teamlease employment outlook report...the tech industry continued to downtrend hiring sentiment,...

TeamLease

Employment Outlook Report

Quarter-21, January-March 2012

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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 8.1. Employment Outlook Index – city-sector drilldown 8.2. Business Outlook Index – city-sector drilldown 8.3. Attrition trends by sector 8.4. Attrition trends by city

9. Insights 9.1. Sentiment Trend Forecasts 9.2. City trend forecasts for Sentiment

10. Annexure 10.1. Research Methodology 10.2. Sample Design & Data Collection 10.3. Reasons for Attrition – the employer perspective


1. Preface

The quarterly TeamLease Employment Outlook Report is a forward looking tool for human

resource policy and decision makers, reflecting business sentiment for hiring across cities

and sectors. The report carries a snapshot of business hiring sentiment for the immediate

next three months with survey and analysis being carried out in the preceding quarter.

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.

This edition of the Employment Outlook Report reports on a subtle and steady drop in

sentiment across many cities and sectors that has occurred over the past 12 months,

grabbing most onlookers unaware. We attempt a visualization of this phenomenon with

some not-so-convenient truths for all of us to digest.

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

The mild mannered, and mostly marginal, changes forecasted for the coming quarter camouflage a substantial drop in index values – and, therefore, sentiment – across cities and sectors over the past 12 months. The 1 point drop in Employment Outlook Index and the stable Business Outlook Index value point to some semblance of stabilizing sentiment. But 12-month trends prove a blood bath has already occurred.

Sector index movements are fairly correlated between Business and Employment Outlook this time round. IT (-4 on Employment Outlook and -6 on Business Outlook), ITeS (-2 each) and Infrastructure (-3 on Employment Outlook and -3 on Business Outlook) witness significant dips in sentiment. Financial Services (+4 and +5 respectively) is the only good news among sectors while Manufacturing (NC and -1 respectively) is more or less frozen in its new found lows.

City-wise trends do not reflect the correlation seen above; neither are they as worse. Mumbai, Bangalore and Pune lose significantly on Employment Outlook Index at -5, -4 and -4 point drops respectively. Pune also slips 3 points on Business Outlook. Delhi shows off a hint of exuberance, with a 3 points rise in Employment Outlook and a smart, 5 point, rise in Business Outlook – the only city improving on both counts. Most other cities have marginal shifts in their index values.

Geographic trends have marginal mobility, with the metro index for hiring inclination falling by a single point. Add to this the indices incrementing by a single point each for tier-2 and -3 cities/towns, and this category might have a vicarious reason to be happy. Entry- and Junior-level hiring recover this quarter with small, 2-point upticks each, while Mid-level hiring intent further reduces 2 points to close at a 12-month low of 38 points. A bigger worry is the steadily incrementing category of ‘Not Hiring’ responses – both with the geographic as well as with the Functional hiring intent, which, by the way, sees nil or marginal movement across functional areas.

A more-or-less gradual, and not easily apparent, fall in sentiment has brought many cities and sectors to near-12 month lows. This was largely unanticipated and would catch the labour market unawares. A large number of indices have lost between 5 – 9 points in this period while the numbers in the 0 – 4 points drop category are also fairly substantial.


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.

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.


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

Following a quarter when it took a sudden, significant dip, the Net Employment Index seems

still on its way to recovery. It lost a lone point to settle at +70 for the Jan—Mar 2012 quarter.

The Index is the difference in the proportion of respondents reporting an increase in hiring

needs and those reporting a decline for the quarter in question.

Quarter Period (Figures in percentage)

Increase Decrease No Change Net Employment Outlook

21 Jan—Mar 2012 71 1 28 +70

20 Oct—Dec 2011 72 1 27 +71

19 Jul—Sep 2011 76 2 22 +74

18 Apr—Jun 2011 78 4 18 +74

The single point drop resulted due to an increment in the proportion of respondents reporting

an increase in hiring. The proportion of respondents reported to be having no change in their

hiring trend also incremented by a point.

[Shaded cells have significant increases (gray) /decreases (red) in Index.]


