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Service sector: smiling no more

Whether it is hospitality, retail or the much-celebrated BPO sector, attrition and lack of employability are rising — what’s the way out for the once-shining industry? Samar Khurshid & Aasheesh Sharma reports. Surveying service | Service sector attrition

business Updated: Mar 11, 2012 01:57 IST
Samar Khurshid and Aasheesh Sharma
Samar Khurshid and Aasheesh Sharma
Hindustan Times

To kill boredom after his class XII exams, Mumbai boy Lucas Pires, now 26, became a call centre worker. Over the next few years, what he thought would be a stopgap arrangement turned into a seemingly dead-end career. During college, juggling night shifts with a Bachelor’s in Commerce became tough and Pires flunked. He dropped out of college and settled for the riches of the BPO industry.

“I just couldn’t quit. Earning Rs 13,000 a month in 2005 was a lot of money for a teenager back then,” he recalls. Eight years on, Pires is yet to become a team manager. He doesn’t have the graduation mandatory for a promotion. “With my qualifications, I may have the money but won’t have a senior designation,” he says.

Instant moolah in the teens, graveyard shifts in the 20s, quick burnout at 30? For the young and restless working in India’s service sector, reality strikes the moment they think of settling down. By the time they realise they’ve spent the most productive years of their lives faking accents, waiting tables, delivering pizzas or deciphering medical transcriptions, disillusionment grips them.

Pires could be one of many service sector employees disillusioned at a young age. According to recruitment tendering platform MyHiringClub, the workforce of the service sector in India grew from 1.34 crore in 2007 to 1.6 crore in 2011. Attrition has kept pace rising from 16% in 2007 to 26% in 2011. Also, the employability of India’s graduates fell from 29% in 2007 to 22% in 2011.

In February 2012, for the first time in three months, India’s service sector lost momentum as firms sacked workers, said HSBC’s Business Activity Index. This brought back memories of the global recession of 2008-10 when Indian companies slashed 40-45% of their staff, says MyHiringClub CEO Rajesh Kumar. “This led to indiscriminate hiring at the entry level, without a sizeable middle rung.”

Whether it is business process outsourcing (BPOs), hospitality or retail, the Indian service sector appears to be in the midst of an unemployability epidemic. Un-employability, or surplus jobs without the requisite skills to hold them, is rising at a fair clip.

A survey of service sector employees commissioned by Hindustan Times and carried out by C-Fore reveals 68% of those who’ve worked in the service sector for more than 8 years regret joining the sector early in their career. One of three (33%) said they joined the sector because it paid well, while 37% perceived it as their last resort — they weren’t qualified for anything else.

The disenchantment sets in early, if the survey is to be believed. Of those who’ve been employed for less than 5 years, more than 6 in 10 (61%) considered their choice of career a mistake. Of these, 63% said they didn’t have the requisite qualifications for anything better.

In the years ahead, the overall human resource requirement across key segments in the service sector is estimated to be around 3.78 crore by 2022, says Ernst and Young executive director Abhaya Agarwal. The lack of skilled labour is not surprising if one considers that India’s annual capacity for skill development and training stands at a paltry 12 lakh persons. “With attrition rates as high as 30-35% in retail and around 25% in hospitality, training becomes critical,” adds Agarwal.

Reasons for the crisis

The skills gap has widened in recent years, says Bibek Debroy of the Centre for Policy Research, Delhi. Industry, adds Debroy, hires people who are less employable as the demand for jobs goes up. “It’s a natural economic law.”

NR Bhanumurthy, professor at National Institute for Public Finance Policy, attributes the problem of unskilled employees to a stagnant education curriculum, not in sync with industry needs. Ground Report

Unlike banking and BPOs, the hospitality industry hasn’t done enough to address the gap between industry needs and skills says Anirban Sarkar, executive assistant manager at Radisson Blu Suites, Gurgaon. “Entry into the hospitality sector isn’t tough. But over the years, if you don’t widen your skill set, you are bound to get frustrated.”

In the absence of training, growth opportunities, too, shrink. According to the HT C-Fore survey, close to 7 in 10 employees (67%) who’ve joined the service sector in the last five years, perceive their promotion prospects as dim. Vijay Kumar, 26, retail manager with Ploof Deli, a South Delhi eatery, for instance, had to switch three jobs in five years. He has since completed a diploma and manages to make a decent living. Still, rues Kumar, he could have done much better. “Without qualifications and training, there is no scope for career progression.”

