Recruiting in China

The explosive rate of growth in India has created a phenomenal demand for talent leading to higher salaries. Salaries are forecast to rise by 14.4 per cent during the year 2008, says a latest report.
"Wages are forecast to rise by 14.4 per cent during 2008, the fifth successive year of double-digit growth. This far outstrips wage inflation in China (8.6 per cent in 2007) and is second only to Sri Lanka, where wage growth has been driven by high inflation," global management consultancy firm HayGroup said.

The high level of demand for experienced employees is driving wage inflation and creating a culture of job-hopping. Staff turnover of 20 per cent or more is not unusual in high-demand sectors such as the service industry, as talented workers jump from employer to employer, following the promise of even higher wages.

"Reward programs of companies are in crisis as wage inflation is witnessing an upward spiralling and staff turnover rates hit new highs," the HR consultancy firm said.

"In an environment where employees can achieve a pay rise of between 40 per cent and 50 per cent by moving to a competitor, they are unlikely to stay put," HayGroup added.

In the year 2007, the middle management level witnessed the maximum increase in average annual base salary (16 per cent), while supervisory, senior management and the executive level had an average annual increase of 14 per cent in their base salaries.

The least percentage of increase was witnessed in case of the clerical staff which saw an increase of only 12 per cent in their base salaries, the report added.

India which has earned a reputation as a source of keen, talented, educated and English-speaking employees, particularly in the IT and service sectors is rapidly witnessing a change in its perception.

"While there is no shortage of graduates in India, there is real concern about the quality of new recruits," the report said, adding that the country's universities produce three million graduates a year but only a fraction are considered suitable for employment in the business processing and IT outsourcing industries. One of the main reason behind this wage inflation is the faulty education system prevailing in the country.

According to the National Association of Software and Service Companies (Nasscom), only around 25 per cent of engineering graduates and 15 per cent of general college graduates are considered employable.

Nasscom believes that the IT sector would face a talent shortfall of 5,00,000 by 2010, which would seriously compromise India's position in the offshore IT services industry.

The education system in India is fragmented. For example, all Indian engineering schools are not uniformly endowed with infrastructure or faculty, the report said.

On one hand world class institutions like the Indian Institute of Technologies (IITs) and National Institute of Technologies (NITs) have a global brand image for the kind of people they produce but at the same time they co-exist with private-run engineering colleges which are devoid of both proper equipment and trained faculty, the report added.