5.2 Net Employment Outlook Growth – by sector

The Tech industry continued to downtrend hiring sentiment, with the index for IT going down a

further 4 points. With this drop the IT and ITeS (with a small, 2 point, drop this quarter) sectors

have shaved their respective indices by about 15 points each, over four consecutive quarters.

Sectors (Figures in percentage)

Quarter Net Increase / Decrease 21 20 19 18

IT 76 80 87 91 -4

ITES 80 82 90 94 -2

Financial Services [FS]

59 55 53 56 +4

Retail & FMCG [R&F] 70 70 72 70 NC

Infrastructure [INF] 65 68 66 63 -3

Manufacturing & Engineering [M&E]

53 53 55 53 NC

Telecom [TEL] 84 81 87 86 +3

Healthcare & Pharma [H&P]

68 67 70 65 +1

Financial Services ups the index significantly to achieve a 12-month high, while

Telecommunication turns around and gains 3 points after a steep drop over the previous

quarter. The Infrastructure index slips by 3 points while Retail & FMCG and Manufacturing &

Engineering continue to remain flat.


5.3 Net Employment Outlook Growth – by city

As many as 3 – and all prominent – cities lose significantly to touch index values 10 points down

where they started 12 months back. Except Delhi, with a 3 point increase, most other cities

experience marginal growth in their index values.


Quarter Net Increase / Decrease 21 20 19 18

Mumbai [Mum] 62 67 72 74 -5

Delhi [Del] 64 61 70 69 +3

Bangalore [Blr] 75 79 88 86 -4

Kolkata [Kol] 62 61 56 60 +1

Chennai [Chn] 63 63 70 72 NC

Pune [Pun] 66 70 78 76 -4

Hyderabad [Hyd] 61 60 60 61 +1

Ahmedabad [Ahd] 69 67 72 70 +2


7. 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 stays at its 12-month low, but with the consolation that none of

respondents shared a negative business sentiment. The proportion of respondents indicating a

‘no change’ in hiring trends has increased substantially, however, over the one year.

Quarter Period (Figures in percentage)

Increase Decrease No Change Net Business Outlook

21 Jan—Mar 2012 73 0 27 +73

20 Oct—Dec 2011 73 1 26 +72

19 Jul—Sep 2011 77 2 21 +75

18 Apr—Jun 2011 80 4 16 +76


6.2 Net Business Outlook Growth – by sector

Sector-wise patterns for Business Outlook Index mirror those for the Employment Outlook. IT

and ITeS lose, with the former losing substantially, to end up 15 – 20 points down their 12-

month highs.


Quarter Net Increase / Decrease

21 20 19 18

IT 76 82 90 94 -6

ITES 75 77 79 80 -2

Financial Services [FS]

60 55 52 49 +5

Retail & FMCG [R&F] 83 79 85 88 +4

Infrastructure [INF] 63 66 61 60 -3

Manufacturing & Engineering [M&E]

57 58 64 63 -1

Telecom [TEL] 58 58 57 55 NC

Healthcare & Pharma [H&P]

68 65 63 65 +3

This, and the fall in the Infrastructure index by 3 points, point to a fairly correlated relationship

between the Employment and Business indices at the industry sector level this quarter.


6.3 Net Business Outlook Growth – by city

A bounce-back by Delhi to 12-month index high eclipses the marginal index movements for the

rest of the cities. Following a drubbing indices of most cities got over the last quarter, there seems to

be a sense of stabilization.


Quarter Net Increase/Decrease 21 20 19 18

Mumbai [Mum] 62 63 65 63 -1

Delhi [Del] 52 47 51 52 +5

Bangalore [Blr] 75 74 80 81 +1

Kolkata [Kol] 70 68 69 70 +2

Chennai [Chn] 76 75 82 81 +1

Pune [Pun] 76 79 84 85 -3

Hyderabad [Hyd] 72 74 76 80 -2

Ahmedabad [Ahd] 70 70 74 71 NC

Pune, Hyderabad, and Mumbai to some degree, have been on an incremental slide. And these

three are at their 12-month lows this quarter. Bangalore just stops short of touching down this

destination.


