Consumer goods industry bullish on hiring, R&D spend

While most companies are trying to find strategies to beat the global slowdown, consumer goods companies have not only decided to increase manpower, but also to scale up their research and development (R&D) spends.

For instance, Korean consumer durables company LG Electronics plans to invest $50 million (around Rs 250 crore) to enhance its manpower and R&D in India by 2009. "To compete more strongly in the market, we need to progressively enhance our technology and provide insight-based products to the consumers. For this, we need to strengthen our R&D capability," reasons V Ramachandran, director-marketing, LG Electronics India.

Samsung, too, intends to double its R&D team in India to 4,000 by 2010. This, says the company, will help it strengthen product development and provide customised technology for the domestic market.

However, Godrej Appliances has maintained its R&D spend at 5 per cent of its turnover every year. "There is a pressing need to accelerate the sluggish demand in the market through innovation and better technology that would generate greater consumer interest," says Godrej Appliances Chief Operating Officer George Menezes.

When demand slows down, companies look at improving efficiencies mainly through price corrections, process reengineering, packaging optimisation, logistics savings, material usage efficiency and even better supply chain management, explain industry observers.

Decreasing manpower may not be the right solution, but hard times leave companies with unpleasant choices, they added.

On the FMCG front, beverage and snack food company PepsiCo — hurt by the continued weakness in beverages offtake in the US and Canada — announced 3,300 job cuts, roughly 1.8 per cent of its 185,000 work force. But, this move will not affect its India growth plans.

"We have not announced any changes in India, and continue to operate as usual," the company maintained in its response to a Business Standard query. PepsiCo, which recently announced an investment of $500 million in India over three years, expects to generate 50,000 direct and indirect jobs in the country.

Milind Sarwate,Chief-HR and Strategy, Marico, says, "The economic slowdown, which most people are afraid of, would impact the talent sourcing strategies of most companies. However, as a large company in the consumer products and services space, we believe that the slowdown would impact our sector the least and therefore we may not significantly alter our hiring plans."

According to ITC's sustainability report, ITC's payroll expenses grew from Rs 541 crore in FY06 to Rs 630 crore in FY07 and Rs 733 crore in FY08 and the company remains bullish on hiring