AgenciesManish Sabharwal, Chairman of Teamlease, throws light on current job trends. He says that the second wave was completely different from the first wave, corporate India had learnt how to cope with lockdowns and super cycle has kicked in for IT sector.
Would you say that the job market, at least for white collar employees, has opened up in the last couple of months?
Absolutely, the second wave was completely different from the first wave, corporate India had learnt how to cope with lockdowns and the digitisation super cycle has kicked in. The secular guess you can make here is that four million IT employment goes to 10 million IT employment over the near future. So, for IT, it really is a super cycle that has been kicked off.
We saw a tweet by Bhavish Aggarwal, the tongue in cheek tweet, saying that "let me do all of my hiring now in San Francisco instead of Bangalore, engineers might be cheaper there". What is the kind of demand we are seeing?
I mean there will always be stories at the margin but I think, India has a good people supply chain for engineers. IT companies had started taking non-computer science engineers into technology a few years ago. In the last few years, we have seen non-engineers go into software code writing, so I would say that I am not sure that talent is the binding constraint for these companies. Costs are going up, but India produces more engineers than the US and China combined and any company who wants to recruit will recruit, now obviously joinees would get preferred to get paid as much as they can and companies will prefer to pay as low as they can but that train has left the station to companies.
What about salaries and remuneration, what are the kind of trends that we are seeing on that front?
I think many companies and employees had accepted last year that they would not take increments or costs were adjusted---all that has been reversed and this year will probably be a good year for salaries. Now, across the board, see sales customer service logistics- which are the fastest growing part of India’s job market in terms of numbers is really coming back quite strongly, not just because the Covid second wave was not as damaging as the first wave economically, but companies which cut back very hard in the first wave regretted it later because they could not find people when the market bounced back quickly.
We still can debate whether we are at the middle or the end of Covid, but we are probably in the last mile. I think it will be a good year for employee remuneration, it will be a good year for bottom of the pyramid job creation and I think it is also just a good start of a super cycle for India’s 150 unicorns in the private unlisted and 350 listed unicorns. We probably have the highest ratio of billion dollar companies unlisted to listed in the world--that just reflects the global recognition that we are the only large country in the world with 20 years of growth ahead of us. So, if COVID has given us this policy window, we are looking at a super cycle of investments and also consequently jobs and salaries, but, we caveat it by the fact that we are at the end of COVID.
We do not know whether third wave, if it comes, what it is going to do, but the two sectors that have the highest employment-largely speaking-are tourism and real estate. Are you seeing any kind of uptick in those sectors which really create large volumes, not necessarily very high paying jobs, but large volumes for sure?
No, tourism and hospitality has not come back yet because there is tentativeness of this whole third wave now, whether it is a promise a threat or danger, nobody knows, but construction is starting to come back and there was a lot of pent up demand, there obviously is a shift in the kind of demand if people are working from home, so I think construction we are starting to see the pickup. Tourism and hospitality will have to wait till vaccination of critical mass which is probably 60% of the population is done or till it is clear that the third wave is not coming.
30% of restaurants may not come back, that is just unfortunately reality, they will be replaced by other new restaurants. 18 months is just too higher to maintain the fixed costs of what the hospitality industry went through, we saw some capitulation by some hotels. Now that there is a light at the end of the tunnel, if it is just another three months we will see that come back quickly.
Just your sense on where vaccination are going, where work from office is going or are people coming back in or moving to a hybrid place?
Most companies are getting to critical mass and are recognising that most of us are making more withdrawals than deposits into social capital. We would not force middle management back, but a number of companies are now asking senior management to come back and I think that will be the tone from the top ones who lead by example. So, many companies are already at sort of 20-30% of their employees strength back in office--at least in Bangalore Hyderabad, some of the people in Chennai. North India is slower of, Delhi is much slower, Bombay is obviously much slower because of Covid. If you think of Bangalore, Hyderabad and Chennai many companies are back to 20-30%, because they are almost at 60% to 80% vaccination of their population.
Now, some people came back saying that my family is not vaccinated, I have parents at home, so, many companies have organised family vaccination also and covered that in the last two-three weeks. That will be the last straw when families are vaccinated, then we can issue a requirement for people to come. The debate has firmly shifted to coordination cost, which days of the week will you ask everybody to come because originally we thought everybody could choose-- which day, they would work from home but now people are realising that if this has to work, everybody will have to be in office on the same days, so that the shift--- from the conversation of-- 'will people come back to exactly how they will come back' is just a precursor to another month or two provided the third wave is weak.