9. 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 Geography

The vicarious good news for tier-2 and -3 towns and cities is that there is an ever so slight

increment in their index values this quarter while there is an even slighter dip in the index value

for metros. This trivial achievement, nonetheless, keeps them well below the respective lows

reached earlier over the 12-month period.

City (Figures in percentage)

Quarter Net Increase/ Decrease

21 20 19 18

Metro 87 88 91 89 -1

Tier – II Cities 18 17 20 21 +1

Tier – III Towns 9 8 10 10 +1

Rural 1 1 1 1 NC


7.2 Hiring Intent by Hierarchy

The marginal changes in index values might serve to brush aside these trends as just

incremental, but the slowly but steadily incrementing ‘Not Hiring’ is a warning sign.

Level (Figures in percentage)

Quarter Net Increase/ Decrease

21 20 19 18

Entry Level [No Experience]

49 47 50 49 +2

Junior Level [1 – 3 years Experience]

65 63 67 64 +2

Middle Level [3 – 7 years Experience]

38 40 44 45 -2

Senior Level [> 7 years Experience]

24 24 25 24 NC

Not Hiring 12 11 10 10 +1


7.3 Hiring Intent by Functional Area

Again, the patterns with Functional Area are marginal or nil in movement. This is a concern

given the substantial fall most functional areas saw last quarter. Besides, the ‘Not Hiring’

response getting a wee bit louder is not comforting either.

F (Figures in percentage)

Quarter Net Increase / Decrease

21 20 19 18

Sales / Marketing / Customer Service [SMC]

77 79 82 78 -2

IT 25 25 31 29 NC

Engineering [ENG] 40 39 43 42 +1

Accounts / Finance [A&F]

12 13 15 16 -1

Administration / HR / Office Service [AHO]

13 12 12 14 +1

Blue Collar [BC]* 42 41 43 40 +1

Other 8 8 10 13 NC

Not hiring 7 6 4 5 +1

*Previously included under ‘Others’


11. Other Trends

8.1. Employment Outlook Index – city-sector drilldown 8.2. Business Outlook Index – city-sector drilldown 8.3. Attrition trends by sector 8.4. Attrition trends by city


