The TeamLease Employment Outlook Report: April-June 2011

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TeamLease
Employment Outlook Report

Quarter-18, April-June 2011

Contents

1. Preface
2. Executive Summary
3. Project Objectives
4. Index definitions
4.1. Employment Outlook Index
4.2. Business Outlook Index
5. The Indices
5.1. 4-Quarter trends
5.2. Quarter-18 Outlook Analysis
5.3. Trends, by sector and by city
6. What’s driving hiring
6.1. Business Sentiment & Hiring
6.2. City & Industry Growth Sentiment
6.3. People Supply & Attrition
7. Who’s hiring
7.1. City-Sector Hiring Sentiment
7.2. Hiring Sentiment by Size of Business
7.3. Forecasts
8. Who’ll get hired
8.1. Geography, Hierarchy & Functional Area
8.2. Forecasts
9. Sweet spots, blind spots & gray areas
10. Annexure
10.1. Research Methodology
10.2. Sample Design & Data Collection


1. Preface

The quarterly TeamLease Employment Outlook Report provides human resource policy
and decision makers a forward looking tool that tracks hiring sentiments in the market.
The report carries an insight into what businesses of various sizes – across the country and
across industry sectors – have on their talent acquisition anvil for the immediate next
three months. The Employment Outlook Survey is carried out, and the analysis done, in
the preceding quarter.

With this issue of the Employment Outlook Report, we are beginning to tell the story anew
– the new format this report carries is a more visual and analytical representation of
findings of the survey. The attempt is to share more insights in each section of the report
and incorporate statistics within the charts.

The Employment Outlook Survey spans eight industry sectors and eight cities across India.
The survey covers small, medium and large companies across these sectors, studies
attrition and employment trends, and gleans information on hiring sentiments, all this
covering different locations, hierarchical levels and functional areas.

With the most critical drivers that influence hiring being tracked quarter on quarter, the
Employment Outlook Report is the only one of its kind seeking to deliver high impact
hiring decision support to its stakeholders – Business & HR heads, Senior Management as
well as industry policy makers.


2. Executive Summary

• The Net Employment Outlook Index steps up by 5 points, as conservatism
reluctantly gives way to cheer. Business sentiment growth keeps pace with the
previous quarters - with the Net Business Outlook Index growing by a rather
incremental 3 points – but hiring intent has picked up appreciably. Businesses are
gradually loosening the leash on hiring – which still lags business sentiment, but
inches closer to it this quarter.

• Cities display a subdued response to both business and hiring sentiment than
sectors. However incremental the growth in indices is, positive business
sentiment in Bangalore, Chennai, Pune and Hyderabad has by now inched up to
90% levels. Mumbai and Delhi put brakes on this effervescent business
sentiment with about 25% respondents sticking to status quo and not intending
to hire.

• Sectors witness fairly high changes in both Employment Outlook and Business
Outlook index values. With Retail & FMCG and Infrastructure as the only
exceptions, sectors increase / decrease Employment Index values significantly. IT,
ITeS and Telecommunication lift hiring and business sentiments by between 8
and 20 points. Between them, this trio also has a 100% response rate for hiring
intent across many cities.

• The growth in intent to hire Entry- and Middle-level profiles is appreciable and
constitute close to 50% of all those intending to hire. While hiring intent
decrements slightly for Junior level profiles, the magnitude of hiring intent is
seen to be well over 60%, with much of this intent being contributed by small
sized (up to 500 employee) businesses. A large proportion of the demand for
Senior level profiles originates in medium sized businesses with between 500 and
999 employees.

• Small businesses, with up to 500 employees in size, are the prime mover fueling
hiring intent. With an appetite for Junior profiles, as well as with the least number
of respondents not intending to hire, they add up to a valuable volume hiring
segment. The hiring intent growth, however, is the sharpest – at 47% for Senior
level profiles – with businesses employing between 500 and 999 people.

• A discernible pattern emerges from the trends captured for this coming quarter.
Geographically, while tier-2 cities maintain their status tier-3 towns and rural
areas find lesser favour among businesses. While large businesses – especially in
the technology / communications industries – are all geared to hire across
multiple cities, small businesses smartly cherry pick junior profiles for Sales and
Blue Collar functions. Administrative and back-office profiles do not find much
favour this quarter.


3. Project Objectives

The Employment Outlook Report aims at –
• Providing forward looking estimates of hiring sentiment and thus enabling its
users with a tool to make effective hiring / people decisions for the immediate
next quarter.
• Providing *Hiring Sentiment Intelligence* for different industry sectors, business
sizes and geographies, as well as across hierarchical levels and functional areas.

