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Industry cools hiring as economy slows down but salary packages not hit, say b-schools

Coupled with the global turmoil and the slowing economic growth rate back home, this placement season has been tougher compared to the previous year at India’s leading business schools. While the number of companies participating in the placement process have more or less remained the same, the number of offers made by each company has certainly dipped. Human resource consulting companies too are feeling the heat of a chilly job market, while corporate India says that they expect things to look up in the near future.

Department of Management Studies (DMS), Indian Institute of Technology (IIT), Delhi admitted that the number of offers made by companies had dwindled in this placement season.”Companies have adopted a conservative approach as far as hiring is concerned. They have limited themselves to a certain number and are not overshooting that,” said Sanjeev Priyam Chandran H, student co-ordinator, DMS, IIT Delhi. “However, they have been more generous as far as summer internships go,” he observed.

“FMCG, banking and finance firms are not making as many pre-placement offers (PPOs) as they had been making a year ago. Even though we have placed nearly everyone, the difference is that last year there were over 80 offers made for a batch of 52, whereas this year we have had 90 odd offers for a batch of 97 until now,” he said. While companies from the FMCG and finance sector had decelerated the hiring process, IT was performing well this season, he added.

“We had anticipated the downturn, which is why we tweaked the placement policy slightly this year. This placement season, once the student lands a job offer, he can avail of another job opportunity only if it is a ‘dream option. In 2011, students were allowed to apply for more than two companies,” said Bimal S, student and placement committee member, DMS IIT Delhi.

“Our domestic placements concluded in December 2011 itself, while our international placements which kickstarted in January 2012 will continue till the first week of April. The international placements are happening with the help of an Indo-Japanese collaboration and a tie-up with a few Singapore associations through our alumni. One Chinese firm is also participating. International placements are a niche area for us and have been better this year,” he added.

IIT Bombay’s Shailesh J Mehta School of Management (SJMSOM) also agreed that the placement scenario was tougher this year. “Companies were cautious about hiring this time, even though it was not reflected in a tangible form,” said a student from the SJMSOM placement committee.

“The number of offers made per company has come down, in the sense that if 50 to 60 organisations made 150 to 120 offers in 2011 then this year, about 70 companies made around 130 offers. Finance companies. especially the multinational ones did come for campus recruitment but made fewer offers while FMCG had slowed down. Consulting and IT have remained flat as compared to the previous year,” he added. SJMSOM, IIT Bombay to had experienced an increase in batch size from 96 to 120 by the time the class of 2012 had joined. The school wagered that there would be no decrease in compensation, though it was yet to process its salary information.

Another top-ranked b-school in Mumbai also agreed that placements were slightly tougher this year. “Companies are sceptical about how the economy will behave in the next couple of quarters. Although they do have people requirements, they are apprehensive and are not picking up people in bulk. This year, we have had to call a many more companies for the placement process as the intake per company has decreased. Pay packages have not been slashed,” said the placement representative of the school not wishing to be named. He too agreed that IT companies had stepped up hiring this year for consulting roles.

IIT Kanpur’s Industrial and Management Engineering department however said that its placements had been unaffected by the economic slowdown. “We have not felt the effect of the slowdown and have had no placement related issues, also because our batch size is small,” said Prof BV Phani, associate professor at IIT Kanpur.

“There might be an economic and investment slowdown as a result of the increase in interest rates implemented by the Reserve Bank of India. This is in turn, a move directed to reign in inflationary pressures, and is therefore not a crisis situation. If b-schools are having to call more companies as a result of the difficult job market scenario, it balances the effect, and is actually a positive change,” he added.

The Indian Institutes of Management (IIMs) at Ahmedabad and Calcutta seemed to have bucked the trend though.

“We are happy with the way placements have progressed this year. The cluster-based system is giving students the freedom to choose from a wide range of opportunities and recruiters were very pleased with the quality of students,” Amith JM, a member of IIM Ahmedabad’s placement committee claimed in an email reply to PaGaLGuY.

“The Boston Consulting Group recruited 17 students and IBM made more than 20 offers. We observed aggressive hiring from consulting firms, FMCG companies and e-commerce enterprises and despite the unfavourable market conditions, a significant number of students from the graduating batch have secured roles in investment banks as well. We did not witness a hiring freeze from any sector,” the b-school stated.

