The Great Indian Talent Hunt

In the modern business world, talent—a word which once referred to one’s innate ability—has become synonymous with brainpower. Modern economies place a premium on brainpower, but there isn’t enough to go around and this talent shortage has given rise to what is now known as The Global War for Talent—companies competing for human resources and countries battling for a balance of brains and power.

According to an international poll conducted by the Washington-based Corporate Executive Board (CEB) among human resources managers, it was found that "attracting and retaining” talent was their number one priority. In another survey, the CEB found that the average quality of candidates had declined by 10% since 2004 and that about one in three employees had been approached by another firm in the hope of luring them away. More than one-third of the managers said that they had hired sub-standard candidates “just to fill a position quickly”.

Every year, India produces 2.5 million university graduates, including 400,000 engineers and 200,000 IT professionals. NASSCOM calculates that the country accounts for 28% of the world’s IT offshore talent.

The Indian advantage? Apart from speaking good English and working while the West sleeps, it all boils down to math. The cost of an Indian graduate is roughly 12% of that of an American one. Indian graduates also work more: an average of 2350 hours compared with 1900 hours in America and 1700 hours in Germany.

On the one hand, the outsourcing boom shows no sign of stopping. Gartner estimates that global spending on IT outsourcing will rise from $193 billion in 2004 to $260 billion in 2009. But on the other, Indian-based companies are encountering severe skill shortages themselves. Wage inflation in the subcontinent’s IT sector is 16% and turnover is 40%. With these rates, NASSCOM predicts that the Indian IT sector will face a shortfall of 500,000 professionals by 2010.

This shortage can be attributed to the fact that the number of people with the relevant skills is tiny: only 11% of the relevant age group go on to higher education and older people have had their management skills outdated. Moreover, the growth is so fast that it would strain any educational system.

Growing along with the skill shortage is the Indian companies desire to move up-market and become world class. They are pushing into sophisticated areas like “integrated solutions” and consulting. At the same time Western multinationals are exporting more and more complicated tasks.

Skill shortages and the drive to become world class have made companies obsessive about finding and holding on to the right people. They are investing heavily in education and training, partly to attract the best talent and partly to keep their existing workers up to speed. Infosys has increased its training budget from $100 million to $125 million. Wipro has different training programs for different talent pools, including one to help people get a university degree while working for the company.

What’s the solution to manage talent more effectively? Some say companies need to be more imaginative about recruiting and retaining talent, including paying more attention to passive candidates who are not actively looking for a job but can be enticed. Techniques also include going through lists of people attending conferences in order to identify prospective employees, buying information about competing firms (including names of key workers) and searching the web for people who have created new patents.

Some companies are also cultivating relationships with former alumni. Ernst & Young fills about a quarter of its vacancies from this source. Another solution is to create an internal market, encouraging workers to apply for jobs across the company as in the case of oil-services company, Schlumberger, which encourages it’s employees to post detailed CV’s on the company’s intranet.

One thing is for sure—there is no best way to manage talent. A problem that persistently plagues the HR industry is that the more valuable talent is, the more difficult it is to manage. You need a world-class management talent, and that too is scarce.

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