The TeamLease Employment Outlook Report: July-September 2011

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TeamLease
Employment Outlook Report

Quarter-19, July-September 2011

Contents

1. Preface
2. Executive Summary
3. Project Objectives
4. Index definitions
4.1. Employment Outlook Index
4.2. Employment Trend Index
4.3. Business Outlook Index
4.4. Business Confidence Index
5. Employment Outlook
5.1. Net Employment Outlook
5.2. Net Employment Outlook Growth – by sector
5.3. Net Employment Outlook Growth – by city
6. Business Outlook
6.1. Net Business Outlook
6.2. Net Business Outlook Growth – by sector
6.3. Net Business Outlook Growth – by city
7. Hiring Intent
7.1. Hiring Intent by Location
7.2. Hiring Intent by Hierarchy
7.3. Hiring Intent by Functional Area
8. Other Trends
8.1. Employment Outlook Index – city-sector drilldown
8.2. Business Outlook Index – city-sector drilldown
8.3. Attrition trends by sector
8.4. Attrition trends by city
9. Insights
9.1. Sentiment Trend Forecasts
9.2. City trend forecasts for Sentiment
10. Annexure
10.1. Research Methodology
10.2. Sample Design & Data Collection
10.3. Reasons for Attrition – the employer perspective


1. Preface

The quarterly TeamLease Employment Outlook Report is a forward looking tool for human
resource policy and decision makers, reflecting business sentiment for hiring across cities
and sectors. The report carries a snapshot of business hiring sentiment for the immediate
next three months with survey and analysis being carried out in the preceding quarter.

The Employment Outlook Survey spans eight industry sectors and eight cities across India.
The survey covers small, medium and large companies across these sectors, studies
attrition and employment trends, and gleans information on hiring sentiments, all this
covering different locations, hierarchical levels and functional areas.

This edition of the Employment Outlook Report also brings you forecasts for sentiments
across cities. We have attempted simple polynomial or logarithmic trending to provide
readers with likely index movements over the next two months. While overall index
movement trends are likely to be more or less flat and stable, city-specific trends exhibit
much sharper movements.

With the most critical drivers that influence hiring being tracked quarter on quarter, the
Employment Outlook Report is the only one of its kind seeking to deliver high impact hiring
decision support to its stakeholders – Business & HR heads, Senior Management as well as
industry policy makers.


2. Executive Summary

• The July-September 2011 quarter is characterized by strong indicators of stability
in the Employment market: a flat Employment Outlook Index growth rate (no
change) and a marginal drop (single percent point) in growth for the Business
Outlook Index. While the overall trends are likely to stabilize further from the
incremental changes witnessed last quarter, cities and sectors may not faithfully
replicate these trends.

• In the midst of a more or less stable market mood, a few sectors display signs of
correction. IT and ITeS are brought down –(4 percent points each)– from the
dizzying growth rates in Employment sentiment of the past few quarters. This,
however, is not significant enough to lower the already high levels these indices
have reached. Health & Pharma makes a smart, 5 point recovery from the
significant 8 point drop it had experienced during the previous quarter.

• But for an incremental, 4 percent point drop in the Business Outlook for
Hyderabad and a marginal, 3 percent point increase in the Business Outlook for
Ahmedabad, city trends stay loyal to the subdued growth pattern of the previous
quarter. This aspect points to geographical uniformity in sentiment trends – trend
growth seems to have stabilized at a city-level.

• At 20 percent points for Tier-2 cities and 10 percent points for Tier-3 towns,
hiring intent for non-metro geographies hits a glass ceiling. Past growth trends for
these geographies have been in single digits and slow, indicating that business
desire to tap into the labour pools in Tier-2 and Tier-3 cities/towns might not have
met with great success. Intent to hire in metros, on the other hand, sees a
handsome growth of 2 percent points and rides high at 91 percent.

• Junior-level profiles steal the limelight from across all other hierarchical levels
with a strong, 3 percent growth to up hiring intent to 67 percent this quarter. This
segment shows the highest and the fastest growing intent to hire and beats the 1
percent point growth that Fresh Graduate and Senior level profiles have managed
to garner. The Middle-level segment experiences a single percent negative
growth. The rather tepid performances by various profiles do not rock the boat,
however – hiring intent is quite uniformly distributed across hierarchy.

