E-commerce can create 12 mn new jobs by 2025: HSBC

Sector can fill half the shortfall of 24 mn jobs over next decade

E-commerce industry in India can create 12 million new jobs by 2025, said a report by HSBC. Business-as-usual estimates suggest that India could have a shortfall of 24 million jobs over the next decade; e-commerce could fill half that gap.

Pranjul Bhandari, Chief Economist, India, HSBC and Prithviraj Srinivas, Economist, HSBC who have co-authored the report 'India: More jobs per click--the employment potential of e-commerce', said that under reasonable assumptions, they estimate that India needs to create 80 million new jobs over the next decade, double of what it had to create in the previous decade. They added that old formulas may not work and business as usual may not be able to deliver quality jobs.

Their report said that in India, agriculture is very low productivity, but employs half the labour force. On the other hand, sectors such as financial services are highly productive, but only employ a modicum of the labour force. As a result, India’s overall labour productivity is at very low levels. 

"Services are not creating adequate new jobs. But that could change. The new kid on the block, e-commerce, with the convenience factor it brings to shoppers in India’s largely unorganised retail landscape, has gently been gaining in size and stature," said Bhandari and Srinivas in the report. As per their estimates, e-commerce is currently employing just under a million people, spread across logistics, warehousing, delivery, customer care, information technology and top management.

In the recent past, there have been reports of various e-commerce companies shutting down or downsizing. Bhandari and Srinivas said that while local media is currently

flush with stories on e-commerce ventures that are failing, globally a large majority of e-commerce businesses fail, and ‘creative destruction’ is a vital part of that ecosystem. 

The report said online purchases to total consumption ratio, an indicator of e-commerce penetration is rising. Further, they said that a young population could be more open to adopting new technology, which lies at the heart of consuming via e-commerce. 

With skewed skills levels in the country, such jobs could also be an easy fit for the population. About 70% of the population has merely middle school or lower education levels. Their report said that in line with the current skill profile, e-commerce too is expected to create around 70% jobs in the logistics, warehousing and delivery brackets and only 30% in customer care, IT and top management, which require higher skill content.

However, Bhandari and Srinivas added that even in the logistics category, basic skills (for instance in driving, packing, assembling and moving), will be needed. And to provide these job relevant skills, the country’s training institutes will have to be upgraded. "Getting private sector companies at the heart of imparting skills and deciding curriculums, even in government run programmes, will help supply the kind of labour which is in demand," said Bhandari and Srinivas. 

Further, the report said that the success of e-commerce according to them will be dependent on flagship schemes of the government like Start-up India, Digital India, Make in India and Skill India. Also, roads are an important part of the e-commerce success and road infrastructure will be crucial for e-commerce to make inroads into smaller towns.