India: Talent Shortages in India Create Opportunities for the Indian Diaspora

Last Updated: 15 June 2010
Article by Anjuna Kalsi

When discussions about India emerge, much is spoken about cricket, Bollywood and the amazing growth India is experiencing. One rarely speaks with any urgency about the skill deficit that the country is facing at the moment. Local industries and large corporates have been voicing their concerns about this gap between available talent and the knowledge pool for a long time now. A country facing phenomenal growth needs a skilled labor force to fuel this engine; without this fuel, India could fast lose its competitive advantage.

Entrepreneurs will agree that, with the deteriorating quality of skilled workers in companies, there is a huge demand and supply mismatch of competent manpower which is hindering their productivity. Many companies who have set up operations in India, both SME's and even large multinationals face similar issues in finding talented staff. Once they have finally found the skilled talent, they face further challenges in retaining their gold dust. Staff turnover for example averages 20% per annum and can reach 60%.

The country's case is a paradox of sorts. On one hand, India has a workforce of around 525 million, being the world's second most populous country. On the other hand, India has just 5,500 industrial training institutes and 1,745 polytechnics. Skills imparted by vocational training institutions also do not always match the requirements of industry. With 350,000 engineering graduates per annum and half of the population just under the age of 25, it is indeed a paradox. A recent publication by the Boston Consulting Group on "What's Next for India" suggests that demand for skilled labor will soon outstrip supply even at entry level and that since training institutions are utilizing technologies which are 30-40 years old, there is a clear threat that graduates may not have the necessary skills for today's market.

Without doubt there is a need to develop human skills to foster the envisaged growth in the various industrial sectors. If achieved, not only will India's production rate increase manifold, we will also be able to attain a higher level of prosperity. What therefore is emerging is the clear opportunity this presents to entrepreneurs and training institutions outside India who want a piece of the action. The opportunity exists to provide high quality vocational training at entry level and senior level management training at another. Many British and International universities and International vocational training institutions have already grasped this opportunity and have set up shop in India.

Another growing trend India is witnessing, is a reverse 'brain gain'. After decades of losing talent, India is finally benefitting from the return of its NRI's (Non-Resident Indians). Highly skilled professionals of Indian origin are retuning to India and adding value to India's numerous growth sectors such as Life Sciences, Technology, Retail, Infrastructure, Education etc. Multinationals looking to enter India or who are already operating in India are paying premium salaries for senior executives. It is no longer surprising to see a General Manager package reaching levels of $400k per annum. In short, companies are willing to pay a premium to attract the right talent.

Global companies are paying executive search organizations thousands of dollars to find Indians residing in the UK, Europe, US to meet their ever demanding requirements of talent who can work across different cultures; talent that can understand the complexities of matrix management. Due to the skill shortages and talent issues in India, many companies are picking talented NRI's from their workforce to lead their entry or operations in India . These individuals who are sometimes "Indian" in name only, find themselves thrown into challenging and interesting positions in India. Scenes from "Mumbai calling" are not far from reality, caricaturing challenges faced by NRI managers. For many global companies particularly US companies, India and China are key markets they are targeting.

Doing business in India is very rewarding but equally challenging. Once in India, it is by no means easy to manage teams and work in a very different work culture. Many senior managers have lamented at their inability to understand the Indian work force or their mindsets. "What do we do, when we meet management teams? Everyone agrees with us, no-one challenges us, and when we get back to base, nothing moves on the projects...!" So, talented people, brush up your CV's and pack your bags!

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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