4. Index Definitions

• Employment Outlook Index: The Employment Outlook Index is computed as the
difference in the proportion of respondents who report an increase in hiring
needs and those who report a decline in hiring needs over the next three months.

• Business Outlook Index: The Business Outlook Index is computed by subtracting
the percentage respondents who say business in the next three months is likely
to decrease from the percentage who say it will increase.


5. The Indices

5.1. 4-Quarter trends
5.2. Quarter-18 Outlook Analysis
5.3. Trends, by City and by Sector


5.1 4-Quarter trends

The Net Employment Outlook Index climbs up by a steep 5 points and yet again touches a new high. This
growth is underpinned by a corresponding growth of 3 points in the Net Business Outlook Index.

While both the indices ramp up, the Employment Outlook Index beats its own pace of growth vis-à-vis
the Business Outlook Index this quarter. It has been trailing the Business Outlook Index for 3 quarters
now, implying a rather conservative hiring sentiment. The slight uptick in the current quarter means
marginally higher growth in hiring sentiment and hence, points to an overall sense of cheer.

5.2 Quarter-18 Outlook Analysis

The net growth in indices could be attributed to respondent sentiments leaning more towards city-
centric industrial growth than towards sectoral growth. More cities, than sectors, reported an increase
in both Employment and Business Outlook indices. On the flip side, more sectors reported a decrease in
Employment Outlook compared with the numbers that reported an increase.

The pattern is more homogeneous on Business Outlook, however. Business sentiments have fared
better than hiring sentiments – for cities as well as for sectors.


As many as 3 cities and 4 sectors contribute to a decrease in hiring sentiment although just 1 city and 3
sectors report reduction in business sentiment. A conservative sentiment persists, therefore, in general
– businesses are bullish about growth but their intent to hire lags the business sentiment a wee bit.


5.3 Trends, by City and by Sector

Mum Del Blr Kol Chn Pun Hyd Ahd
Q-18 74 69 86 60 72 76 61 70
Q-17 69 67 83 63 67 79 58 73
Q-16 70 67 80 58 66 77 64 73
Q-15 63 62 82 54 62 79 63 68

Mumbai and Chennai see an appreciable improvement in the Net Employment Index this quarter. Three
more cities just about increment the index. The decreases – in case of Kolkata, Pune and Ahmedabad –
are marginal as well.

The incremental nature of this quarter’s index movements is thanks also to a quarter of all respondents
in 4 cities reporting no change in their hiring plans. Three of these cities – Delhi, Kolkata and Ahmedabad
– also report a correspondingly high proportion of respondents with unchanged business sentiment (see
chart below).


Mum Del Blr Kol Chn Pun Hyd Ahd
Q-18 63 52 81 70 81 85 80 71
Q-17 59 51 79 75 77 85 79 76
Q-16 54 52 79 77 70 83 80 77
Q-15 52 49 73 76 72 80 74 77

With nearly 90% of respondents rooting for business growth, Bangalore, Chennai, Pune and Hyderabad
lead the charge of an effervescent business sentiment. The cheer is kept in check, primarily, by Mumbai
and Delhi where a significant (approximately 25%) proportion of respondents share a sober, no-change,
business sentiment.

The changes in business sentiment, this quarter, are largely incremental as well. The more significant
changes in index values, as in case of Mumbai and Kolkata, do not serve to either add or take away from
the overall sentiment.


M&E R&F FS IT ITeS INF TEL H&P
Q-18 53 70 56 91 94 63 86 65
Q-17 82 68 62 70 64 60 64 73
Q-16 74 60 65 69 63 68 61 74
Q-15 71 66 60 61 57 66 59 70

Sector trends for the Employment Index are more drastic than the trends across cities. With just two
sectors – Retail & FMCG and Infrastructure – incrementing index values, all others witness fairly high
changes. The significant changes are seen to be equally balanced between increases for IT, ITeS and
Telecommunication, and decreases for Manufacturing & Engineering, Financial Services and Healthcare
& Pharmaceuticals.


M&E R&F FS IT ITeS INF TEL H&P
Q-18 63 88 49 94 80 60 55 65
Q-17 82 69 55 77 59 67 47 76
Q-16 72 63 58 67 56 70 51 81
Q-15 73 66 57 65 46 64 41 76

Sector trends for Business Index mirror those for the Employment Index – significant shifts in index
values across the board mark this quarter’s sectoral performance. Besides IT, ITeS and
Telecommunication, Retail & FMCG also increments the index value significantly. With a sole exception
of Healthcare & Pharmaceuticals, the same set of sectors that saw a significant proportion of
respondents who reported no change in hiring sentiment, repeats its performance on Business
sentiment.


