teamlease employment outlook report: jul - sep 2010

TeamLease

Employment Outlook Report

Quarter-15, July-September 2010

Prepared by: inTouch analytics

be-in-touch.com

http://be-in-touch.com

Contents

1. Preface

2. Executive Summary

3. Project Objectives

4. Index definitions

4.1. Employment Outlook Index

4.2. Employment Trend Index

4.3. Business Outlook Index

4.4. Business Confidence Index

5. Employment Outlook

5.1. Net Employment Outlook

5.2. Net Employment Outlook Growth – by sector

5.3. Net Employment Outlook Growth – by city

6. Business Outlook

6.1. Net Business Outlook

6.2. Net Business Outlook Growth – by sector

6.3. Net Business Outlook Growth – by city

7. Hiring Intent

7.1. Hiring Intent by Location

7.2. Hiring Intent by Hierarchy

7.3. Hiring Intent by Functional Area

8. Other Trends



8.3. Attrition trends by sector

8.4. Attrition trends by city

9. Employment Outlook Drivers – a brief analysis

10. Annexure

10.1. Research Methodology

10.2. Sample Design & Data Collection

10.3. Reasons for Attrition – the employer perspective


1. Preface

TeamLease Services brings out the Employment Outlook Report once every quarter with

the purpose of providing human resource policy and decision makers a forward looking

tool that tracks hiring sentiments in the market. The report carries an insight into what

businesses of various sizes – across the country and across industry sectors – have on their

talent acquisition anvil for the immediate next three months. The Employment Outlook

Survey is carried out, and the analysis done, in the preceding quarter.

The Employment Outlook Report goes as far back as the quarter of October-December

2006 and we have brought out 15 successful reports since then [please visit

www.teamlease.com for archives].

The Employment Outlook Survey spans eight industry sectors and eight cities across India.

The survey covers small, medium and large companies across these sectors, studies

attrition and employment trends, and gleans information on hiring sentiments, all this

covering different locations, hierarchical levels and functional areas.

With the most critical drivers that influence hiring being tracked quarter on quarter, the

Employment Outlook Report is the only one of its kind seeking to deliver high impact hiring

decision support to its stakeholders – Business & HR heads, Senior Management as well as

industry policy makers.


2. Executive Summary

• Hiring sentiment is at an 18-month high for the Quarter beginning July and ending

September 2010, with the Employment Outlook Index rising 6 percentage points

to 64. This is the second successive quarter with an increase in the index following

9 months of stagnant sentiment (July 2009 – March 2010), which was in turn

preceded by 6 months of low hiring sentiment (January 2009 – June 2009).

• Almost all sectors contribute to the increased sentiment sans Healthcare &

Pharmaceuticals – which consolidates its already high hiring sentiment with a

negligible drop of 2 percent points. Infrastructure, with a 21% increase,

Manufacturing & Engineering and Telecom, with 13% and 11% increases

respectively, significantly contributes to the increased index value. Among cities,

Delhi leads sentiment with a 19% increase in the index, followed by Mumbai and

Ahmedabad with 14% each.

• Business Outlook – which has been on a steeper incline for the past 4 quarters,

compared with the Employment Outlook – somewhat tapers at 61%, which is still

an increase of 3 percent points. The preceding four quarters had exhibited faster

growth between 10 and 20 percent points, each quarter.

• The Telecom sector sees a sentiment boost of 16%, while the other sectors weigh

in with varying increases of between 2% and 10%. The indices for Retail & FMCG

and IT increase by 10% and 9% respectively while the Infrastructure and

Manufacturing & Engineering sectors – which lead the Employment Outlook Index

growth – contribute 8% each. The indices for Ahmedabad and Bangalore rise by

18% and 17% respectively.

• Tier-II cities experience a significant increase (3%) in hiring intent to 19% - an all

time high, indicative of the talent supply potential of these geographies and a

lack of the same in the metros. Metro cities lead the hiring intent hierarchy by a

wide margin though, at 86% - a 2 percent point increase.

• Hiring at the Junior and Entry levels of organizational hierarchy are set to make

a strong comeback with 17% and 11% increases in hiring intent – the biggest rise

after more than 24 months of stagnant or negative growth in index value. The

other good news is that the ‘Not Hiring’ category dips to a 12-month low and

stands at 12%, a big 8 percent point drop. Sales, Marketing & Customer Care

registers the highest increase of 8% among functional areas.

