In the world’s fastest growing economy, the sheer scale and youthfulness of the working population means HR in India is setting a global template.
When India’s Prime Minister Narendra Modi announced his vision for the country’s future last year, he declared that HR in India will be what manufacturing is to China.
In practice, the push to make India the human resources capital of the world is tempered by many of the same issues that plague employers in other economies. However, the sheer scale of its population magnifies these challenges and ups the stakes. With this drive for business growth comes increased pressure on the people who keep the wheels turning: human resources.
The human capital challenges are there, but the drive for development is creating an opportunity for the profession to really assert itself as the deciding factor between good and great business practice. As the world’s fastest-growing economy, what happens with HR in India could set an international precedent for years to come.
Building to scale
India rose to prominence as a major economic player in the past 10 years. Within the next 15, it is projected to generate USD$2.1 trillion in GDP, jumping to third place in global rankings. According to the International Monetary Fund, this rising star is “the bright spot in the global landscape.” By then, it will have not just the youngest workforce, but the largest.
The scale for human resources in India is unlike any market, with the exception of China, says Aaron Green, vice-president of HCM strategy for Oracle Corporation. As such, the profession has to meet business needs in ways that are years ahead of countries such as Australia. “A mid-size company averages 15,000 to 20,000 employees; large companies can exceed 100,000,” he says.
The country’s economy is growing at a steady pace of 7 per cent, and Modi has set a goal of 8 to 10 per cent year-on-year growth over the next decade. Maintaining that momentum will be difficult, though, without a little help. Eight-hundred million people of working age is a lot to play with.
Beyond recruitment and on-boarding, other core human resources functions such as employee engagement and retention are difficult as well. When one job opening attracts tens of thousands, perhaps hundreds of thousands of applications, speed and efficiency need to be matched with accuracy and quality.
Growing use of technology to connect employers with the workforce is one of the biggest assets for HR in India.
“Technology is evolving here, it is cutting a path and it is making people’s lives easier,” says Amit Bhagria, head of HR for education consultancy company Shri Educare and blogger at Young HR Manager. Bhagria uses a suite of internal and external systems to manage learning and development, performance appraisals, internal communications and more for his employees and management team. “Tech is centred around the entire employee life cycle. We have hardly any manual or analog systems, which also means we have really great data and touch points about our staff.”
India’s advantage is that traditionally, it didn’t have a high rate of digital adoption. As a result, there aren’t legacy systems to serve as barriers, says Shakun Khanna, senior director of HCM strategy for Oracle APAC and a member of Green’s team.
“Demand for the latest workforce technology is very high for businesses and employees,” he says. “Organisations have to retain talent and recruit heavily; people want to be empowered to learn what they want, collaborate when and where they want and access information easily. Companies must adapt and provide these services to their workforce.”
A booming IT and startup culture is filling this need. According to Khanna, India is a competitive but collaborative environment, which makes it a breeding ground for innovation in these sectors.
“If you look at the use of things like mobile technology or apps, India is years ahead in how simple it is,” adds Green. “It speaks to the difference in infrastructure and scale. If a foreign company is trying to bring in a service, there is usually already an Indian counterpart they should partner with instead.”
Difference in diversity
Economic growth usually leads to more jobs for women, but India’s female labour force participation has declined steadily. Between 2004 and 2011, rates dropped from 35 to 25 per cent, according to data from the International Labour Organisation (ILO).
It’s not that women don’t want to work or don’t possess the skills. Education and economic opportunities continue to expand, but persistent social systems and gender norms are a barrier, Bhagria says. Increasing women’s participation in the workforce by 10 per cent by 2025 would increase GDP by 16 per cent.
The exception is some professional sectors where there has been sharp growth and expansion, such as financial services: While only one in 10 Indian companies are led by women, more than half of those are in the financial sector. Quotas are a common tool and are already being used successfully to get more women involved in government and education.
As India’s female labour population is declining, the number of young people entering the workforce continues to skyrocket.