6. What continues to drive hiring

6.1. Business Sentiment & Hiring
6.2. City & Industry Growth Sentiment
6.3. People Supply & Attrition


6.1 Business Sentiment & Hiring

A growing business sentiment has limited, but appreciable, influence on hiring trends across hierarchies.
Entry- and Middle-level hiring intent benefit the most, followed by an ever-so-slight increase in the
intent to hire at Senior-levels. Hiring intent for the Junior-levels sees a small dip but a much higher
proportion of respondents with this intent more than compensates for the dip.

A noteworthy, and continuing, trend from the previous quarter is a significant drop in the number of
respondents who report no hiring requirements. This segment now represents just 10% of the sample.


6.2 City & Industry Growth Sentiment

Q-on-Q trends illustrate the stronger influence of Overall Industry growth sentiment on Business
sentiment compared with the influence of City-centric growth of Industry. The incremental change in
business sentiment is seen to be marginal for a given quantum of change in Overall Industry growth
sentiment. Further increments in the Business Outlook Index are seen to need marginally higher growth
in Overall Industry and City-centric Industry sentiments.


6.3 People Supply & Attrition

Trends for People Supply gap and Attrition rates are very well in sync, with a few isolated sectoral
exceptions. This implies that attrition is, indeed, significantly driven by inadequacies in the people
supply chain.


The trend is pronounced for cities where, attrition rates are in sync with the gap in people supply. In
case of Bangalore, however, the supply inadequacy is so high that attrition rates seem almost out of
sync. Among sectors, Retail & FMCG and Healthcare & Pharmaceuticals witness a very similar
relationship between these two attributes.


7. Who’s hiring

7.1. City-Sector Hiring Sentiment
7.2. Hiring Sentiment by Size of Business
7.3. Forecasts


7.1 City-Sector Hiring Sentiment

With a large proportion of the respondent sample intending to hire for the forthcoming quarter, most
cities are seen to have multiple sectors with a 100% intent to hire. A closer look reveals that IT, ITeS and
Telecommunication are the only occurrences of this incidence. In half the cities – Mumbai, Bangalore,
Chennai and Pune – all IT and ITeS respondents intend to hire. These two sectors are in aggression
mode: across cities, at least 80% of respondents from these sectors intend to hire.

None of the other sectors is seen to share the level of consistency that IT and ITeS exhibit this quarter.
Manufacturing & Engineering and Financial Services are the worst performing sectors on this count –
both stay well below 80% intent levels across cities, with the former even dipping to 40% intent levels in
Mumbai and Delhi.


7.2 Hiring Sentiment by Size of Business

Business size is seen to have a limited bearing on hiring intent – the pattern seems mixed, albeit with
two seemingly logical observations: Junior-level hires in vogue with small businesses of size up to 500
employees, and Senior-level hires predominantly being hired more in medium (500 to 999 employees)
and large (greater than or equal to 1,000 employees) sized businesses.

The ‘500 to 999 employees’ category of business has emerged as having the highest growth in hiring
intent this quarter. The sweet spot, however, belongs to small businesses of size up to 500 employees –
the volume hiring evident in this sector is what fuels the hiring sentiment. It is also to be noted that this
segment of businesses has a much lower proportion of respondents that do not intend to hire,
compared with the other two segments.


7.3 Forecasts

The below visuals illustrate directions the Employment Outlook Index is likely going to take across
sectors and cities. Bold lines depict index values for the four quarters in consideration and the dotted
trendlines mark an estimate for the quarter after next (Q-19) with their tail-ends.

1. Information Technology

2. Retail & FMCG


3. Telecommunication


8. Who’ll get hired

8.1. Geography, Hierarchy & Functional Area
8.2. Forecasts


8.1 Geography, Hierarchy & Functional Area

Trends for Geographical preferences to hire
stay largely the same, with metros leading
the rest of the geographies by a large margin.
The lesser geographies – especially, tier-2
cities – are indeed catching up, but still have
some way to go.

As seen earlier, Junior-level hiring intent is
strong. And much of this intent is expressed
by businesses of a size less than 500
employees. Also to be noted is the significant
rise in the proportion of respondents that
intend to hire middle-level professionals.

Sales, Marketing & Customer Service retains
its leadership over all other functional areas
with a close-to-80% hiring intent. An increase
in intent to hire the Blue Collar workforce and
a relegation of Administrative and related
profiles are other trends to be noted this
quarter.


