Brick-and-mortar loses talent to IT

BANGALORE: The continuous and endless hunt for fresh talent by the IT sector in India is having its side effects. The manufacturing industry, which is another major recruiter of engineers in the country, is bearing the brunt of huge entry-level hiring by IT firms. Consequently, manufacturing companies are settling for the second best in terms of manpower quality. And if this is not enough, they are also facing the problem of retaining entry-level employees.

“Earlier engineering, infrastructure and other manufacturing companies had stringent educational qualification requirement. They used to hire freshers from top 10-20 engineering institutes in India. But now that is not the case as they are forced to compete with IT industry, which is hiring not just software engineers but also mechanical, civil, electrical and chemical. Therefore manufacturing companies are relaxing entry level qualification criteria,” says E Balaji, executive director of Ma Foi Consultants.

“Manufacturing companies are opting for second-rung engineering institutes across the country, he adds. While there are no specific estimates of job creation in the manufacturing sector in India, HR experts say that at least 1 lakh jobs could be created in the sector in fiscal ’06-07.

Employee retention at entry level is another major issue for the manufacturing firms. Companies are now re-looking at the salary structure, particularly of the freshers. They are also using retention strategies like job enrichment programmes and opportunities to work abroad.

“Though the remuneration in the manufacturing industry is not on par with the IT sector, it has certainly increased significantly. Currently, pay package at entry level stands at around Rs 2.5-3 lakh,” says Shiv Agarwal, CEO of ABC Consultants.

The salary package has witnessed 20% rise in last one-two years. Two years ago, the entry level salary in several manufacturing companies was around Rs 1.5 lakh.

“However, small scale manufacturing companies with turnover of Rs 50-200 crore are not able to pay high salaries, leading to inability to hire quality engineers,” says Nirupama VG, associate director, TeamLease. Even if these companies do manage to hire quality manpower, retaining them is very difficult.

“Youngsters with less than 1-year experience compare their salaries with that of their peers in the IT industry and decide to leave for greener pastures,” she adds.