• An overall exuberant business sentiment, an intent to hire at the frontlines and

junior levels, as well as a somewhat undesirable rise in attrition rates are fuelling a

by now healthy hiring sentiment, thus propelling the Employment Outlook Index

by a strong 6 percentage points. All industry sectors – Infrastructure being the

sole exception – clock their 12 month highs. In general, the growth is across

geographies, sectors, functional areas and business size.


3. Project Objectives

The Employment Outlook Report aims at –

• Providing forward looking estimates of hiring sentiment and thus enabling its users

with a tool to make effective hiring / people decisions for the immediate next

quarter.

• Providing *Hiring Sentiment Intelligence* for different industry sectors, business

sizes and geographies, as well as across hierarchical levels and functional areas.

4. Index Definitions

• Employment Outlook Index: The Employment Outlook Index is computed as the

difference in the proportion of respondents who report an increase in hiring

needs and those who report a decline in hiring needs over the next three months.

• Employment Trend Index: The Employment Trend Index is calculated by dividing

the Current Employment Outlook Index with the baseline index and converting

the same in percentages by multiplying with 100.

• Business Outlook Index: The Business Outlook Index is computed by subtracting

the percentage respondents who say business in the next three months is likely to

decrease from the percentage who say it will increase.

• Business Confidence Index: The Business Confidence Index is computed by

dividing the Current Business Outlook Index with the baseline business outlook

index, and converting the same in percentages, by multiplying with 100.


5. Employment Outlook

5.1. Net Employment Outlook

5.2. Net Employment Outlook Growth – by sector

5.3. Net Employment Outlook Growth – by city


5.1 Net Employment Outlook

The ‘Net Employment Outlook’, derived as the difference in the proportion of respondents

reporting an increase in hiring needs and those reporting a decline, sees a 6% rise in the 15th

quarter beginning July 2009.

Quarter Period (Figures in percentage)

Increase Decrease No Change Net Business

Outlook

15 Jul-Sep 2010 69 5 26 +64

14 Apr-Jun 2010 62 4 35 +58

13 Jan-Mar 2010 51 4 46 +47

12 Oct-Dec 2009 52 6 42 +46

Although flatter compared with the previous quarter, this growth is comprehensive, with

businesses reporting increased confidence and strong hiring intent across cities and business

sizes.


5.2 Net Employment Outlook Growth – by sector

The Employment Outlook Index growth is seen to be driven by strong sentiment growth in the

Infrastructure, Manufacturing & Engineering and Telecom sectors.

Sectors (Figures in percentage)

Quarter Net Increase / Decrease

15 14 13 12

IT 71 69 59 55 +02

ITES 66 62 47 36 +04

Financial Services

[FS]

60 53 45 64 +07

Retail & FMCG [R&F] 61 61 38 35 0

Infrastructure [INF] 57 36 69 48 +21

Manufacturing &

Engineering [M&E]

66 53 38 30 +13

Telecom [TEL] 59 48 50 49 +11

Healthcare &

Pharma [H&P]

70 72 55 61 -02

Infrastructure bounces back after a sharp dip of 33 percentage points in the previous quarter, while

Manufacturing & Engineering continues a dream run of sorts for the fourth quarter in succession.

Telecom sees healthy growth after three stagnant quarters.


71

66

60 6157

66

59

7069

62

53

61

36

53

48

72

59

4745

38

69

38

50

5555

36

64

35

48

30

49

61

0

10

20

30

40

50

60

70

80

IT ITES FS R&M INF M&E TEL H&P

Q15

Q14

Q13

Q12


5.3 Net Employment Outlook Growth – by city

Delhi, Mumbai and Ahmedabad deliver growth for the index with double digit city-level index growth.



15 14 13 12

Mumbai [Mum] 63 49 41 51 +14

Delhi [Del] 62 43 35 59 +19

Bangalore [Blr] 82 78 55 41 +04

Kolkata [Kol] 54 63 47 34 -09

Chennai [Chn] 62 64 54 34 -02

Pune [Pun] 79 75 70 20 +04

Hyderabad [Hyd] 63 57 54 76 +06

Ahmedabad [Ahd] 68 54 37 41 +14

Each of the 3 leading cities builds on its growth in the previous quarter(s) and ramps up to a 12-month

high. Delhi and Ahmedabad record the smartest recovery and growth, respectively, over the 4 quarters,

while Kolkata puts up a relatively poor show. Bangalore and Pune build on their already heady index

values.


