TeamLease Employment Outlook Report: Jul - Sep 2010

Prepared by: inTouch analytics
be-in-touch.com

TeamLease
Employment Outlook Report

Quarter-15, July-September 2010

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

http://be-in-touch.com

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 60 53 45 64 +07
[FS]
Retail & FMCG [R&F] 61 61 38 35 0

Infrastructure [INF] 57 36 69 48 +21

Manufacturing & 66 53 38 30 +13
Engineering [M&E]
Telecom [TEL] 59 48 50 49 +11

Healthcare & 70 72 55 61 -02
Pharma [H&P]

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.


80
71 7072
69 69
70 66 64 66
62 60 6161 61
59 57 59
60 55 55
53 53
48 50
48 49
50 47 45
Q15
36 38 36 38
40 35
Q14
30
30 Q13

20 Q12

10

0
IT ITES FS R&M INF M&E TEL H&P


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.


90
82
78 79
80 75 76
70 68
70 63 62 63 6264 63
59 57
60 55 54 54 54 54
49 51 47
50 43 Q15
41 41 41
40 35 37 Q14
34 34
30 Q13
20 Q12
20
10
0
Mum Del Blr Kol Chn Pun Hyd Ahd


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 57 55 45 31 +02
[FS]
Retail & FMCG [R&F] 65 55 22 14 +10

Infrastructure [INF] 46 38 55 35 +08

Manufacturing & 64 56 41 25 +08
Engineering [M&E]
Telecom [TEL] 41 25 32 32 +16

Healthcare & 76 71 64 40 +05
Pharma [H&P]

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.


80 76
73 71
70 64 66 65 64 64
60
60 5755 55 55 56
48 46
50 44 44 45
41 41 40 Q15
38
40 35
31 3232 Q14
30 25 25 Q13
22
20 Q12
13 14
10

0
IT ITES FS R&M INF M&E TEL H&P


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.


90
78 80
80 76 7577 77
73 72 74
69 68
70
63
58 60 59
60 56
52
49 49
50 Q15
42 40 40 39 Q14
40 36 35
30 31
Q13
30 25
21 22 Q12
20 14 16

10

0
Mum Del Blr Kol Chn Pun Hyd Ahd


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

100
90 86 84 87
82
80
70
60
Q15
50
Q14
40
Q13
30
Q12
19
20 16 15 17

10 7 6
2 4 2 1 2 2
0
Metro Tier – I Cities Tier – II Cities Rural


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 32 20 26 28 +12
[No Experience]

Junior Level 61 44 40 45 +17
[1 – 3 years Experience]

Middle Level 46 51 40 41 -05
[3 – 7 years Experience]

Senior Level 21 23 20 20 -02
[> 7 years Experience]

Not Hiring 12 20 26 23 -08

70
61
60
51
50 45 46
44
40 40 41
40 Q15
32
28 Q14
30 26 26
23 23 Q13
20 21 20 20 20
20 Q12
12
10

0
Entry Level Junior Level Middle Level Senior Level Not Hiring


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 / 78 71 71 59 +07
Customer Service [SMC]
IT 24 22 19 24 +02

Engineering [ENG] 33 32 26 28 +01

Accounts / Finance 18 17 16 20 +01
[A&F]
Administration / HR / 13 17 10 16 -04
Office Service [AHO]
Blue Collar [BC]* 28 - - - NA

Other 6 27 12 12 -21

Not hiring 8 - - - -

*Previously included under ‘Others’


90
78
80
7171
70
59
60

50 Q15

40 Q14
3332
28 28 Q13
30 26 27
24 24
22 Q12
19 1817 20 17 16
20 16
13 1212
10
10 6 8
000 000
0
SMC IT ENG A&F AHO BC Other Not hiring


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.

Sentiment Sweet Spot

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.


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

Sectors / City Mumbai Delhi Bangalore Kolkata Chennai Pune Hyderabad Ahmedabad Total
Manufacturing & 10 8 8 7 12 16 8 8 77
Engineering [M&E]

Retail & FMCG 22 11 8 11 12 8 6 7 85
[R&F]

Financial Services 13 6 13 7 10 8 12 8 77
[FS]

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 8 7 8 8 8 6 9 8 62
[H&P]

Total 88 74 77 64 72 69 64 60 568

Business Size Breakup

Small Medium Large
[Up to 249 employees] [250 – 999 employees] [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


10.3. Reasons for Attrition – the employer perspective

By City

By Sector


For more information:
email: arun@be-in-touch.com
twitter: http://twitter.com/be_in_touch
LinkedIn: http://www.linkedin.com/companies/305009


TeamLease Employment Outlook Report: Jul - Sep 2010

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