TeamLease Employment Outlook Survey - Oct-Dec, 2010

Prepared by: inTouch analytics
http://www.be-in-touch.com

TeamLease
Employment Outlook Report

Quarter-16, October-December 2010

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. Employment & Business Outlook: a trend analysis
10. Annexure
10.1. Research Methodology
10.2. Sample Design & Data Collection
10.3. Reasons for Attrition – the employer perspective


1. Preface

TeamLease Services brings out the Employment Outlook Report once every quarter with
the purpose of providing human resource policy and decision makers a forward looking
tool that tracks hiring sentiments in the market. The report carries an insight into what
businesses of various sizes – across the country and across industry sectors – have on their
talent acquisition anvil for the immediate next three months. The Employment Outlook
Survey is carried out, and the analysis done, in the preceding quarter.

The edition you have in your hand is an improvisation on previous editions. It illustrates
those areas – sectors and cities – that have a significant increase / decrease is sentiment
measures. It also carries an analysis of city-sector clusters that have emerged over the
several quarters of this report tracking Employment sentiment. [Please visit
www.teamlease.com for archives].

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.

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 Net Employment Outlook Index improves by 4 percent points, Q-on-Q, and is
forecast at +68 for the period October—December 2010. While there is a very
healthy, 10 percent point surge in the Net Business Outlook Index – a cumulated
30 percent points over 12 months – to +71, employer sentiment on hiring seems
to be sobering down and a consolidation seems inevitable in hiring numbers and
patterns.

• The sobering of hiring sentiment and therefore deceleration of the Net
Employment Outlook Index have clear patterns across sectors as well as across
cities. Retail & FMCG is the only sector with a significant improvement in the Net
Employment Outlook Index (8 percent points) during the present quarter even as
there is a significant drop in the index (6 percent points) for ITeS. Among cities,
Mumbai (with 7 percent points) is the only one with a significant improvement in
the index value.

• Infrastructure and Telecommunications drive the Net Business Outlook Index up
with 10 percent point improvements apiece. It needs to be noted, however, that
beside the above, there is no other sector, or even city, contributing to the
upsurge. The improvements in the indices are sub-5 percent points – in general –
across all other sectors and cities.

• The Hiring Intent measures do not vary appreciably by location or by functional
area, but see some very significant pattern variation in terms of hierarchical
positions. There is a levelling off of sorts between sentiment for the Entry Level
and that for Middle Level positions. Entry Level hires are set to be even more
popular (with a 9 percent point increase to +41), and Middle Level positions lose
lustre with a drop of 5 percept points to +41.

• Metro cities continue their dominance with a further 2 percent point
improvement in Hiring Intent this quarter. Tier-III towns follow suit however, and
along with a marginal improvement by Tier-II cities, the less privileged
geographies are gradually incrementing their status in the employment market.

• Engineering, as a functional area, emerges as a strong and clear contender for the
second most sought after position in terms of Hiring Intent.
Sales/Marketing/Customer Service loses marginally and is far ahead in Hiring
Intent. The ‘Other’ category is witnessing incremental improvements as well
implying a further addition of newer categories.

• While the exuberance of business growth continues, its sway over employment
sentiment is waning. This, however, has little effect on attrition levels – which
increase marginally across geography and business sectors. All in all, therefore,
the consolidation could also mean a relatively better supply-demand scenario in
the employment market.


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

There is a 4 percent point increase in the ‘Net Employment Outlook Index’ forecast for the
forthcoming quarter [October through December 2010]. 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 Business
Outlook
16 Oct—Dec 2010 72 4 24 +68

15 Jul—Sep 2010 69 5 26 +64

14 Apr—Jun 2010 62 4 35 +58

13 Jan—Mar 2010 51 4 46 +47

The increase in the Index is not significant this quarter as is illustrated by the shading of the
cells in the table above. Shaded cells have significant increases (gray) /decreases (red) in Index.

The Employment Index witnesses a stabilizing effect on sentiment this quarter. Even as
Business Outlook surges, the Employment Outlook is seen to increase relatively marginally.


5.2 Net Employment Outlook Growth – by sector

Sentiments climb up for a host of sectors, although only marginally, with ITeS being the sole
exception of a drop in sentiment – and a significant drop at that.

Sectors (Figures in percentage)
Quarter Net Increase / Decrease
16 15 14 13

IT 74 71 69 59 +03

ITES 60 66 62 47 -06

Financial Services 65 60 53 45 +05
[FS]
Retail & FMCG [R&F] 69 61 61 38 +08

Infrastructure [INF] 63 57 36 69 +06

Manufacturing & 68 66 53 38 +02
Engineering [M&E]
Telecom [TEL] 61 59 48 50 +02

Healthcare & 74 70 72 55 +04
Pharma [H&P]

Retail & FMCG sees the biggest jump in sentiment and the only case where the increase in the
index value is significant. Information Technology and Healthcare & Pharma are characterized
by two consecutive quarters of marginal growth in index values.


5.3 Net Employment Outlook Growth – by city

At a city level, index values increase only marginally this quarter, with Mumbai being the sole
exception.