63 62

82

54

62

79

6368

49

43

78

63 64

75

5754

41

35

55

47

54

70

54

37

51

59

41

34 34

20

76

41

0

10

20

30

40

50

60

70

80

90

Mum Del Blr Kol Chn Pun Hyd Ahd

Q15

Q14

Q13

Q12


6. Business Outlook

6.1. Net Business Outlook

6.2. Net Business Outlook Growth – by sector

6.3. Net Business Outlook Growth – by city


6.1 Net Business Outlook

The Net Business Outlook Index slows a bit – up just 5 percent points to 61 – but doubles itself over the

course of the 4 quarters in consideration.

Quarter Period (Figures in percentage)

Increase Decrease No Change Net Business

Outlook

15 Jul-Sep 2010 68 7 25 +61

14 Apr-Jun 2010 60 4 36 +56

13 Jan-Mar 2010 50 9 41 +41

12 Oct-Dec 2009 45 14 41 +31

Business sentiment is steadily growing over the 12 months and Q-15 builds it out across business size,

industry sectors and geographies. The robustness of this quarter’s growth shows up in strong hiring

sentiment and an increased Employment Index.


6.2 Net Business Outlook Growth – by sector

A host of industry sectors led, by far, by Telecom propels Business Outlook growth. Each of the

industries has had a positive growth in the index this quarter



15 14 13 12

IT 73 64 48 44 +09

ITES 66 60 44 13 +06

Financial Services

[FS]

57 55 45 31 +02

Retail & FMCG [R&F] 65 55 22 14 +10

Infrastructure [INF] 46 38 55 35 +08

Manufacturing &

Engineering [M&E]

64 56 41 25 +08

Telecom [TEL] 41 25 32 32 +16

Healthcare &

Pharma [H&P]

76 71 64 40 +05

Growth springs back to decent index levels for Telecom which brought up the rear amongst all sectors

for the past 3 quarters. ITeS and Retail & FMCG have the most interesting growth stories while the

bigger picture is that all sectors – except for the sole exception of Infrastructure – are at their 12-month

highs.


73

66

57

65

46

64

41

76

6460

55 55

38

56

25

71

4844 45

22

55

41

32

64

44

13

31

14

35

25

32

40

0

10

20

30

40

50

60

70

80

IT ITES FS R&M INF M&E TEL H&P

Q15

Q14

Q13

Q12


6.3 Net Business Outlook Growth – by city

Ahmedabad and Bangalore record growth rates that are twice as much as most other cities. With

Kolkata being the only city having a negative – albeit small – growth in Business Outlook, the mood is

upbeat across cities.


Quarter Net Increase/Decrease

15 14 13 12

Mumbai [Mum] 52 42 21 25 +10

Delhi [Del] 49 40 36 40 +09

Bangalore [Blr] 73 56 49 22 +17

Kolkata [Kol] 76 78 58 39 -02

Chennai [Chn] 72 69 60 30 +03

Pune [Pun] 80 75 77 14 +05

Hyderabad [Hyd] 74 63 35 68 +09

Ahmedabad [Ahd] 77 59 31 16 +18

Again, all cities clock 12 month highs – sans Kolkata, which, actually, comes very close to being left out

of the club. Ahmedabad, Bangalore and Mumbai have the best growth trajectories over the 4-quarter

period while Hyderabad exhibits a smart recovery from its Q-13 slump.


5249

7376

72

80

7477

42 40

56

78

69

75

6359

21

36

49

58 60

77

3531

25

40

22

39

30

14

68

16

0

10

20

30

40

50

60

70

80

90

Mum Del Blr Kol Chn Pun Hyd Ahd

Q15

Q14

Q13

Q12


7. Hiring Intent

7.1. Hiring Intent by Location

7.2. Hiring Intent by Hierarchy

7.3. Hiring Intent by Functional Area


7.1 Hiring Intent by Location

Metro cities are far ahead in consideration for employers, although tier-II cities are showing signs of

growing at a marginally faster clip. This could be attributed to improving employability and talent quality

in tier-II cities.