• A simple trendline analysis forecasts that overall Employment and Business
Outlook trends are flattening over the next two quarters after many quarters of
mostly upward growth. Observations accompanying the analysis also highlight
index movement directions that are indicative of an impending sentiment
slowdown. City specific trends vary, however, and a few surprises are likely in
store.


3. Project Objectives

The Employment Outlook Report aims at –
• Providing forward looking estimates of hiring sentiment and thus enabling its users
with a tool to make effective hiring / people decisions for the immediate next
quarter.
• Providing *Hiring Sentiment Intelligence* for different industry sectors, business
sizes and geographies, as well as across hierarchical levels and functional areas.

4. Index Definitions

• Employment Outlook Index: The Employment Outlook Index is computed as the
difference in the proportion of respondents who report an increase in hiring
needs and those who report a decline in hiring needs over the next three months.

• Business Outlook Index: The Business Outlook Index is computed by subtracting
the percentage respondents who say business in the next three months is likely to
decrease from the percentage who say it will increase.


5. Employment Outlook

5.1. Net Employment Outlook
5.2. Net Employment Outlook Growth – by sector
5.3. Net Employment Outlook Growth – by city


5.1 Net Employment Outlook

The Net Employment Index stays put at its previously achieved highpoint for the July-
September 2011 quarter. The Net Employment Outlook Index is the difference in the
proportion of respondents reporting an increase in hiring needs and those reporting a decline
for the quarter in question.

Quarter Period (Figures in percentage)
Increase Decrease No Change Net Employment
Outlook
19 Jul—Sep 2011 76 2 22 +74

18 Apr—Jun 2011 78 4 18 +74

17 Jan—Mar 2011 74 5 21 +69

16 Oct—Dec 2010 72 4 24 +68

There has been an appreciable, 4 point increase representing the number of businesses that
report no changes in their hiring requirements for the quarter, accompanied by a tiny
proportion of businesses that report a reduction in hiring requirements. The net effect is that of
stability in what has so far been a long term positive employment sentiment trend.
[Shaded cells have significant increases (gray) /decreases (red) in Index.]


5.2 Net Employment Outlook Growth – by sector

Sector-level index movements show up an apparently dissimilar pattern compared with overall
trends. However, a closer look reveals consolidation in IT and ITeS – traditionally fast growing
sectors that report negative growth for the upcoming quarter. While these two sectors see
hiring sentiments dropping appreciably, Healthcare & Pharma sees a significant increase.

Sectors (Figures in percentage)
Quarter Net Increase / Decrease
19 18 17 16

IT 87 91 70 69 -4

ITES 90 94 64 63 -4

Financial Services 53 56 62 65 -3
[FS]
Retail & FMCG [R&F] 72 70 68 60 2

Infrastructure [INF] 66 63 60 68 3

Manufacturing & 55 53 82 74 2
Engineering [M&E]
Telecom [TEL] 87 86 64 61 1

Healthcare & 70 65 73 74 5
Pharma [H&P]

The drops in sentiment, in case of IT and ITeS, follow a heady previous quarter. Although
significant, the two sectors are still keeping themselves in relatively high spirits compared with
the scenario during quarters 16 and 17.


5.3 Net Employment Outlook Growth – by city

Insignificant changes in sentiment mark city trends for Employment Outlook, except for
Kolkata, which slips to a new low – relative to other cities.

19 18 17 16

Mumbai [Mum] 72 74 69 70 -2

Delhi [Del] 70 69 67 67 1

Bangalore [Blr] 88 86 83 80 2

Kolkata [Kol] 56 60 63 58 -4

Chennai [Chn] 70 72 67 66 -2

Pune [Pun] 78 76 79 77 2

Hyderabad [Hyd] 60 61 58 64 -1

Ahmedabad [Ahd] 72 70 73 73 2

The stability factor, forecast in previous editions of the report, continues to keep city trends
buoyant.


7. Business Outlook

6.1. Net Business Outlook
6.2. Net Business Outlook Growth – by sector
6.3. Net Business Outlook Growth – by city


6.1 Net Business Outlook

A significantly large number of businesses expecting the business environment to stay
unchanged works to keep the Business Outlook incrementally lesser than the new high the
index had reached last quarter – but still very high.

