Air Deccan's Gopinath: It's tough to 'ground' staff

Airline industry execs would like everyone to believe that the job market relevant to them is not as overheated as it is made out to be. However, rumours of a no-poaching agreement between Air Deccan and Kingfisher Airlines, and Air Sahara's decision to sue SpiceJet for poaching pilots tell a different story. Still, with most pilots already being well paid, the real salary boom is happening for ground staff with new airlines paying premia of anything between 50 and 100 per cent. "I have already lost several members of my ground staff," says Captain G.R. Gopinath, Managing Director, Air Deccan (itself only three years old). "They have joined new carriers at salaries that are sometimes double what they used to earn." There's unlikely to be a shortage of ground staff, though, like there is for pilots; Sunil Arora, the outgoing MD of Indian Airlines, is convinced that even this is a temporary phenomenon "because there are more Indian pilots coming through". "Salaries increased 12 years ago when several airlines entered the market," he adds, "and then, when most collapsed, there was a glut of trained staff." With the economy on a (modest) roll-there's a direct correlation between economic growth and passenger traffic-and Air Deccan not imploding as many expected it to (proving, in the process, that a low-cost airline can be viable in India) that seems a remote possibility.

-Kushan Mitra

ICICI's Ramkumar: Bank jobs galore

In 2004-05, the Indian banking industry grew by 15 per cent; the corresponding figure for the asset management (mutual fund) industry was 9 per cent; and for insurance, 15 per cent. Growth engenders demand for people (which, in turn, encourages companies to loosen their hold over purse strings), with Ramkumar K., Senior General Manager, ICICI Bank, predicting that some 35,000 people will be hired by the financial services industry this year (banking alone will account for 25,000, and ICICI Bank, 12,500). The sector is also open to poaching by IT enabled services firms that are focussed on the financial services space (most are). Ramkumar stresses that ICICI Bank "does not compete in the employment market on (the basis of) salary" but there are enough firms that do, especially those seeking a toe-hold in booming markets such as housing finance, asset management, investment banking and broking or new ones such as pension funds. "Salaries in the banking business have increased by around 20-25 per cent over the last two years," says Arun Das Mahapatra, Managing Partner, Heidrick & Struggles. This year promises to be no different.

-Priyanka Sangani

Jindal Steel & Power's Joseph: Experience pays

You know the salary boom is well and truly on when companies in the engineering and manufacturing sectors start battling high attrition rates. The two, after all, are sectors where "human capital isn't the only cog in the wheel, and people are not the product", according to N.N. Akhori, Vice President (Human Resources Management), Hero Honda. Surprisingly then, attrition in the engineering and manufacturing industries is up from 7-9 per cent two years ago and is nudging the 15 per cent mark; it is a mere few percentage points lower in IT services. That could explain why salaries in the two industries increased by an average of 15 per cent last year and will, by a similar amount this year. The number is higher in the case of some companies; at Jindal Steel and Power, for instance, salaries have increased by an average of 24-28 per cent over the past few years. "Three years ago an individual with eight to 10 years experience would earn Rs 30,000 a month; today the same person would earn Rs 80,000," says Joseph John, Deputy General Manager (HR), Jindal Steel and Power. One reason for the explosion in salaries is that companies in manufacturing and engineering are doing well; another is that the two sectors are a happy hunting ground for firms operating in areas such as IT services, consulting,or financial services looking for the ever-elusive domain skills.

-Kushan Mitra

EXL's Dhawan: Seeking performers

Or should that be worst? In some ways, the Indian ITEs or business process outsourcing (BPO) industry has everything going for it: a workforce of 350,000, set to touch a million by 2007-08 and an annual growth rate of 60 per cent. And in some ways, it is an HR manager's nightmare: attrition rates average around 35 per cent; there is a significant mismatch between demand and supply; and there are few competent senior managers available. "Each new player who enters the market (to start a BPO) plays the compensation card," says Rahul Varma, Director (HR), Accenture. Given the industry's age (it is still a toddler), it is hard to find people with experience, and new entrants are more than willing to pay a premium for whatever experience is available. That (the scarcity of experienced hands) motivates people from the IT services and financial services sectors to look for greener pastures in ITES where they, more often than not, find them. Even at the junior level where, according to Deepak Dhawan, Vice President (HR), EXL Service, "we look for people with the drive to perform and the ability to think on their feet", salaries have increased by around 15 per cent a year over the past few years. And while employees celebrate their huge hikes, companies are beginning to lose sleep over wage inflation and the consequent erosion of the cost advantage India currently enjoys over other countries.