City (Figures in percentage)

Quarter Net Increase/

Decrease 15 14 13 12

Metro 86 84 87 82 +02

Tier – II Cities 19 16 15 17 +03

Tier – III Towns 7 6 2 4 +01

Rural 2 1 2 2 +01

86

19

72

84

16

61

87

15

2 2

82

17

4 2

0

10

20

30

40

50

60

70

80

90

100

Metro Tier – I Cities Tier – II Cities Rural

Q15

Q14

Q13

Q12


7.2 Hiring Intent by Hierarchy

The Junior and Entry levels find favour among employers indicating that volume hiring could well be

anticipated over the next 3 months. This, however, has cut significantly into mid-level hiring although

the magnitude of sentiment with Junior and Entry levels more than makes up for the mid-management

cut back.

Level (Figures in percentage)

Quarter Net Increase/

Decrease 15 14 13 12

Entry Level [No Experience]

32 20 26 28 +12

Junior Level [1 – 3 years Experience]

61 44 40 45 +17

Middle Level [3 – 7 years Experience]

46 51 40 41 -05

Senior Level [> 7 years Experience]

21 23 20 20 -02

Not Hiring 12 20 26 23 -08

32

61

46

21

12

20

44

51

2320

26

40 40

20

2628

4541

2023

0

10

20

30

40

50

60

70

Entry Level Junior Level Middle Level Senior Level Not Hiring

Q15

Q14

Q13

Q12


7.3 Hiring Intent by Functional Area

A significant increase in hiring intent for Sales / Marketing / Customer Service – a heady area already, in

terms of the outlook – marks the sweet spot among functional areas. Blue Collar* is the other segment

that might benefit from the sentiment groundswell.



15 14 13 12

Sales / Marketing /

Customer Service [SMC]

78 71 71 59 +07

IT 24 22 19 24 +02

Engineering [ENG] 33 32 26 28 +01

Accounts / Finance

[A&F]

18 17 16 20 +01

Administration / HR /

Office Service [AHO]

13 17 10 16 -04

Blue Collar [BC]* 28 - - - NA

Other 6 27 12 12 -21

Not hiring 8 - - - -

*Previously included under ‘Others’


78

24

33

18

13

28

68

71

22

32

17 17

0

27

0

71

19

26

16

10

0

12

0

59

2428

2016

0

12

00

10

20

30

40

50

60

70

80

90

SMC IT ENG A&F AHO BC Other Not hiring

Q15

Q14

Q13

Q12


8. Other Trends



8.3. Attrition trends by sector

8.4. Attrition trends by city


8.1 Employment Trend Index

The Trend Index levels-up during Q-14 and continues growth into Q-15, the quarter in consideration.

The clear upward trend substantiates the positive hiring intent and Employment Outlook for Q-15.

8.2 Business Confidence Index

<<Unclear about this section – please review and revert>>

DUMMY CHART ---


8.3 Attrition Trends – by city

Attrition rates explain Delhi’s voracious appetite for hiring and its lead over other cities on Employment

Outlook while still trailing on Business Outlook. A more conservative Chennai exhibits an exactly

opposite attitude by maintaining a negative Employment Outlook for a very modest Business Outlook

and a considerably high attrition rate.

8.4 Attrition Trends – by sector

Infrastructure and Manufacturing & Engineering are characterized by high attrition rates and this

explains their rather high Employment Outlook numbers as contrasted with other sectors that have not-

as-high Business Outlook indices. Telecom, on the other hand, has a high Business Outlook Index but a

modest Employment Index value – thanks to a moderate attrition rate.


9. Employment Outlook Drivers – a brief analysis

9.1. The Sentiment Sweet Spot

9.2. Business Outlook, Attrition & Employment Outlook

9.2.1. City-wise Growth Trends

9.2.2. Sector-wise Growth Trends


9.1 The Sentiment Sweet Spot

In order to have a comprehensive overview of the employment scenario, it is essential that the drivers

of employment are mapped in relation to the various locations surveyed. The correspondence plot

below is an illustration of this mapping. The plot is statistically derived through a correspondence

analysis technique and is a visualization of the Business and Hiring sentiments alongside Attrition and

Manpower shortage, forecasted for Q-15.