Would you say that the job market, at least for white collar employees, has opened up in the last couple of months?
Absolutely, the second wave was completely different from the first wave, corporate India had learnt how to cope with lockdowns and the digitisation super cycle has kicked in. The secular guess you can make here is that four million IT employment goes to 10 million IT employment over the near future. So, for IT, it really is a super cycle that has been kicked off.
We saw a tweet by Bhavish Aggarwal, the tongue in cheek tweet, saying that "let me do all of my hiring now in San Francisco instead of Bangalore, engineers might be cheaper there". What is the kind of demand we are seeing?
I mean there will always be stories at the margin but I think, India has a good people supply chain for engineers. IT companies had started taking non-computer science engineers into technology a few years ago. In the last few years, we have seen non-engineers go into software code writing, so I would say that I am not sure that talent is the binding constraint for these companies. Costs are going up, but India produces more engineers than the US and China combined and any company who wants to recruit will recruit, now obviously joinees would get preferred to get paid as much as they can and companies will prefer to pay as low as they can but that train has left the station to companies.
What about salaries and remuneration, what are the kind of trends that we are seeing on that front?
I think many companies and employees had accepted last year that they would not take increments or costs were adjusted---all that has been reversed and this year will probably be a good year for salaries. Now, across the board, see sales customer service logistics- which are the fastest growing part of India’s job market in terms of numbers is really coming back quite strongly, not just because the Covid second wave was not as damaging as the first wave economically, but companies which cut back very hard in the first wave regretted it later because they could not find people when the market bounced back quickly.
We still can debate whether we are at the middle or the end of Covid, but we are probably in the last mile. I think it will be a good year for employee remuneration, it will be a good year for bottom of the pyramid job creation and I think it is also just a good start of a super cycle for India’s 150 unicorns in the private unlisted and 350 listed unicorns. We probably have the highest ratio of billion dollar companies unlisted to listed in the world--that just reflects the global recognition that we are the only large country in the world with 20 years of growth ahead of us. So, if COVID has given us this policy window, we are looking at a super cycle of investments and also consequently jobs and salaries, but, we caveat it by the fact that we are at the end of COVID.
We do not know whether third wave, if it comes, what it is going to do, but the two sectors that have the highest employment-largely speaking-are tourism and real estate. Are you seeing any kind of uptick in those sectors which really create large volumes, not necessarily very high paying jobs, but large volumes for sure?
No, tourism and hospitality has not come back yet because there is tentativeness of this whole third wave now, whether it is a promise a threat or danger, nobody knows, but construction is starting to come back and there was a lot of pent up demand, there obviously is a shift in the kind of demand if people are working from home, so I think construction we are starting to see the pickup. Tourism and hospitality will have to wait till vaccination of critical mass which is probably 60% of the population is done or till it is clear that the third wave is not coming.
30% of restaurants may not come back, that is just unfortunately reality, they will be replaced by other new restaurants. 18 months is just too higher to maintain the fixed costs of what the hospitality industry went through, we saw some capitulation by some hotels. Now that there is a light at the end of the tunnel, if it is just another three months we will see that come back quickly.
Just your sense on where vaccination are going, where work from office is going or are people coming back in or moving to a hybrid place?
Most companies are getting to critical mass and are recognising that most of us are making more withdrawals than deposits into social capital. We would not force middle management back, but a number of companies are now asking senior management to come back and I think that will be the tone from the top ones who lead by example. So, many companies are already at sort of 20-30% of their employees strength back in office--at least in Bangalore Hyderabad, some of the people in Chennai. North India is slower of, Delhi is much slower, Bombay is obviously much slower because of Covid. If you think of Bangalore, Hyderabad and Chennai many companies are back to 20-30%, because they are almost at 60% to 80% vaccination of their population.
Now, some people came back saying that my family is not vaccinated, I have parents at home, so, many companies have organised family vaccination also and covered that in the last two-three weeks. That will be the last straw when families are vaccinated, then we can issue a requirement for people to come. The debate has firmly shifted to coordination cost, which days of the week will you ask everybody to come because originally we thought everybody could choose-- which day, they would work from home but now people are realising that if this has to work, everybody will have to be in office on the same days, so that the shift--- from the conversation of-- 'will people come back to exactly how they will come back' is just a precursor to another month or two provided the third wave is weak.
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