In fact, lack of personal growth ranks high on employees’ reasons for quitting their organisations, reveals the HT survey. Close to 40% of those who’ve joined the workforce in the last five years say they would change their job owing to bleak career prospects.

The trend is fuelled by short-sighted recruitment, says Himanshu Aggarwal, CEO of employability solutions company Aspiring Minds. “Most BPO hires are evaluated on English-speaking skills and personality. However, as a professional approaches managerial roles, the lack of skills rears its head.”

Who is to blame?

Genpact vice chairman, Pramod Bhasin, 60, a pioneer of the business process management industry, says it is unfair to single out the BPO industry for attrition. “We are no worse than banking or retail. In emerging economies it is a function of growth. With the BPO industry growing at 15 %, there’s is bound to be higher attrition because there are many more job options,” adds Bhasin.

Rosita Rabindra, chief people officer, NIIT Technologies, says attrition levels in the voice function in a BPO business are higher since voice executives don’t gain any functional expertise on the job.

Life beyond the plateau

The children of liberalisation, as experts call them, view a job differently. An employment contract has changed from a lifetime commitment to a cab transaction, says Manish Sabharwal, co-founder of TeamLease. The mantra to break out, once they realise they are flat-lining, adds Sabharwal, is to ‘repair, prepare and upgrade’.

Earlier this year TeamLease signed an agreement to set up vocational universities in Gujarat to teach soft skills, English and accounting. One good way out of the quagmire of mid-career blues for those who are languishing, says Sabharwal, is to re-tool and join the retail sales sector. “Growing at close to 50%, sales is the fastest growing sector in India for job creation.”

Industry Minister Anand Sharma recently said the opening up of the retail sector would create around 10 million jobs in the next three years. Industry estimates suggest about 1.5 million jobs will be created in the front-end alone with the employment of one person for every 350-400 sq.ft of retail space. Assuming that 10 % more people are required for back-end operations, the direct employment generated by organised retail in India over the next five years could be close to 1.7 million jobs.

Another handy tip to beat stagnation, suggests Rajiv Krishnan, head of human capital business vertical at Mercer India, is to upgrade skills. Many companies, including Mercer, help young employees pursue management studies along with their job. Once an employee crosses the five-year threshold, says Rabindra of NIIT, companies give them a chance to specialise in processes, quality management or training. “After four years, as the worker reaches the late 20s, continuing in night shifts becomes an issue. Many of them want to settle down, get married and crave for saner work hours.”

Jeeveshu Ahluwalia, 34, director with Gurgaon-based call centre Teleperformance India, for instance, didn't let graveyard shifts come in way of realising his dream of an MBA, aided by his employers. “I joined the industry 10 years back with Genpact, on a princely salary of Rs 5,000. Since then, after an MBA by correspondence, I’ve risen from agent, to team developer, to senior manager.” The onus for upgrading skills often rests with the individual. ChandrashekharVaidya, 31, for instance, came to Mumbai in 2006 from Karnataka’s Hubli district. Today, having worked in the sales department of a bank, setting up kiosks and peddling insurance policies, he is senior captain (a rung above a waiter) at a restaurant.

Being educated in Kannada, Vaidya often finds himself struggling with English. “I started as a trainee steward at 25. Now I am 31 and I won’t be a restaurant manager until I turn 35,” he rues. Undeterred, Vaidya has completed a basic English-speaking course and signed up for personality development classes on his own. “Workers in the service sector, who take charge of their destiny and adopt lifelong learning as a work ethic won’t be hit by low tide,” says TeamLease’s Sabharwal, who popularised temp staffing in the country. Gouri Gupta, who leads the strategy function at the National Skill Development Council, says India needs at least 52.6 crore skilled workers by 2022. “It is time companies took initiatives for skill development.”

But as a Swedish proverb goes, the best place to find a helping hand is at the end of your own arm. A few spirited individuals refuse to let burnouts, graveyard shifts or bad bosses keep them down. Ahluwalia, who juggled an MBA along with night shifts and Vaidya, who’s learning English to beat mid-life blues, are just two individuals battling the odds that life has stacked against them. Butterfly Generation make way, India’s ‘drone’ generation isn’t yet done.

First Published: Mar 10, 2012 22:27 IST