IIM Calcutta echoed these sentiments. “The current job situation at IIM-C has been very positive despite the slowdown in the industry. Although the placements were set to happen over five days, we wrapped up the process by day 4 evening,” the institute’s placement committee claimed.

“We saw a good mix of new and traditional recruiters. While Microsoft hired for its Redmond head office, Plinga (a German gaming firm) recruited for its Berlin office. The alumni played a very crucial role in this bad market scenario and were there to support us whenever we needed them. Finance offers were made across the major financial hubs of the world including New York, Zurich, Hong Kong, London and Singapore,” the institute said.

PaGaLGuY also spoke to human resources and recruitment consulting organisations to gain deeper insight into the current job situation.

ABC Consultants said that while there were not too many employment opportunities being generated at the moment, the hiring slowdown would not last very long. “The market scenario is a little challenging, and we are not seeing expansion in terms of employment opportunities. From the way we see it, the current slowdown in India is worse than 2008. Back then, while the world economy was in shambles, we had coped with the challenge pretty well. At the moment our economy is struggling. The inflation rate is high and the interest rates are high,” said Shiv Agrawal, CEO, ABC Consultants.

“There is a degree of scepticism in the market, since there is lack of a fundamental political will to change things. Export-oriented sectors like IT and BPO have been affected. Insurance and telecom have taken a hit as well. Media is at the moment, sluggish. Investment and corporate banking are not doing well because of the global scenario,” he added. For the firm too, business had slowed down compared to the previous year, he added.

GlobalHunt, another talent recruitment company shared this view. “Seen from the industry’s perspective, there are jobs available and students are being recruited. However, the difference is that students are not getting multiple offers,” said Mr Sunil Goel, Director and spokesperson, GlobalHunt. “We sniffed the first signs of yet another meltdown in the April-May 2011 period. Then, sometime in August Standard & Poor downgraded USA, which further aggravated the problem. The European crisis and America being downgraded had a ripple effect on the other countries (India, China) as well,” he stated.

About the situation back home, Mr Goel said, “India has two parallel economies. One is the domestic market which contributes 50-60% of the economic growth, while the other is the global economy, that contributes 30-40%. Industries like IT, ITES and textiles that fall under the latter category have taken the hit. As of now, the telecom sector is consolidating, therefore hiring in this sector has slowed down. I reckon it should recover in a year’s time,” he said.

Mr Goel believes that market sentiment might improve by the second quarter of 2012. He was of the opinion that by the next financial year, things will improve as companies might resume their stalled expansion plans and achieve cost optimisation. On being asked how the recruitment firm was tackling slowdown issues, he said that since demand for jobs had not gone down, they were not feeling the pressure. “As far as job losses are concerned, a lot of it has to do with the gap between the industry’s requirements, and the individual’s qualifications and capabilities,” he added.

Ma Foi Randstad, another HR consulting firm however was of the opinion that if at all there was a dearth of jobs, it was because of the gap between the expectations of companies and the quality of students that some b-schools are churning out. “Quite a lot of graduates from lower-rung management institutes are ignorant about the basics in their specialisation, so how can they be hired?” asked Sanjeev Singh of Ma Foi Randstad. The firm maintained that companies were still hiring, and they had not experienced any effects of the economic slump.

Among those PaGaLGuY spoke to in India Inc, Essar Group said that slowdown or not, the Indian economy was based on solid fundamental economic realities. “This is actually the time when we get our systems in place, our processes in order for the development that is to happen. We will continue with our hiring, though I cannot quantify in terms of numbers. Recruitment in the Essar Group will be based on our needs and projections,” Adil Malia, group president, Human Resources, Essar Group told PaGaLGuY on the sidelines of a conference in Mumbai last week.

FMCG giant Dabur India said they had lowered campus hiring for b-schools by 30-40% this year. “Hiring outlook in the FMCG sector has definitely not been buoyant, as witnessed in the recent past. We also have pruned the numbers to be hired from b-bchools,” said Srijan Srivastava, head, Talent Acquisition, Dabur India.

“Recruitment is a factor of business growth and natural attrition. The business did display robust top line growth, however the low churn brought down our campus requirements. We have already completed hiring for this year, and we hired only from tier-1 b-schools, which includes a few IIMs and others,” he added.

On being asked for his outlook for the future, Srivastava said, “We are upbeat about the hiring scenario, and we do intend to augment the hiring through the PPO route.”

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