and other visiting trainers.
Many BPOs are tying up with academic institutions. Hewlett-Packard has tied up with Jadavpur University to exchange knowledge in mobile computing, while Cisco, the networking major, has set up more than 130 networking academies across 20 states and union territories in India, training more than 6,000 students.
There is considerable debate in India over allowing foreign higher education institutions to play a greater role.
The Commerce Ministry has been arguing in favor allowing foreign universities, such as Harvard, Yale, the Massachusetts Institute of Technology, Stanford and the London School of Economics, to open campuses here. But the left-wing parties, as well as sections of the government, are opposing the move.
Meanwhile, the appetite for trained talent is only going to grow.
