Engineering staffers bolt to the West
The Indian engineering industry is facing its worst attrition ever as many employees are leaving India for opportunities in the Gulf and the West.
By MV Ramsurya, TNN |
MUMBAI: It was something that was common in the technology world. But, recent trend estimates have shown a different picture. The Indian engineering industry is facing its worst attrition ever as many employees are leaving India for opportunities in the Gulf and the West.
Senior executives in leading engineering companies such as Larsen & Toubro (L&T), TRF, Siemens and Kilburn Engineering have admitted that the trend is growing and what was once part of software companies, is now afflicting even brick and mortar firms.
“It’s a serious issue and one that needs to be tackled early,” says L&T chairman AM Naik. He should know. L&T, India’s largest engineering company by revenue, is currently facing an attrition rate of 15% in its design engineering segment, compared with a rate less than 10%, two years ago.
It is an unexpected turn of events for L&T, that has for long been the favoured destination for the more-than 300,000 students, who pass out of various Indian engineering schools every year. Recently, most of them have spent on an average less than two years in L&T.
“Everybody wants to go to the Gulf or to the US...no one is interested in staying in India,” Mr Naik said at a recent meeting. TRF, a material handling company in the Tata fold, has been facing the same problem. “I have difficulty in retaining people as large US-based hydrocarbon companies offer better prospects,” says executive director Ramesh C Nandrajog. “The demand is more for design engineers and those with consultancy experience,” he added.
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One of India’s leading engineered equipment, systems and services company, TRF, perhaps, faces the fastest attrition rate ever, at 20%. On a total employee strength of 800 people, TRF has seen more exodus in its 350-strong officer category — a segment peopled by those with professional education. “Every year, on an average I recruit 35 engineers, but last year it went up to 70,” said Mr Nandrajog. L&T too has been taking on people fast. The 28,000-strong company has already recruited 3,300 people in the first half of the current fiscal year, to offset rising attrition levels.
The employee turnover in engineering operations has been happening at different levels. In companies, like L&T it has been affecting almost all grades, in smaller companies it is mostly the middle-to-lower management staff that are leaving.
A Siemens executive said that while attrition rates have been going up, they weren’t high enough to be worried. He didn’t give details. “In our case, the rate (attrition) isn’t that high,” says Vibhav Sinha, MD, Kilburn Engineering, Mumbai. “Although, I do agree that the trend is worrying, in our company it has been mostly at the lower rung of hierarchy,” he added.
The $500-million Kilburn Engineering has interests in manufacturing and marketing of tea, batteries and engineering with a turnover of over $500 million. It specialises in design, engineering for various types of drying systems for chemical, petrochemicals, food, oil, gas and other industries.
Measures to retain staff are having an impact on the wage bill of companies. TRF’s total wage costs surged 26% last year and this year, Mr Nandrajog expects a similar quantum hike. L&T’s staff expenses for the quarter ending September 30, rose to Rs 395.56 crore, from the Rs 272.73 crore spent in the year ago period.
The company spends Rs 890 crore as staff expenses in a year. Mr Naik says that increasing opportunities within an organisation and offering more career training options are some measures to stem the attrition rate. “I have been sending plane loads of our employees to our offices in the Gulf, so that they get a globalised work environment and can benchmark their expertise against the best.”
Mr Nandrajog said his company is focusing more on training and improving an employee’s qualifications to retain him. “The attrition problem is serious, but I’m sure it can be addressed,” he said, adding that the government should try and increase vocational courses so that the number of trained manpower goes up.
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A recent report by the National Council for Applied Economic Research has said that Indian firms are facing an acute shortage of staff as employees have better options outside the country. The shortage is leading to a sharp rise
in salaries. The wage costs are rising 22% in the six months to September, compared to an average increase of 12% in the past four years.
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