Indian Firms Tap Benefits, Brand in Talent Battle

By Jeremy Smerd

Mar. 9, 2006

College graduates in India are experiencing heady days reminiscent of the gilded dot-com era in the U.S. a decade ago.

    Indian 22-year-olds who hold college degrees and speak good English are easily finding entry-level jobs in the booming business outsourcing industry, where salaries are around $300 a month. In India this is enough purchasing power to buy a Hero Honda motorcycle or hire a maid who cooks. Of course, with employers clamoring for an edge in the hiring spree, employees need neither.

    In major tech hubs like Delhi, for example, where the outsourcing industry is located about 15 miles outside the city center, companies are offering their employees shuttle buses to work. Others are adding cafeterias and recreation rooms.

    “These are the tools that are not extremely high-cost in India and are being used to provide benefit and retain talent,” says Soumen Basu, executive chairman for Manpower India, whose clients include blue chip companies such as IBM and Motorola.

    The competition for good employees in the entry-level outsourcing work­force–and the desire to keep them–has challenged employers to offer incentives to reduce turnover, which averages more than 40 percent, Basu says.

    Attrition is perhaps the most significant challenge facing employers in India’s tech industry as it grows 30 percent annually and is expected to employ 1 million people by 2008, according to Nasscom, an Indian tech policy research group.

    Companies are also competing with prestige.

“The No. 1 recruitment tool is brand,” Basu says. “People want to work for the IBMs and Microsofts as opposed to an Indian name.” Often, he says, that is as important as salaries and benefits.

    As a way to distinguish its brand, Man­power, for example, offers 4,000 courses and programs for the ambitious entry-level customer service agent, from letter writing to certification in software and database management. An e-mail sent between executives at business outsourcing company Progeon, a subsidiary of IT consultant Infosys, and obtained by Workforce Management talks about using IBM, Microsoft, Sony and 3M as models for how to “create employer branding–influencing an employee’s ‘choice to join in.’ ”

    To remain competitive, Progeon offers shuttle buses, food courts, health care, gyms and special employee shops offering discounts on brand names. Progeon even has a “chief fun officer to promote fun and work–games, quizzes, puzzles, celebrations and team huddles are all part of a Progeonite’s work day,” according to the e-mail.

    This might sound like dot-com foolery, but every little edge counts.

    Microsoft, Oracle and Cisco all declined requests for interviews for this article, as did Reuters, which has recently begun outsourcing some of its editorial work. An editor at Reuters in charge of hiring, who spoke on condition of anony­mity, explained why companies are guarding their retention plans like state secrets.

    “It’s no secret that for all of us here –in whatever industry–the biggest challenges are the rate at which demand is growing for Indian knowledge workers, resulting in a rapid rise in salaries, and making sure you distinguish your brand in the marketplace so that you can attract and retain the best.”

    Focusing on benefits has also enabled companies to keep salaries, which still remain a relative bargain, from spiraling out of control, says Dave Jensen, a spokes­man for Genpact, one of India’s largest business outsourcing companies. “If you have a 20 percent increase in salary, that still amounts to the equivalent of a 3 percent to 5 percent increase in the United States.”

    As a result, the boom seems likely to continue. Genpact, which has 15,000 of its 19,000 employees worldwide in India, hires 800 to 1,000 employees a month across India by using storefronts in smaller cities, such as Jaipur, three hours from Delhi and Calcutta, like army recruiting stations. Likewise, recruiting firms like Manpower plan on expanding their presence from nine cities currently to 29 cities within the next three years.

    Only when the hiring boom slows will attrition rates come down. By then, Basu says, those college graduates looking to move into the management ranks will be forced to go back to school to earn the advanced degrees required by most Western companies. When that happens, the young Indian workforce will look much like their counterparts in the U.S. did when the dot-com era went from boom to bust: They’ll go back to school for their MBA.

Workforce Management, February 27, 2006, p. 6Subscribe Now!

Jeremy Smerd writes for Crain’s New York Business, a sister publication of Workforce Management.

Schedule, engage, and pay your staff in one system with