Satyam's Hari: Specialisation pays

It smells like old times," says Pratik Kumar, Corporate Vice President (HR), Wipro. Kumar is referring to the pre-2001 era when IT services companies lavished half-yearly, sometimes quarterly hikes, on their employees (not across the board, though). The phenomenon of quarterly hikes may not be back (at least, not across the industry), but if there is one sector that embodies the boom in salaries, it is IT services. One reason for this is the sheer number of people companies have been hiring. Over the past year, TCS, Wipro and Infosys have each hired over 10,000 people. And tech multinationals such as Accenture (from 1,000 employees three years ago, the firm has increased the strength of its workforce to over 13,000), IBM and EDS haven't been idle either. The predictable outcome: a scramble for talent.

In other sectors, that may have resulted in a spurt in salaries at the entry-level; in IT services, says Ajit Issac, Managing Director, Adecco People One, a staffing firm, "it is primarily people in the middle and junior (not entry) levels that have seen a (significant) hike". Bhaskar Das, Vice President (HR), Cognizant Technology Solutions, admits that salaries at the entry level have remained flat over the past two years. And T. Hari, Sr Vice President (HR), Satyam Computer Services, points out that although salaries have increased by around 12-15 per cent across the organisation, at the middle-management level, they have increased 18-20 per cent. The large number of engineering graduates India turns out each year (184,347 at last count by NASSCOM estimates) is one reason for this. Another, explains Hari, is "the high demand for specialised skills". Thus, experienced technical architects, integration managers, change managers, programme managers and domain specialists are in demand.

-Venkatesha Babu with E. Kumar Sharma

Dr Reddy's Chakraborty: No poaching, but...

The magic pill (in case you are wondering), something that can promise an increase in salary of 50 per cent or more, is available to individuals who are anything between a manager and a vice president in a pharmaceutical firm, and have skills in areas such as clinical research, new product development, quality, or marketing (generics especially, which are generic versions of off-patent drugs) in regulated markets such as the US. "It is demand from Indian pharma players entering regulated markets, particularly with generics and speciality drugs, that is driving the salaries boom," says Ishwar Balchandani, Executive Director, Omam Consultants, an HR consulting firm focussed on recruitments. Thus, even Dr Reddy's Laboratories, which, according to Saumen Chakraborty, Executive Vice President and Global Chief of HR, "does not poach and does not offer fantastic hikes", has had to relax the rules a bit in functions such as R&D and regulatory affairs. In these, says Chakraborty, "the whole thing is about negotiation and what one presents as his value and what the employer perceives as it (the value)".

-E. Kumar Sharma

Shoppers' Stop's Kashyap: Dipping into a limited pool

That (Rs 12,10,000 crore) is the size retail consulting firm KSA Technopak puts on organised retail in India by 2010. Retail has been the next big thing for sometime; apart from existing players such as RPG (Spencer's, MusicWorld), Shoppers' Stop, Pantaloon (Big Bazaar), and Trent (Westside), there are a clutch of foreign companies (read: Wal-Mart and the like) waiting to enter the country once the government relaxes rules regarding foreign direct investment in the sector. When that happens, it will only exacerbate the existing manpower crunch in the industry (although FMCG companies are a happy hunting ground; RPG's Sanjeev Goenka has just poached Jeetu Mehta from HLL to serve as the Chief Operating Officer of the group's retail business). "This is what happens when you have lots of people suddenly chasing a limited talent pool," says Vijay Kashyap, Vice President (HR), Shoppers' Stop, referring to the phenomenon of companies willing to pay anything to attract that all-that-rare talent. "The retail industry is facing a shortage of people, especially in areas such as mall management and merchandising," says Sonal Agrawal, Senior Director, Accord India, a headhunting firm. "It will create one million jobs by 2010."

-Priyanka Sangani

Bharti's Nayar: The boom won't end anytime soon

Telecom, India's most happening industry, provides a good illustration of how salaries can explode with increments remaining in the modest 15 per cent to 18 per cent range. "Everybody is hiring from everybody else," says an executive at a large telecom equipment firm. "Attrition rates are going through the roof and people are leaving for salaries that are sometimes double what they used to earn." That's an assessment that Steve Correa, Corporate HR Head, Hutch, agrees with. "Too many companies are chasing too few people and only smart companies have been able to keep wages and associated costs in check." And Bharti Tele-Venture's Executive Director and Acting Head, HR, Anil Nayar sees salaries continuing to rise in the sector as long as it contnues to grow.

