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Monday, December 27, 2010

Service sector in India is facing the shortage of skilled labor says ASSOCHAM

New Delhi: The rapid economic growth in the country has greatly increased the demand for
skilled labor and approximately 10 to 15 million jobs are expected to be created in India by next
year, in which 75 per cent of these new jobs will require vocational training to enhance the
employability wrapper, if not addressed properly can lead to a slowdown in the country’s
economic growth, according to the ASSOCHAM.

The year 2011 is likely to be a boom for skilled worker in IT & ITES, biotechnology and services
sector as against the 15 per cent hike in their salaries in 2010, is expected to be registering 30 to
40 percent growth in salaries, said Mr. D S Rawat, Secretary General, ASSOCHAM while
releasing the ASSOCHAM paper.

The share of the services sector is steadily increasing and this is confirmed by the fact that
services contribute to nearly two-third in the GDP. The high growth service sector industries
include information technology, academic and biotechology sectors. Due to the high demand of
India’s vaunted IT outsourcing sector, companies have been forced to raise wages by 10 to 15
per cent during the year 2010.

The employers are trying to catch up the highly skilled manpower and the salaries are going
through the roof. Companies are not only facing the problem of retention difficult and job hoping
extensive, but there is a clear shortage of qualified and skilled manpower. Mainly IT/ITES,
academics, engineering, HR, hospitality, insurance and biotechnology sectors, which are driven
by the highly skilled manpower but the supply of capable labor is not up to the demand at the

About 90 per cent of the current jobs in these sectors are skill-based and require vocational and
management training but only 6 per cent of the population receive any form of vocational training”
says the chamber study for 2011.

The IT/ITES industry which provides direct employment to the about 2.23 million and indirect
employment to the 8 million people will be experiencing of the shortage of skilled manpower. It is
expected that the salaries in this sector will be growing at a par of 30-40 per cent during the year
2011, according to the study of ASSOCHAM.

Growth rate of India is the second highest in the world after that of China. The youth force of India
is contributing lot to the same. It is believed that principal reason behind Indian progress is its
youth force, highest in number in the world. However, there is a problem, the huge numbers of
Indian youth are not only unemployed but unemployable,whereas a large numbers of white collar jobs are waiting for suitable candidates.

Assocham revealed that with the growing demand of services sector, which employs lakhs of
people every year, is expected to add more over the coming years. Similarly, the IT and ITES
industry will also need skilled manpower, and, the growing market of the biotech industry in India
will also need highly skilled professionals. Not only in India, the developed world too facing skill
manpower shortages.

Job generating service sectors (January-November 2010)

Sectors          Growth in %age as compare to the 2009    Share in %age
IT/ Enabled           31.9                                                                        40.3
Academics              85.5                                                                        12.4
Engineering           110.4                                                                        5.6
Insurance               19.9                                                                         5.0
Hospitality              38.2                                                                         3.3
Biotechnology         46.0                                                                        2.7
HR                           16.7                                                                         2.5

Source: Newspapers and job portals

This is further stretched due to the fact that most of the growth has been in the services sector
which, being a dynamic sector is continuously evolving. Thus, not only is there a shortage of
skilled labor, a constant up-gradation required on new skill types is visibly low.
The skills shortage spans all levels, from management to frontline operations, and all sectors,
from IT to fast food. This shortfall can be met by India, where both educated unemployment and
the number of people joining the workforce are on the rise. In short, the opportunities before India
are huge, provided skilled workforce gears up to take these on.

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