The plot is aimed at a obtaining a quick and intuitive understanding of Employment Outlook, beyond the

indices. The radial distances are to scale and indicate the affinity of any two pairs of data points.

Cities that fall close to a specific parameter data point are characterized by the parameter. For instance,

Delhi, Hyderabad and Chennai are characterized by Manpower shortage. Likewise, Bangalore is

characterized by High attrition. From an employment perspective, Bangalore, Pune and Ahmedabad are

seen to share better Positive hiring sentiment as well as a relatively high Positive business sentiment.

Sentiment Sweet Spot


9.2 Business Outlook, Attrition & Employment Outlook

Business and Employment Outlook are interdependent – and attrition trends are in line with these two

attributes. The below analysis looks at the annual change in the growth of these three parameters –

across cities and across sectors.

9.2.1. City-wise Growth Trends

It could be observed that Business and Employment Outlook have a definite and positive growth

pattern across cities – with Employment Outlook lagging Business Outlook. Hyderabad is a lone

exception here with a meager increase in Business Outlook and a significant negative growth in

Employment Outlook. Attrition has risen significantly in case of Delhi and Pune and fallen significantly in

case of Bangalore.

9.2.2. Sector-wise Growth Trends


Sector-wise patterns are similar to those in the city – with growth in Employment Outlook generally

lagging Business Outlook growth (with Financial Services being an exception).

Our conclusions:

- The four quarters in consideration have kicked in significant growth in indices – especially in

specific cities and sectors. It could be noted that Bangalore, Chennai and Pune among cities and

Manufacturing & Engineering, Retail & FMCG and ITeS among sectors, have had a very healthy

growth in both Business and Employment Outlook indices.

- As a corollary of the above, various cities and sectors exhibit differing sentiment growth

patterns, indicating differing attitudes to a growing employment outlook as business outlook

grows.


-

9. Annexure

Research Methodology

The Employment Outlook Survey follows a rigorous and statistically validated

process as detailed below.

Sample Design & Data Collection

Random sampling technique was used to identify respondents for the survey. Data

sources used to collect contact data were:

1. Kompass directory for small, medium and large sized companies in the

private sector. To ensure continuity with the baseline measurement, the

core random sample was drawn from this database.

2. NASSCOM database for IT companies

3. Companies registered with bpo.india.org in the case of ITES and

4. Financial companies registered with the Bombay Stock Exchange (BSE).

Respondent Selection

Target respondents for the study were Business & HR Heads as well as Senior

Managers with hiring mandates. The databases offered a contact name for each

company listed. Interviewers called into each of these companies and obtained the

names of the appropriate individuals who were responsible for hiring decisions.

Data Collection

The survey instrument was then administered to the target respondents using the

CATI (Computer Aided Telephonic Interview) methodology. Appropriate computer

software was used for data collection and tabulation. Please refer the following

section named ‘Sample Distribution’ for details on city and business size-wise

breakup of the sample.


Sample Distribution

City-wise breakup

Business Size Breakup

Small [Up to 249 employees]

Medium [250 – 999 employees]

Large [1,000 or more employees]

Mumbai 22 53 13

Delhi 12 52 10

Bangalore 23 42 12

Kolkata 13 46 5

Chennai 19 38 15

Pune 14 44 11

Hyderabad 11 46 7

Ahmedabad 22 30 8

Sectors / City Mumbai Delhi Bangalore Kolkata Chennai Pune Hyderabad Ahmedabad Total

Manufacturing &

Engineering [M&E]

10 8 8 7 12 16 8 8 77

Retail & FMCG

[R&F]

22 11 8 11 12 8 6 7 85

Financial Services

[FS]

13 6 13 7 10 8 12 8 77

IT 8 8 12 8 8 8 8 8 68

ITeS 6 9 10 7 8 8 8 8 64

Infrastructure [INF] 8 10 8 8 8 7 8 8 65

Telecom [TEL] 13 15 10 8 6 8 5 5 70

Healthcare & Pharma

[H&P]

8 7 8 8 8 6 9 8 62

Total 88 74 77 64 72 69 64 60 568


10.3. Reasons for Attrition – the employer perspective

By City

By Sector


For more information:

email: [email protected]

twitter: http://twitter.com/be_in_touch

LinkedIn: http://www.linkedin.com/companies/305009