-Kushan Mitra

SpiceJet's Winders: It pays to be an expat

Expats earn more, and they should. "It is only fair that companies pay a premium not just over the Indian salary but also the home salary to attract expats," says Mark Winders, CEO, SpiceJet, himself an expat. However, over the past two years, the gap between Indian and expat salaries has narrowed: from a premium of 100 per cent earlier, expats now attract a premium of around 30-35 per cent. Part reason for the narrowing gap is the steep rise in Indian salaries. Another is the status of India as a hot emerging market that has, explains Gangapriya Chakraverti, Head (Compensation Practice), Mercer Human Resources Consulting, "ensured that many expatriates now want to be part of the excitement". She adds that even in these cases, the salaries are at a premium over "local levels". Then, expat salaries are the same as domestic ones only in the First World.

FINANCE & ACCOUNTING PROS
Why? Because every segment of retail finance is booming, foreign financial services majors are entering India with aggressive plans, and companies are feeling the pressure to focus on transparency and corporate governance. Now, where does that leave companies seeking to fill slots in their corporate finance function?

MERCHANDISERS, MALL MANAGERS, SOURCING SPECIALISTS
If organised retail is a science (the companies in the business swear it is), people who belong to any of these three categories are the equivalent of research scientists. Not surprisingly, there aren't too many of any of the three types floating around. "People are scouting abroad for experienced people," says Dharmesh Jain, Chairman, Nirmal Lifestyle, a Mumbai-based mall developer.

IT PROJECT MANAGERS
The divas of the IT services space, there are few project managers around who can manage a project involving 500-800 people. "Finding the type is harder for MNCs that have recently come here to leverage India," says Gautam Sinha, CEO, TVA Infotech, a Bangalore-based HR firm. "Domestic firms get by because they have grown and nurtured talent internally."

SALES & MARKETING PROS
Consumer confidence (see on top of the world on page 88) is on an all-time high; there is a real-estate boom on; there's a passenger-car boom on; and consumer durables aren't doing too badly either. "We usually hire sales and marketing people from other auto companies," says G.S. Ramesh, Senior Vice President (HR), Hyundai Motor India. "Given how fast we are growing, we have also started tapping other service-oriented industries."

PILOTS AND AIRCRAFT MAINTENANCE ENGINEERS
The going rate for the captain of an airbus 320 or boeing 737 is Rs 3-4 lakh a month. That for an entry-level aviation engineer, Rs 50,000-60,000. And domestic airlines have to compete with international carriers that, according to Captain G.R. Gopinath, Managing Director, Air Deccan, "pay in foreign currency, have better pay scales and tend to fly bigger planes (the bigger the plane, the more the pilot or engineer is paid)".

R&D AND CLINICAL RESEARCH PROS
"There are around 40 research teams in the country that need to be rebuilt across 25 companies and a dozen-odd research hotshops with each needing around 30-40 people," says R. Suresh, Managing Director, Stanton Chase, a headhunting firm. That's 1,000 people India doesn't have right now.

PRIVATE EQUITY PROS, RESEARCH ANALYSTS AND FUND MANAGERS
The stock market is on a roll (face it, although the sensex is a trifle volatile it hasn't seen 6,000 in a long while), foreign institutional investors (FIIs) cannot get enough of India, and existing asset management firms are launching new schemes and new ones are entering the market. Says Paras Adenwala, an investment advisor, "There is definitely a shortage of good people in the market, especially on the investment side, which isn't surprising given the number of new players."

CEOs, says one HR consultant, earn, on an average, between 25 per cent and 30 per cent more today than they did a year ago. Much of this, however, can be attributed to performance incentives (and with India Inc. continuing to outperform-the net profits of 1,528 companies increased some 28.74 per cent in 2004-05 over 2003-04-that shouldn't surprise anyone). "It is this component that is the real differentiator between the salaries of CEOs and other senior managers," says K. Pandia Rajan, Managing Director, Ma Foi, a staffing and executive search firm. For instance, in the pharmaceuticals sector, the performance-pay component in CEO salaries is 30 per cent; in contrast, that for senior managers is a mere 5 per cent. The head-tail ratio (HR-speak for ratio of CEO salary to that of the junior-most manager in the organisation) tells a similar story. From 15:1 a decade ago, it today stands at 100:1 for private sector firms and 35:1 for public sector ones. Deepak Gupta, Country Head and Managing Director, Korn/Ferry, a headhunting firm, has no issues with that. CEOs, he explains, are becoming global resources and that warrants global compensation standards for them. Still, 100:1 seems a bit much.