India’s growth story no longer needs to be sold. We are a trillion-dollar economy with a trillion-dollar stock market. India is now one of the world’s major software and services hubs. India’s much-maligned manufacturing sector is also increasingly seen as one (in select sectors at least) that can deliver global scale manufacturing capacity and price-competitiveness. Indian companies are rapidly expanding their global footprint, often through acquisitions funded by canny investors who have recognised the competence of Indian managers and the skills they bring to the table.
Now consider this: an estimated one-fifth of India’s current workforce — from shop-floor workers to top managers — which has played a crucial part in the transformation of Indian business, will be out of the workforce by the year 2010. For good.
Not because they would have been ‘downsized’, but simply because they would have passed India’s absurdly low retirement age of 58.
Welcome to the downside of India’s much-touted ‘demographic dividend’, its vast supply of young workers entering the workforce, which will give India a huge edge over other economies, who are faced with a rapidly aging working population.
Young, yes. Talented? There’s a question mark over that. According to a recent study by Citigroup, critical and rapidly growing sectors like retail, civil aviation, telecom services and infrastructure, especially engineering services, are already facing moderate to severe talent shortages.
Meanwhile, experienced, well-trained manpower is simply walking out of the office door, never to return. And most employers do not even appear to be bothered by this. In a survey of 4,742 employers spread across all major sectors, the results of which were released recently, recruitment major Manpower India found that a majority of the respondents did not have any strategy in place to retain or use what it termed the ‘older workforce’ — employees aged 50 years or above.
“Opening the doors to older workers is a major benefit…it will help organisations retain knowledge and experience, widen the recruitment base and could lead to more customers and greater profits,” commented Soumen Basu, executive chairman, Manpower India.
In other words, looking beyond those grey hairs makes sound business sense. Western companies have already begun to engage with the problem. A study by IBM Consulting carried this telling quote from Keith Johnstone, co-lead of Sandia’s Knowledge Preservation Project: “What we’re doing is trying to capture their ideas, but more than that, their psyches, to try to learn not just what they did, but why they did things the way they did; to find out what worked, what didn’t work, what might have worked had the supporting technology been more advanced…”
Another major issue will be the type of labour entering the market. Demographic studies have already found that states with high literacy levels, as well as urban centres, have significantly lower than average fertility levels. The reverse is true for the most educationally backward areas. According to Nicholas Eberstadt of the American Enterprise Institute, “Educated and aging, or untutored and fertile — this looks to be the contradiction for India's development in the years immediately ahead.”
The choice is ours.