The slowdown in the economy has put the brakes on hiring — and the hardest hit will be the mid-level professional who has made a career out of job switches, says Prasun Chaudhuri Boom and bust cycles will keep affecting the job market. Be prepared for the worst Ajay Shome was all set to hop jobs for the sixth time in his career. The 35-year-old investment banker was to take charge of the Calcutta-based insurance wing of a European bank by December. He was verbally assured of the job (“it’s a done deal”) after the interview in early October.
But two months went by and no offer letter materialised. Finally, Shome realised that the firm had put the recruitment on hold. “I was told by an insider that the European debt crisis had hit them hard,” says Shome, who is now not very keen to switch jobs. “This is not the right time to make a move. The situation is quite volatile.”
Shome is just one among a growing number of job hoppers who’ve been stymied by an economy in the doldrums. Some are being made to wait, and others are deferring their plans to change jobs. “Most companies are cautious about the hiring process as there is a pressure on their (profit) margins. There is a 8-10 per cent slowdown in hiring, especially in sectors linked to the European market,” says E. Balaji, MD and CEO, recruitment firm Ma Foi Randstad. According to a recent Ma Foi survey, India Inc was expected to create 16 lakh jobs in 2011, but only 13.6 lakh of them materialised. By year-end, the shortfall will be at least 2.3 lakh jobs. “At the start of the year, companies were bullish about hiring. But economic uncertainty has led to an abrupt dip in job creation from October onwards,”says Balaji.
The hardest hit will be the mid-career professional who is usually a relatively costly hire for a company. “Even though companies have not yet begun laying people off, they are recruiting fewer people — especially at the senior and mid-level,” says Sangeeta Lala, senior vice-president, TeamLease Staffing Solutions.
Teamlease’s recent (October-December, 2011) employment outlook report shows a sharp fall in the job index. Six of the eight sectors surveyed reported a downslide, with the technology industry bearing the brunt of the fall. Telecom, real estate, banking and financial services, information technology (IT) and aviation are the sectors where hiring is being cut back.
If employers are putting the brakes on hiring, employees too are thinking twice about making a job switch. Sheela Shankar, a 30-year-old software engineer working at IT biggie Infosys, had been looking for a switch. Having been in the job for the past three years, she is chafing at the “monotony” and the “stiff timings” of her job. A month back, she bagged an offer from a US-based software giant with a big hike in salary. Shankar was tempted, but shelved the plan at the last moment. “I gave up the idea, scared of the future of the company since the US is in the grip of a recession,” she says, having decided to stay put at Infosys for the time being.
However, Kamal Karanth, head of Kelly Services, a US-based staffing firm, thinks that the situation is not “overwhelmingly” bad as yet, and has hit just a few isolated pockets of the industry. Agrees V.P. Suresh, executive vice-president, Naukri.com, the job portal. “It’s not a big slowdown, just a negative sentiment. Probably employers are adopting a wait-and-watch policy.”
But why did employers suddenly turn so cautious? Are we approaching a situation similar to the downturn in 2008-2009, when thousands of people were laid off on the back of a global financial crisis? Most head hunters feel that there is “no need to press the panic button” just yet. The Indian economy is still growing at the rate of 6.9 per cent and it's nowhere near the scenario seen in 2009, says Suresh.
Head hunters feel that this time recruiters are applying the lessons learnt during the 2009 crisis. “They are preferring to go easy on hiring, rather than laying off employees,” says Lala of Teamlease. Concurs Suresh, “If the going gets really bad in the near future, you won’t see any knee-jerk reaction leading to job loss this time.”
The one clear silver lining is that unlike in 2008-2009, campus recruitment is unabated. “The first casualty in 2008-9 was hiring at the entry level,” recalls Suresh. Even IT companies, which have been hit hard by the slowdown, have not stopped hiring fresh graduates. “This year we are aiming to hire 45,000 new employees, and offer letters have already been given to 23,000 campus recruits,” says a spokesperson for Infosys.
IT firm iGate Patni also plans to hire 4,000 freshers, says Srinivas Kandula, global head HR, iGate. “We haven’t put any brakes on hiring — the plan is to add about 12,000 heads in 2012,” he says. HCL Technologies too says it is going to hire 10,000 people by 2015. Placement co-ordinators at different technology colleges confirm the hiring trend. “We had record placements in the IT sector,” says the spokesperson for Vellore Institute of Technology, near Chennai. Calcutta’s Institute of Engineering and Management and Bhubaneswar’s KIIT College too claim to have wrapped up the campus recruitment of the 2012 batch by October this year.
Again, though it’s too early to predict placements in B-schools which are poised to take off in February 2012, going by the summer internships — many of which turn into real jobs — at the Indian Institutes of Management (IIMs) in Bangalore and Ahmedabad, would-be graduates had plenty of offers from the financial, consumer goods and even the reeling manufacturing sector. “Around 33 per cent of students got offers from the financial sector,” says P.D. Jose, chairperson, career development at IIM-B.
But smooth campus recruitment doesn’t necessarily reflect the ground realities of hiring. “Companies always want to keep the cream of the fresh batches booked,” says Pradeep Mukherjee, a career consultant and former HR head at Citibank India.
The buzzword is optimisation of existing personnel, and it's slammed the brakes on job switching. “The attrition rate has come down drastically in big companies to a mere 12 per cent from 27 per cent,” says Kris Lakshmikanth, CEO, Head Hunters India, Bangalore. “We won’t see the blistering pace of job hopping that we saw in early 2008, when 20,000 people from Infosys quit in one day.”
Ananth Krishnan, a senior executive at a Bangalore-based company learnt this truth in a hard way. Krishnan, who had a policy of hopping jobs every three years (“it’s the fastest way to move up the ladder”) plans to stay put even though he has many job offers. Krishnan knows well that most companies follow a “last in, first out” policy in which the axe invariably falls first on the newcomer during downsizing.
During the 2008 crisis Indian companies learnt one important lesson from its US counterparts: hire more freshers, cut costs by reducing high-salaried “fat cats”, and improve profit margins. This is the mantra of a globalised employment market. “India is now a part of a larger global economy,” says Karanth of Kelly Services. “Which is why the country will no longer remain immune to any crisis in Europe, the US or Asia Pacific.”
According to Mukherjee, boom and bust cycles in the global economy will keep affecting the Indian job market and jobs will come and go with such ups and downs every three or four years. Says Anup Sinha, professor of economics, IIM-Calcutta, “Employment is the obvious casualty of a volatile economy. So employees need to stay prepared for any eventuality. Brief periods of boom and bust will be part of our life.”As a part of the “globalised” workforce, Indian jobseekers must also get ready for a roller coaster ride.