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'India Inc to reel under manpower crunch'

Corporate India would undergo severe manpower shortage in the next five years due to gap in the demand and supply of skilled human capital, says a leading industry body.

business Updated: May 20, 2007 19:34 IST

Corporate India would undergo severe manpower shortage in the next five years due to gap in the demand and supply of skilled human capital, says a leading industry body.

The manufacturing sector is already feeling the pinch of employment elasticity, which has fallen from 0.59 in 1983-1998 and has fallen to 0.33 in 1993-2000, according to a report by the PHD Chambers of Commerce and Industry (PHDCCI).

According to an estimate by TeamLease Services, a leading headhunting firm, given that manufacturing sector is growing at 12 per cent and there are indications that such level can be maintained, effort should be made to enhance the employment elasticity to 0.59, so that the manpower requirement to the sector will be around 2.59 million per year.

"There are signals of manpower shortages already in the horizon with the growth rate perking up in the recent years and wage rates getting overheated. Our estimates show that manufacturing sector will be hard hit since there are two visible trends in the segment," PHDCCI president Sanjay Bhatia said in a statement.

"One is the greater degree of poaching by the ICT (information, communication and technology) sector taking into its rolls even electrical, mechanical and civil engineers and diploma holders for doing IT-related works though their discipline and orientation are different. Secondly, no organised efforts are visible both at the private and public domain to create and upgrade the skill sets," Bhatia added.

According to the PHDCCI, the manufacturing sector would require two different sets of manpower as the sector becomes more and more digitised. Thus the technical institutions would require more investment and greater degree of private-public partnerships.

Other sectors, which would need a huge number of trained human resources, are IT, banking, insurance, tourism, retailing that would steer the Indian economy towards higher growth trajectory.

For the IT and IT-enabled sectors alone, the manpower requirement would be around three million workers a year, PHDCCI said adding that this scenario would give rise to poaching, which in turn would disfigure the Indian job market.

Sectors such as agriculture and allied industries, such as food processing, cold chains would also need capable manpower.