Currently, more than half of India’s population is less than 25 years old. “We are on the cusp of three to four generations working together, and this is creating a complex social and cultural environment,” Khanna says.
Younger Indians value freedom and empowerment, which clashes with the ‘plan, control and review’ mode of traditional workplace hierarchies. The gap between those making the decisions and those being impacted by the decisions will continue to widen, says Khanna.
“This is a generation that has a different mindset, but managers come from a different, older generation,” he says. “HR has to manage that relationship to create the best possible outcomes in terms of productivity, engagement and retention.”
Part of this divide stems from the rapid stride of liberalisation and globalisation starting in the early 1990s. Millennials and Gen X are more aware than their predecessors about global opportunities, and as a result employer loyalty is a problem. India has a much higher rate of people actively searching for jobs compared to other labour markets – 20 per cent globally compared to 40 per cent in India, says Khanna.
“Some industries are job-hopping industries, and people will take on jobs for six months and then leave,” says R. Mohan Das, director of personnel and industrial relations for India’s largest coal energy company. “Finding employees is never the issue, it’s getting them to stay.”
At the core of Modi’s vision is a desire to develop India’s most abundant natural resource – its people. Professor of human resources management at Satavahana University Enugala Manohar sees a lag between level of education and skills employers actually need from their workforce.
“Universities can’t develop the skills that industries need because there is miscommunication between the two,” Manohar says. “There is no interface. Industries need to influence what is taught in universities, and universities need to partner with companies to upskill employees, but that doesn’t happen at the level it should.”
India has invested heavily in STEM education, which has created a substantial talent pool of knowledge workers for fields such as information technology, engineering and medicine. Even so, the total number of skilled workers comprises only a small percentage of the workforce – in 2014, it was just 2 per cent.
What’s more, there is an acute shortage of vocational and blue-collar workers, and a significant number of people work in unincorporated or informal occupations, such as street vendors or home businesses. As part of Modi’s Skill India mission, industry bodies and educational institutions are forming partnerships to attract and train 400 million people in skilled work by 2022. If all goes according to plan, this will create a consistent and robust pipeline of talent to fuel Modi’s other project: Make in India, which aims to paint India as a haven for manufacturing and other industries, particularly aviation, defence, transportation, media and entertainment, textiles and garments, tourism and hospitality, and even space exploration.
With a few exceptions, it seems to be working. Make in India is aggressively courting foreign investment, and in February, Amitabh Kant, the secretary of the Department of Industrial Policy and Promotion, revealed USD$219 billion in deals.
“People want to work, so we must create centres for them to do so,” Manohar says. “It’s a challenging time for businesses. Creativity and innovation are leading to opportunities, even in small scale industries.”
HR in India has evolved beyond the personnel department, says Bhagria, and has assumed the mantle as a core business function. Business and government leaders are realising that plans for economic development and prosperity hinge on people management. If companies can fully harness the power of India’s workforce, the possibilities are endless.
“Human resources must know the pulse of the business. If you know what keeps the CEO awake at night, then you’re in,” says Bhagria.
Effective use of technology helps support HR knowledge and gives the profession authority, says Khanna, who thinks that HR’s ability to measure the impacts of people functions on business has improved. As a result of quantitative data and qualitative insights, the profile of HR in India has grown.
The change in status is reflected in job titles. Even five years ago few people had the title of CHRO, says Green. “You would find directors of HR, an occasional vice-president of HR or some variation on that title,” he says. “Now you regularly encounter CHROs and senior-ranking HR practitioners.”
One thing that immediately struck Green about India’s business ethos is its ambition to put people to work: to create a job for everyone, and match everyone to a job. How that translates long term is a work in progress. Once the kinks are worked out, though, there’s no stopping India’s debut into the new world order.
This article is an edited version. The original version first appeared in the June issue of HRMonthly magazine as “Making it in India.” AHRI members receive HRMonthly 11 times a year. To learn more about becoming a member, click here.