T Thomas: Dealing with talent paucity

The broadening of India's entrepreneurial class is a great help in popularising the attractions of a business career.

For some time now, most of us have assumed that India has an adequate pool of engineers and scientists to meet our growing needs and then some to spare, to feed the very lucrative export of our talent to the US and other developed economies. It is now time to question this comfortable assumption and wake up to the looming problem of a widening gap between demand and supply, especially of engineers but also of quality business graduates who can lead companies, and even people like chartered accountants""all of whom now command sharply rising salaries in the employment market because of the growing shortage of supply. If not corrected quickly, this will erode the competitiveness of Indian business.

Engineering colleges in India turn out about 175,000 graduates each year. Of these, about 70 per cent are picked up by no more than 10 leading companies, most of them in the software sector. All other potential employers have to compete for the remaining 30 per cent, and many of the engineering graduates at the bottom of the pile are not very employable. Even reputed companies like Larsen and Toubro now find it difficult to get qualified engineers to work for them.

That is the entry-level problem. At middle and senior management levels too, there is the question of qualified supply in sufficient numbers. Some leading companies with good management practices do become the training ground here, and therefore a talent base from which others cherry-pick. For instance, at one time Hindustan Lever had become a sort of university for training managers, who would go on to lead other companies. In more recent times, leading IT companies like Wipro and Infosys have served the same purpose""Mindtree, for instance, has been launched by a long-time Wipro manager.

But the scarcity grows as leading international companies seek to enter the Indian market and look for ready-made managerial material. They dip into the same pool, and find easy pickings because of the glamour of the international tag. There is only one obvious solution, which is to increase supply to the talent pool. Doing this will necessarily involve addressing the level of investment that we make in education.

At the national level, India spends about 3.3 per cent of its GDP on education, which is only about half the comparative figure for several Western countries. It is 7.7 per cent for Norway, 6 per cent for France, 5.9 per cent for the United States and 5.5 per cent for the UK. It is also well below the level of spending on education by some other developing countries, e.g. Mexico (5.8 per cent), South Africa (5.4 per cent) and Thailand (4.2 per cent). Only countries like Pakistan (2 per cent) and Bangladesh (2.2 per cent) spend less than us. The figures for China are not readily available. These numbers must be viewed in the context of the fact that in the next 25 years, India will be the one country in the world to have the largest increase in population. By that time, about 40 per cent of India's population will be under the age of 18, and needing to be educated so that it can realise its potential for earning and saving. Among the many challenges before us in addressing this issue, and simultaneously easing the shortage of skilled personnel, is how to orient this emerging population so that it has an understanding of commerce and business, and becomes capable of taking up management jobs.

At the enterprise level, the big feed on the small, and the talent hunt becomes ever more difficult for small and medium enterprises (SMEs), as the best technologists and managers flock to the large business houses or to international companies. Yet, any healthy economy needs a vibrant SME sector. How is this sector to prosper when there is a scarcity of qualified people? It is clear that SMEs have to find ways of anchoring managers to their organisation. One such anchor is caste and language group affinity, which are strong factors. But it is also necessary for SMEs to reward their promising people financially, sometimes even better than the larger companies. This is made easier for them as their numbers are small and there need not be any rigid system or wide disclosure. They can also give shares to managers whom they want to retain. This is easier in a smaller firm than in a large firm. Ownership of shares in a company does transform one's interest and attitude to the performance of the company, and is therefore a very powerful motivational factor. This practice is bound to spread in Indian business in the years ahead. It will be another step in the globalisation of Indian business practices and will strengthen further the business culture in our country.

A longer-term issue to be addressed is social attitudes to business. At the high school level, the commerce stream has already become an important option for students. However, those who opt for the science stream do not get the chance to familiarise themselves with commercial concepts and therefore there is no early marriage of business with technology. At the graduate level, we need a national programme for giving youngsters the opportunity to work in companies for at least one year after graduation. The government could look for ways to encourage companies to take on at least two graduates as trainees for every 500 employees""and some tax breaks might be a good incentive. This exposure to business should encourage more youngsters to opt for a career in business.

These are important issues because in India, we still have a residual aversion to business, sometimes bordering on suspicion. Perhaps it is because in our ancient caste system traders as a class were placed below the priests, warriors and administrators. This Indian tradition was buttressed by the dominance of India for 200 years by the British, whose equivalent of our caste system was a class system wherein trade and commerce was considered almost indecent for the upper classes to engage in. However, as the benefits of wealth became more apparent, the rigid class system in Britain got eroded gradually. There is a similar evolution of social attitudes to business in India. When someone becomes rich, the importance of caste tends to diminish, especially when it comes to business dealings. The broadening of India's entrepreneurial class, taking it beyond the traditional business communities, is a great help in popularising the attractions of a business career.