Construction and engineering company Larsen and Toubro Ltd (L&T), which hired around 5,000 people in 2011-12, will go slow on hiring in the current financial year on account of cost optimisation, the company’s chairman said.
"We will not be hiring 5,000 people as we are right now on a cost optimisation drive. In certain areas like infrastructure and others, we are growing. There, we will add 2,000-3,000 people," A M Naik told Business Standard.
In the last financial year, wage hikes and increase in manpower pushed up L&T's staff costs by 29 per cent to Rs 3,664 crore from Rs 2,830 crore the year before.
The company will give greater focus to its international operations and step up hiring abroad, especially in West Asia, in 2012-13. "In the Gulf, we will hire for hydrocarbon and other businesseses. Overall, we might hire around 3,000 to 4,000 people in the year," said Naik.
This hiring plan, however, excludes the diversified group's recrutment strategy for its information technology services and solutions business, where the group firm, L&T Infotech Ltd, plans to add around 3,000-4,000 employees in 2012-13.
L&T decided to go aggressive on the international business after orders had slowed down in India. The company recently won a procurement and construction contract in a chemical complex in Saudi Arabia that belongs to the Gulf country’s state-owned oil giant Aramco.
The company is also looking for more such orders in countries such as Australia, Turkey, Brazil and the former Soviet republics. It is now opening offices abroad.
In India, hiring across the capital goods sector is slowing down. "Hiring in the first quarter with some clients in the domestic market has not picked up yet, while they are focusing on overseas markets," said Kamal Karanth, managing director at Kelly Services India, a leading HR consultancy.
Job creation in the capital goods sector is directly related to the number of projects won and the status of order books. Slower industrial activity, high interest costs and policy level hurdles delayed investment decisions of companies, which translated into fewer orders for the sector last year.
"Growth in the sector shrank 21.3 per cent last financial year, compared with an expansion of 14.5 per cent the fiscal before. Eroding margins have had a direct effect in terms of manpower hiring plans of power (sector)-centric manufacturing clients," said Karanth.