Quarter Period (Figures in percentage)

Increase Decrease No Change Net Business
Outlook
19 Jul—Sep 2011 77 2 21 +75

18 Apr—Jun 2011 80 4 16 +76

17 Jan—Mar 2011 78 5 17 +73

16 Oct—Dec 2010 75 4 21 +71

While the number of respondents indicating an increase in business sentiment has dropped, there has
been a proportionate reduction in the numbers indicating a dip in business sentiment.


6.2 Net Business Outlook Growth – by sector

Sector trends for Business Outlook fluctuate less than their Employment sentiment
counterpart. IT is the lone sector with a significant dip in business sentiment. Still, the resultant
number for IT is way higher than the sentiment across all other sectors.

19 18 17 16

IT 90 94 77 67 -4

ITES 79 80 59 56 -1

Financial Services 52 49 55 58 3
[FS]
Retail & FMCG [R&F] 85 88 69 63 -3

Infrastructure [INF] 61 60 67 70 1

Manufacturing & 64 63 82 72 1
Engineering [M&E]
Telecom [TEL] 57 55 47 51 2

Healthcare & 63 65 76 81 -2
Pharma [H&P]

Financial Services, Manufacturing & Engineering and Infrastructure – in that order (reducing
order of concern) – remain concern areas. The business sentiments in these sectors seem to be
languishing well below others for a considerable period of time. Healthcare & Pharma has failed
to perk itself up from the previous quarter’s big (11 point) drop.


6.3 Net Business Outlook Growth – by city

Stable city trends for Business Outlook see an insignificant blip in case of Hyderabad and an
almost equally small uptick for Ahmedabad.

Quarter Net Increase/Decrease
19 18 17 16

Mumbai [Mum] 65 63 59 54 2

Delhi [Del] 51 52 51 52 -1

Bangalore [Blr] 80 81 79 79 -1

Kolkata [Kol] 69 70 75 77 -1

Chennai [Chn] 82 81 77 70 1

Pune [Pun] 84 85 85 83 -1

Hyderabad [Hyd] 76 80 79 80 -4

Ahmedabad [Ahd] 74 71 76 77 3


9. Hiring Intent

7.1. Hiring Intent by Location
7.2. Hiring Intent by Hierarchy
7.3. Hiring Intent by Functional Area


7.1 Hiring Intent by Geography

Tier-II cities suffer a second successive incremental drop in hiring intent this quarter while the
metros continue their rather flat upward trend. Tier-III towns and rural areas remain at the low
numbers of the previous quarter.

City (Figures in percentage)
Quarter Net Increase/
Decrease
19 18 17 16
Metro 91 89 89 88 +02
Tier – II Cities 20 21 22 20 -01
Tier – III Towns 10 10 9 9 NC
Rural 1 1 1 2 NC


7.2 Hiring Intent by Hierarchy

A marginal increase in hiring intent across all hierarchical levels is beaten by a significant
upward trend in hiring, specifically, at junior levels. Mid-level hiring intent stays stable although
a single point drop in intent is observed.

Level (Figures in percentage)
Quarter Net Increase/
Decrease
19 18 17 16
Entry Level 50 49 47 41 +01
[No Experience]

Junior Level 67 64 66 63 +03
[1 – 3 years Experience]

Middle Level 44 45 43 41 -01
[3 – 7 years Experience]

Senior Level 25 24 23 21 +01
[> 7 years Experience]

Not Hiring 10 10 12 16 NC


7.3 Hiring Intent by Functional Area

Functional area trends for hiring intent are stable – especially with Sales / Marketing /
Customer Service, IT, Engineering and Blue Collar. Support functions seem to be bearing a small
brunt of negative intent this quarter, following many quarters of stability.

F (Figures in percentage)
19 18 17 16
Sales / Marketing / 82 78 77 77 +04
Customer Service [SMC]
IT 31 29 27 27 +02

Engineering [ENG] 43 42 41 41 +01

Accounts / Finance 15 16 16 16 -01
[A&F]
Administration / HR / 12 14 13 13 -02
Office Service [AHO]
Blue Collar [BC]* 43 40 37 37 +03

Other 10 13 15 15 -03

Not hiring 4 5 7 7 -01

*Previously included under ‘Others’


11. Other Trends

8.1. Employment Outlook Index – city-sector drilldown
8.2. Business Outlook Index – city-sector drilldown
8.3. Attrition trends by sector
8.4. Attrition trends by city


