Executive Search in India– 2016 Outlook
Surging economy to fuel strong recruiting need
In the midst of considerable turmoil in many emerging markets, Indian growth is expected to remain strong. Though a weak monsoon, flagging external demand, stalled parliamentary action on structural reforms, and external shocks may obstruct the rate of growth, the Indian economy is expected to be on a robust trajectory with stable annual growth rate, rising foreign exchange reserves and relatively stable foreign exchange rate.
The World Bank projects India will grow by a robust 7.5 per cent in 2016 and 7.8 per cent in the next two years compared to 4.8% for developing countries overall. World Bank also predicted that India will be the fastest growing economy in the world in the next three years and would outpace China.
The long-term prospects appear to be equally bright. The consuming class is expected to more than triple to 89 million households by 2025. By 2030, we will have 75 cities with a population of over 1 million people.
Some of the bold initiatives by the new government have played a key role in stimulating the economy. A series of programmes and bold plans to transform the nation in the next decade have already branded India as potentially one of the strongest contenders among the growing economies.
Action so far has included higher bank account penetration, a strong push on jobs and growth and reduced “leakage” of social assistance by transferring funds directly to beneficiaries. There is still work to be done, but the public sector has generated strong momentum. India, with an accelerated pace of reforms, has the potential to be one of the bright spots in a struggling global economy.
Growth continues accelerate in the Manufacturing, FMCG, Education, Pharma & Healthcare industries. Following are additional “game changers” that can be expected to propel demand for Executive Talent:
Digital Economy
The digital economy is tasked with solving increasingly difficult problems with fewer resources – material, human and otherwise – than ever before. Yet most of our work is still being done through legacy structures and antiquated processes that cost valuable time and money.
Digital businesses will impact jobs in many different ways. By 2018, according to Gartner, digital businesses will require 50 percent fewer business process workers. However, by the same year, digital business will drive a 500 percent boost in digital jobs. There is a convergence of IT, Communication and Telecom services with planned launch of 4G services, emergence of ecommerce and boost in demand for entertainment & communication.
Finding the right talent to do these digital jobs will be a challenge for companies as well as for search consultants.
Unlocking the potential of women
A rise in female literacy rate in India has played a key role in bringing women into the limelight. Women contribute only 17% of India’s GDP today, and comprise only 24% of the workforce – compared with 40% globally. Studies have shown that women bring in altogether a different perspective to the workplace and most of organisations today recognize the need for gender diversity.
Financial performance is generally higher where women serve on corporate boards. Diversifying boards with women can lead to more independence, innovation, good governance and tends to maximize the company’s performance. Executive search professionals are increasingly tasked to identify such professionals across all levels including at board level.
Energy Independence
Historically, India has been massive energy importer. Achieving energy independence will require a multipronged approach, including investments in conventional and renewable energy sources, adoption of new energy storage technologies, and improved energy efficiency norms.
The government has announced scaling up of renewable power generation to 175 GW by 2022 – out of which solar power alone is envisaged at 100 GW. The key issues – such as the need for transformational change in the delivery network, new financing solutions for capacity expansion, land acquisition and the setting of rates – continue to slow progress in achieving a step-change in investment in this sector.
Once progress is made in these key areas, however, we expect the renewable energy sector to quickly take off along with new employment opportunities.
Infrastructure Investments
India’s infrastructure lags the growth in GDP and is considered a major bottleneck. Though the situation has improved in the last couple of years with many world-calibre projects, the demand is huge and needs substantial investment to catch up with global standards.
As proposed in the budget, the creation of a ‘National Investment in Infrastructure Fund’ with an initial annual allocation of USD3.25 billion would lead to considerable growth in the infrastructure sector. The fund will be expected to make investment in public sector infrastructure finance companies which, in turn, will be able to leverage their higher credit rating to access domestic and international debt markets. This step should help the sector attract increased investment from foreign pension funds, insurance funds and other institutional investors seeking more secure investments.
The fund is expected to increase its annual allocation in future years. The fresh allocation of USD2.25 billion to roads and USD1.6 billion to railways is also intended to improve liquidity in the system by pushing forward EPC, Cash Contract and Annuity models for the awarding of projects in these sectors.
We expect that in 2016 the stalled infrastructure projects will start moving and increase demand for competent professionals.
Transforming India’s Banking Landscape
From technology to customer expectations, the market has changed considerably in the five years since the global financial crisis and will continue to evolve in the years to come. To succeed in this environment, banks must enhance their existing business models. Banks may adhere to sustainable competitive advantage by leveraging three building blocks—optimization and simplification, agility and continuous innovation.
With the Central bank (RBI) granting licenses to 10 payment banks & 10 small banks, India has taken its first step towards transforming the banking system. Technology is changing the payments segment of the banking industry at an extraordinary rate. Payments banks will alter the way transactions are carried out but they will complement banks, not compete with them. At the core of this change will be the mobile phone.
Apart from this, the small banks will trigger cash flow by undertaking basic banking services, including acceptance of deposits and lending loans primarily to the unbanked — small businesses and farmers, micro and small industries which do not have access to finance from the larger banks.
Government is also committed to major recapitalisation of existing public sector banks and bring legislative reforms like bankruptcy law to enable banks to deal with wilful defaulters and clean up non-performing assets which are choking the banking sector. This will enable more lending to come to market for deserving borrowers.
All these changes including in financial sector space is likely to create huge demand of professionals in BFSI sector over next 3-5 years.
To Sum up
We expect India to be resilient to global headwinds and demand for high calibre executives across sectors to pick up. Attracting, retaining and building talent for emerging competitive phase will be a key for survival and growth in this VUCA (Volatile, Uncertain, Complex and Ambiguous) world.