8.1 Employment Outlook Index – city-sector drilldown

City Quarter Total Sector

IT ITeS FS RMF INF M&E TEL H&P

Mum 21 62 9 8 10 8 5 7 5 7

20 67 10 8 11 8 9 8 7 9

19 72 12 10 9 9 10 8 7 10

Del 21 64 7 3 8 9 7 7 10 8

20 61 8 3 8 10 8 9 8 9

19 70 10 6 9 11 10 10 10 9

Blr 21 75 7 6 7 8 9 10 15 15

20 79 10 7 6 7 12 11 17 14

19 88 13 10 7 9 14 13 19 12

Kol 21 62 5 3 12 12 7 7 5 18

20 61 4 3 13 12 5 6 4 19

19 56 3 3 10 11 5 4 5 17

Chn 21 63 6 6 9 10 10 11 10 6

20 63 7 7 9 9 10 10 10 5

19 70 10 11 9 10 9 10 13 4


Pun 21 66 6 8 6 5 12 11 9 9

20 70 11 9 5 4 15 12 9 10

19 78 16 15 6 5 18 14 8 8

Hyd 21 61 6 8 8 10 8 11 7 7

20 60 7 10 6 9 9 10 6 7

19 60 9 11 5 8 10 11 4 4

Ahd 21 69 4 4 21 6 4 8 8 20

20 67 4 4 20 5 3 10 6 19

19 72 6 4 21 6 4 12 8 23

8.2 Business Outlook Index – city-sector drilldown

City Quarter Total Sector

IT ITeS FS RMF INF M&E TEL H&P

Mum 21 62 8 7 7 4 17 9 7 10

20 63 11 8 6 5 19 10 6 9

19 65 12 12 7 6 17 9 5 10

Del 21 52 8 5 8 12 8 10 8 11

20 47 7 3 7 11 6 7 7 9

19 51 10 3 5 13 10 6 7 10


Blr 21 75 12 6 12 8 8 12 14 11

20 74 15 7 10 8 11 9 11 8

19 80 17 11 9 7 12 9 12 8

Kol 21 70 9 5 11 11 8 9 9 18

20 68 10 3 12 10 7 10 7 17

19 69 10 4 14 10 4 10 7 20

Chn 76 10 12 9 8 11 11 12 15

20 75 11 14 10 5 9 12 12 12

19 82 15 16 12 4 9 15 11 11

Pun 21 76 8 22 7 5 14 14 10 7

20 79 10 21 5 6 16 15 9 7

19 84 12 24 6 5 18 17 8 7

Hyd 21 72 9 9 11 5 8 10 7 15

20 74 10 8 10 5 9 12 8 17

19 76 10 9 11 7 9 10 8 15

Ahd 21 70 6 4 16 10 4 13 6 18

20 70 6 5 17 8 3 15 4 20

19 74 8 6 18 8 2 17 3 19


8.3 Attrition Trends – by city

The high-trending attrition rates by city continue to ride the crest with incremental changes

across cities. Bangalore leads the annual rate, as it has been, while managing to keep the

quarterly rates fairly low. Delhi and Hyderabad are at the risk of cumulating high quarterly

attrition rates and push their annual rates substantially over.

8.4 Attrition Trends – by sector

Sectors are spared the privilege cities such as Mumbai and Ahmedabad enjoy – that of

exceptionally low annual as well as quarterly attrition rates. Attrition trends are ubiquitously

high with cities, and relentless – meaning, high sustained quarterly as well as annual attrition

rates.


13. Insights

9.1. Mapping the 12-month fall: a visualization


9.1 Mapping the 12-month fall: a visualization

The past 12 months have been eventful. They follow a rather heady clime business and

employment sentiments had reached. The fall from the edge has rarely been so subtle and with

so many index entities.

A more-or-less gradual, and not easily apparent, fall in sentiment has brought many cities and

sectors to near-12 month lows. This was largely unanticipated and has caught the labour

market unawares. We try to illustrate this phenomenon through a visual map below.

The drop measure is the difference between the highest value an index has reached over the past 12

months and the index’s present value. Only such instances where drops are observed have been

reported. Given that the above exercise only covers index-drop instances, the sheer number of entities

(sectors and cities) that have experienced a net drop in the index over the last 12 months is worrying.

Some salient features of this phenomenon:

IT loses substantially on both business and employment outlook – more so, on the first.


The largest number of index drop entities is in the 5 – 9 points category. This, along with the

number in the 0 – 4 points category are cumulatively subtantial

The highest divergence in sector and city indices are with ITeS (Employment Outlook drop in the

15 – 20 pints range and Business Outlook drop in the 5 – 9 points range) and Mumbai

(Employment Outlook drop in the 10 – 14 pints range and Business Outlook drop in the 0 – 4

points range)

Chennai and Bangalore have both Employment and Business Outlook index drops occurring in

the 5 – 9 points category


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 15 52 9

Delhi 12 59 10

Bangalore 18 50 13

Kolkata 15 51 9

Chennai 17 45 16

Pune 14 55 13

Hyderabad 18 43 12

Ahmedabad 10 41 13

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

Manufacturing & Engineering [M&E] 8 7 10 7 11 10 8 7 68

Retail & FMCG [R&F] 11 15 10 9 9 11 8 7 80

Financial Services [FS] 10 10 10 8 10 11 7 7 73

IT 10 11 11 10 9 9 10 9 79

ITeS 9 11 10 10 10 9 11 8 78

Infrastructure [INF] 10 9 9 9 10 12 10 8 77

Telecom [TEL] 8 8 11 10 9 11 10 8 75

Healthcare & Pharma [H&P] 10 10 10 12 10 9 9 10 80

Total 76 81 81 75 78 82 73 64 610


10.3. Reasons for Attrition – the employer perspective

By City

By Sector

teamlease employment outlook report...the tech industry continued to downtrend hiring sentiment,...

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