8.1 Employment Outlook Index – city-sector drilldown

City Quarter Total Sector

IT ITeS FS RMF INF M&E TEL H&P

Mum 19 72 12 10 9 9 10 8 7 10

18 74 13 11 8 8 12 7 9 11

17 69 12 9 8 9 14 5 6 10

Del 19 70 10 6 9 11 10 10 10 9

18 69 10 5 11 13 8 9 11 8

17 67 11 4 10 13 6 8 9 10

Blr 19 88 13 10 7 9 14 13 19 12

18 86 16 10 4 7 15 14 17 11

17 83 14 8 3 6 17 13 15 14

Kol 19 56 3 3 10 11 5 4 5 17

18 60 5 3 12 12 5 5 5 18

17 63 5 1 16 13 4 6 3 21

Chn 19 70 10 11 9 10 9 10 13 4

18 72 12 11 10 8 10 12 11 6

17 67 10 9 12 7 10 9 10 7


Pun 19 78 16 15 6 5 18 14 8 8

18 76 15 15 5 6 17 16 6 7

17 79 17 16 4 5 20 17 4 6

Hyd 19 60 9 11 5 8 10 11 4 4

18 61 10 12 4 8 9 10 5 6

17 58 9 9 3 9 8 13 3 7

Ahd 19 72 6 4 21 6 4 12 8 23

18 70 4 3 20 6 5 13 8 22

17 73 6 2 22 7 4 15 7 22

8.2 Business Outlook Index – city-sector drilldown

City Quarter Total Sector

IT ITeS FS RMF INF M&E TEL H&P

Mum 19 65 12 12 7 6 17 9 5 10

18 63 14 10 8 5 16 10 6 8

17 59 15 9 7 5 17 8 4 6

Del 19 51 10 3 5 13 10 6 7 10

18 52 10 4 4 14 8 8 9 9

17 51 12 4 5 15 6 6 8 10


Blr 19 80 17 11 9 7 12 9 12 8

18 81 19 10 8 5 14 10 13 9

17 79 16 8 7 5 16 10 12 11

Kol 19 69 10 4 14 10 4 10 7 20

18 70 11 4 15 9 4 13 6 19

17 75 10 4 18 8 6 16 5 22

Chn 19 82 15 16 12 4 9 15 11 11

18 81 11 19 10 5 10 15 10 12

17 77 8 18 10 5 9 14 10 14

Pun 19 84 12 24 6 5 18 17 8 7

18 85 14 22 4 4 20 17 10 9

17 85 16 23 3 4 22 16 7 8

Hyd 19 76 10 9 11 7 9 10 8 15

18 80 13 10 12 6 10 9 6 18

17 79 14 9 13 6 9 11 3 20

Ahd 19 74 8 6 18 8 2 17 3 19

18 71 5 6 18 6 3 19 4 18

17 76 6 5 22 6 2 21 2 21


8.3 Attrition Trends – by city

Attrition rates marginally increase for most cities this quarter and so do annual attrition rates.
Bangalore and Hyderabad top the charts by far – compared with the rest of the cities.

8.4 Attrition Trends – by sector

Sectors continue their rather flat trends of attrition. The current quarter does not add
appreciably to the modest attrition rates of before.


13. Insights

9.1. Sentiment Trend Forecasts
9.2. City trend forecasts for sentiment


9.1 Sentiment Trend Forecasts

The upward trending of Employment and Business Outlook indices over the past several
quarters and a sobering / stabilizing effect over the previous and current quarter give rise to a
fundamental ask: is it about time for sentiments to fall? The below analysis investigates the
hypothesis with a simple, trendline forecast of Employment and Business sentiment.

The trendline forecast for the next two quarters shows a downward direction Business Outlook
is likely to take. The Employment Outlook, meanwhile, is likely to trend upward for the period
in consideration.

What is apparent about the Business Outlook is an alternating pace of positive growth over the
past 6 quarters. This alternating rate of growth in sentiment has resulted in a gradually
declining trend and sees a small, single point dip for the quarter in study currently. The current
dip, on its own, may not hold much evidence of an impending fall in sentiment. The gradual
flattening of the trend does, however, point to a likely downward movement.