8.2 Forecasts

The below visuals illustrate directions the Employment Outlook Index is likely going to take across
‘Hierarchies’ and ‘Functional Areas’. Bold lines depict index values for the four quarters in consideration
and the dotted trendlines mark an estimate for the quarter after next (Q-19) with their tail-ends.

1. Hierarchies

2. Functional Areas


9. Sweet spots, blind spots & gray areas


The below matrix is a visualization of hiring intent – a match between ‘Who’s hiring’ and ‘Who’ll be
hired’. This will serve as a quick overview of how employment opportunities are likely to stack up across
the country over the next quarter.

The matrix is to be read –

1. Along the three ‘intent to hire’ rows: against ‘HIGH’, ‘MEDIUM’ and ‘LOW’, and

2. As an intersection of the row descriptors and the column descriptors (size of business): ‘SMALL’,
‘MEDIUM’ and ‘LARGE’.

This visual is a summary of the foregoing discussion this report carries. The first set of rows,
alongside ‘HIGH’, constitutes the ‘Sweet spots’. The subsequent rows depict ‘gray’ and ‘blind’
spots, in that order. An illustration of the visual’s reading is as follows:

Within the ‘Small’ sized business segment, Sales / Blue Collar profiles and Junior level hires are
associated with a ‘HIGH’ intent to hire (between 40% to 75%). They, therefore, form a ‘Sweet
spot’. Again, in the ‘Small’ sized business segment, Senior level hires are associated with a ‘LOW’
intent to hire (between 7% to 17%) and so form the ‘Blind spot’.

IT / ITeS: Tel:
HIGH
Sales / Blue Collar Mum/Blr/Chn/Pun Del/Blr/Pun/Hyd
Intent to Hire

JUNIOR LEVEL MIDDLE LEVEL Engineering / Sales
H&P:
MEDIUM
Chn/Hyd
M&E: Mum / Del
Back-office / Support
LOW
SENIOR LEVEL Tier-3 and Rural
SMALL MEDIUM LARGE

Size of Business

The sector-city combinations on the right extreme of the above matrix are a sweet spot – these
combinations have a 100% positive response on intent to hire. The Healthcare & Pharmaceuticals sector
– Chennai / Hyderabad combination, as well as the Manufacturing & Engineering sector-Mumbai / Delhi
combination, with ‘MEDIUM’ intent to hire (about 50%), fall in a ‘gray’ spot.


9. Annexure

Research Methodology

The Employment Outlook Survey follows a rigorous and statistically validated
process as detailed below.

Sample Design & Data Collection

Random sampling technique was used to identify respondents for the survey. Data
sources used to collect contact data were:

1. Kompass directory for small, medium and large sized companies in the
private sector. To ensure continuity with the baseline measurement, the
core random sample was drawn from this database.

2. NASSCOM database for IT companies

3. Companies registered with bpo.india.org in the case of ITES and

4. Financial companies registered with the Bombay Stock Exchange (BSE).

Respondent Selection

Target respondents for the study were Business & HR Heads as well as Senior
Managers with hiring mandates. The databases offered a contact name for each
company listed. Interviewers called into each of these companies and obtained the
names of the appropriate individuals who were responsible for hiring decisions.

Data Collection

The survey instrument was then administered to the target respondents using the
CATI (Computer Aided Telephonic Interview) methodology. Appropriate computer
software was used for data collection and tabulation. Please refer the following
section named ‘Sample Distribution’ for details on city and business size-wise
breakup of the sample.


Sample Distribution

City-wise breakup

Sectors Mum Del Blr Kol Chn Pun Hyd Ahd Total
Manufacturing &
Engineering 9 10 10 9 10 11 12 8 79

Retail & FMCG 23 14 10 11 10 9 9 10 96

Financial Services 10 10 12 9 10 10 11 9 81

IT 8 10 12 11 10 11 10 8 80

ITeS 8 10 11 6 10 10 9 10 74

Infrastructure 10 11 10 7 7 10 10 8 73

Telecom 11 12 15 10 12 10 6 7 83
Health Care /
Pharma 9 12 9 9 10 11 8 6 74

Total 88 89 89 72 79 82 75 66 640

Business Size Breakup

Small Medium Large
[Up to 249 employees] [250 – 999 employees] [1,000 or more employees]

Mum 24 46 18

Del 15 62 12

Blr 22 51 16

Kol 14 49 9

Chn 20 44 15

Pun 16 48 18

Hyd 19 44 12

Ahd 16 39 11


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The TeamLease Employment Outlook Report: April-June 2011

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