National Outlook India
After enduring a second wave of COVID-19, the Indian economy is expected to witness a rebound in growth. The IMF has projected India’s real GDP growth at 8.5% for FY 2022 —one of the fastest among the world’s major economies.
In the first two weeks of December 2021, exports increased over 48% from the comparable period in 2020 and a 25.8% increase over April-December 2019. India’s merchandise exports stood at $299.74 billion in April-December 2021. Moreover, heightening demands in the domestic Indian consumer market after a long period of stagnation took India’s merchandise imports in 2021 to over $443 billion (a nearly 70% increase over the previous year).
India reported the highest ever merchandise export figures in December of 2021. The trade minister expects this surge to translate into an export valuation of $400 billion in FY22. To foster exports and boost competitiveness, the Indian government announced rates of tax refunds under RoDTEP (Refund of Duties and Taxes on Exported Products) for 8,555 tariff lines.
India’s economic rebound involves a substantial focus on privatization and liberalization of investments. The near-term inflationary pressures will likely result in elevated volatility in financial markets. Experts expect the Reserve Bank of India (RBI) to hasten policy rate hikes to fast-track growth on the curve.
Indian Startup Ecosystem
The lockdown dramatically ravaged the employment market, with over 100 million jobs lost. But as the government continues to introduce positive policy reforms, Indian startups are expected to amplify their hiring plans for 2022. A survey by TurningIdeas Ventures revealed that over 40% of Indian startups plan on taking the global route in 2022. This trend comes from rising consumer affinity for new-age goods and services and generous funding. Venture debt, crowdfunding, bank loans, and revenue-based financing are emerging as alternate funding routes for startups.
With a YoY growth of over 10%, the Indian startup ecosystem is the second largest globally, with 60,770 DPIIT-recognized startups across the country. (DPIIT stands for Department for Promotion of Industry and Internal Trade.) In 2021, the nation became the home to 44 new unicorns, resulting in a total Indian startup valuation of $89.17 billion. Unconventional sectors made inroads: companies in areas such as D2C (direct to consumer), cryptocurrency, Cloud Kitchens ( delivery-only restaurants which do not offer dine-in), and NBFCs (Non-Banking Financial Companies) emerged as new entries into the Indian unicorn cohort. It took Mensa Brands only six months to transform into a unicorn.
Additionally, as of December 2021, going beyond the unicorn, Paytm and BYJU’s entered the decacorn list (company valuation of over $10 billion).
Leadership Hiring Outlook
Adaptability emerged as a critical determinant in the Indian job skill market due to the COVID-19 pandemic. With companies opting for virtual recruiting technologies, a high percentage of job interviews will be conducted virtually. Indian businesses have also shown a shift of focus towards internal hiring, which lowers costs for the company and increases the ease of carrying out the recruitment process.
Diversity, equity, and inclusion (DE&I) remain a focal point for recruiters and hiring managers. The geographic flexibility offered by remote working continues to lay the foundation for more diverse teams. Moreover, according to a survey by Linkedin, digital fluency emerged as the #1 power skill in 2021 and will continue to be desirable as pandemic uncertainty continues. The Indian recruitment market is expected to invest more in upskilling/ reskilling of the employee base to keep up with the global business changes.
With a steady boom in the consumer market after the pandemic-induced lockdown, the Indian recruitment market is bound to rethink talent strategy while devising ways to integrate talent acquisition tools into workflows, among other vital factors.
How Companies Are Coping
Despite demonstrating strategic resilience, firms are facing headwinds and supply chain bottlenecks. For example, India’s economic growth is expected to dip by 0.30% in the March quarter due to reimposed COVID-19 restrictions.
Companies are now taking advantage of new channels of social interaction sans physical interaction to keep employee motivation high. However, several organizations could not replicate their earlier operating and revenue models due to the pandemic. With a massive GDP dip of 24.4% — one of the most significant contractions among the global economies — Indian small businesses have performed poorly.
The percentage of fully vaccinated people stands at less than 50% for the entire Indian population. Given this, COVID-19 poses a continual risk as India lags in vaccination rollouts. With the emergence of the COVID-19 Omicron variant, there is significant skepticism swirling around the economic outlook.
In addition, stretched government finances (especially ahead of elections in some Indian states) risk sparking tax surges and a political backlash in populism. India has to overcome supply chain disruptions to repress inflation. Inflationary pressures remain close to the levels that the RBI – Reserve Bank of India – declares excessive for fiscal and current account deficits.
It is a maxim that when the US sneezes, the rest of the world catches a cold. So, given the elevated valuations that can trigger bubbles or corrections in Indian equities, India is in a vulnerable position vis-à-vis Fed policy of lower or higher US yields.
Constant economic and market changes are pushing Indian organizations to swiftly remodel their organizations to catch up with the global market dynamics. Companies require adaptive business strategies and a robust talent and leadership pool to stay ahead. As a market leader in workforce consulting in India, Cornerstone International Group is well-positioned to leverage agile business strategies that align with core business goals.
For information on Cornerstone’s executive search service in Bangalore, Gurgaon, New Delhi and Pune, visit Cornerstone Mumbai.