It could also be observed that the Employment Outlook trendline is flattening over the past
many quarters. However, the appreciable sentiment uptick over the last quarter and the less


flat nature of this index’s movement – relative to the Business Outlook Index – might mean
there is still time to go before the Employment Index starts to fall.

This may not mean that individual cities and sectors will likely have downward movement of
Indices. The below section brings out differences in the index movements for cities. The sector
data was found to have lesser degree of accuracy with the approach followed and therefore,
we have not included a sectoral analysis here.

9.2 City trend forecasts for sentiment

Mumbai has a more or less upward trend for both the indices – with Employment Outlook
slightly outpacing Business. [A caveat here is that the trend-fit for Employment Outlook is
not as good as it is for Business Outlook]


Delhi seems to have a pattern similar to that of Mumbai with an even more marked departure
between the directions of the two trendlines. [Again, the curve-fit for Employment Outlook is
poorer than for Business]


Bangalore seems to show no respite from its dizzy growth trend on both the indices. The upward
movements are clear and more plausible than in case of Mumbai and Delhi.


Despite rather tepid growth rates for both indices over the past five quarters, Kolkata is quite likely to
have a fairly quick bucking of this negative trend over the next couple of quarters. It also reasons that
the city’s Employment and Business indices have succeeded in breaking into the 60’s and 70’s lines over
the 13th and the 14th quarters but failed to stay up thereafter. The forecasts show a possibility for the
city’s indices to uptrend in the immediate next two quarters.


Slow and steady seems Chennai’s and Pune’s style but seemingly no longer! The pace of growth has
quickened over the past quarters and this is likely to translate into rapid growth in Employment and
Business Outlook over the next two quarters.


Hyderabad’s index data does not lend itself very well for a simple trendline analysis. However, it could
be observed from the above that index movements have flattened – and this is a concern.


Ahmedabad has index movements almost mirroring each other so far. However, this is not likely to hold
over the next few quarters. The chart points to a likely divergence in movements of the Employment
and Business Outlook – with a downward movement in Business Outlook.


9. Annexure

Research Methodology

The Employment Outlook Survey follows a rigorous and statistically validated
process as detailed below.

Sample Design & Data Collection

Random sampling technique was used to identify respondents for the survey. Data
sources used to collect contact data were:

1. Kompass directory for small, medium and large sized companies in the
private sector. To ensure continuity with the baseline measurement, the
core random sample was drawn from this database.

2. NASSCOM database for IT companies

3. Companies registered with bpo.india.org in the case of ITES and

4. Financial companies registered with the Bombay Stock Exchange (BSE).

Respondent Selection

Target respondents for the study were Business & HR Heads as well as Senior
Managers with hiring mandates. The databases offered a contact name for each
company listed. Interviewers called into each of these companies and obtained the
names of the appropriate individuals who were responsible for hiring decisions.

Data Collection

The survey instrument was then administered to the target respondents using the
CATI (Computer Aided Telephonic Interview) methodology. Appropriate computer
software was used for data collection and tabulation. Please refer the following
section named ‘Sample Distribution’ for details on city and business size-wise
breakup of the sample.


Sample Distribution

City-wise breakup

Sectors / City Mumbai Delhi Bangalore Kolkata Chennai Pune Hyderabad Ahmedabad Total
Manufacturing &
Engineering [M&E] 8 8 10 8 11 9 10 10 74

Retail & FMCG
[R&F] 19 16 11 9 9 11 8 10 93

Financial Services
[FS] 8 8 10 8 10 10 9 11 74

IT
11 9 11 10 10 9 9 11 80

ITeS
8 10 10 9 9 9 11 10 76

Infrastructure [INF]
8 11 9 9 8 11 10 9 75

Telecom [TEL]
10 10 13 12 10 13 8 8 84

Healthcare & Pharma
[H&P] 11 9 10 10 11 9 9 10 79

Total
83 81 84 75 78 81 74 79 635

Business Size Breakup

Small Medium Large
[Up to 249 employees] [250 – 999 employees] [1,000 or more employees]
Mumbai 21 51 11

Delhi 13 57 11

Bangalore 17 53 14

Kolkata 14 54 7

Chennai 22 41 15

Pune 15 52 14

Hyderabad 18 43 13

Ahmedabad 16 47 16


10.3. Reasons for Attrition – the employer perspective

By City

By Sector


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The TeamLease Employment Outlook Report: July-September 2011

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