16 15 14 13

Mumbai [Mum] 70 63 49 41 +07

Delhi [Del] 67 62 43 35 +05

Bangalore [Blr] 80 82 78 55 -02

Kolkata [Kol] 58 54 63 47 +04

Chennai [Chn] 66 62 64 54 +04

Pune [Pun] 77 79 75 70 -02

Hyderabad [Hyd] 64 63 57 54 +01

Ahmedabad [Ahd] 73 68 54 37 +05

In most cases (again, Mumbai being the only exception), an index value of 60 and above seems
to be a ceiling. The sentiment increases only marginally beyond the 60’s. However, it needs to
be noted that – as in case of Bangalore and Pune where incremental increases in sentiment up
the index to very high value – sentiments across cities are trending very high in general. This
implies that an ebullient – albeit stable – job market is in the offing over the next few quarters.


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

An appreciable increase in the Net Business Outlook Index points to a surge in positive business
sentiment for Oct—Dec 2010. With 3/4ths of all respondents bullish about business prospects
for the forthcoming quarter, the Index hits a 12-month high.

Quarter Period (Figures in percentage)

Increase Decrease No Change Net Business
Outlook
16 Oct-Dec 2010 75 4 21 +71

15 Jul-Sep 2010 68 7 25 +61

14 Apr-Jun 2010 60 4 36 +56

13 Jan-Mar 2010 50 9 41 +41


6.2 Net Business Outlook Growth – by sector

The Index is propped up by marginal increases in individual sector index values, with
Infrastructure and Telecom driving this growth more than all other sectors.

16 15 14 13

IT 72 73 64 48 -01

ITES 63 66 60 44 -03

Financial Services 58 57 55 45 +01
[FS]
Retail & FMCG [R&F] 67 65 55 22 +02

Infrastructure [INF] 56 46 38 55 +10

Manufacturing & 70 64 56 41 +06
Engineering [M&E]
Telecom [TEL] 51 41 25 32 +10

Healthcare & 81 76 71 64 +05
Pharma [H&P]

The Infrastructure and Telecom sectors continue their dream run and raise their index values to
respective 12-month highs.


6.3 Net Business Outlook Growth – by city

Cities consolidate the already high values of the Net Business Outlook Indices and seem to
present a rosy overall picture of business sentiment.

Quarter Net Increase/Decrease
16 15 14 13

Mumbai [Mum] 54 52 42 21 +02

Delhi [Del] 52 49 40 36 +03

Bangalore [Blr] 79 73 56 49 +06

Kolkata [Kol] 77 76 78 58 +01

Chennai [Chn] 70 72 69 60 -02

Pune [Pun] 83 80 75 77 +03

Hyderabad [Hyd] 80 74 63 35 +06

Ahmedabad [Ahd] 77 77 59 31 NC

Bangalore and Hyderabad have similar and sizeable increases in their index values. Alongside
Pune, Ahmedabad and Kolkata, these two cities have an astounding 75% plus net positive
sentiment. Except for Pune, the 4 other cities mentioned above have seen a 12-month growth
of 50% or more in their index values.


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 Location

While the metros are in stabilization mode, tier-2 and 3 cities/towns are nipping at their heels
with steady increase in hiring intent. However, the Hiring Intent trends are incremental and it
could take a while for the lesser privileged parts of India to make a difference.

City (Figures in percentage)
Quarter Net Increase/
Decrease
16 15 14 13
Metro 88 86 84 87 +02
Tier – II Cities 20 19 16 15 +01
Tier – III Towns 9 7 6 2 +02
Rural 2 2 1 2 NC


7.2 Hiring Intent by Hierarchy

A clear upward trend in hiring entry level talent marks a major shift in hiring patterns over the
12 month period. Following a temporary fillip, middle level hiring is back to near 12-month low
levels and hiring intent at senior levels is more or less stagnant. The other significant
development is the sharp reduction in the proportion of those not hiring.

Level (Figures in percentage)
Quarter Net Increase/
Decrease
16 15 14 13
Entry Level 41 32 20 26 +09
[No Experience]

Junior Level 63 61 44 40 +02
[1 – 3 years Experience]

Middle Level 41 46 51 40 -05
[3 – 7 years Experience]

Senior Level 21 21 23 20 NC
[> 7 years Experience]

Not Hiring 16 12 20 26 +04


7.3 Hiring Intent by Functional Area

The intent to hire Engineers sees a second significant increase and positions Engineers firmly as
the second most sought after category of hires. The gradual increase in the number for ‘Others’
is indicative of even more emerging categories in hiring consideration.

F (Figures in percentage)
16 15 14 13
Sales / Marketing / 75 78 71 71 -03
Customer Service [SMC]
IT 23 24 22 19 -01

Engineering [ENG] 39 33 32 26 +06

Accounts / Finance 16 18 17 16 -02
[A&F]
Administration / HR / 12 13 17 10 -01
Office Service [AHO]
Blue Collar [BC]* 31 28 - - +03

Other 11 6 27 12 +05

Not hiring 10 8 - - +02

*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 16 70 10 8 9 10 14 6 7 11

15 63 9 13 6 7 12 5 7 9

14 49 8 10 4 7 6 3 4 7

Del 16 67 10 2 13 15 4 10 8 10

15 62 8 4 10 12 3 10 8 9

14 43 6 0 6 11 -2 6 4 10

Blr 16 80 12 7 3 6 16 15 14 12

15 82 12 10 2 6 17 15 15 11

14 78 12 9 - 5 14 11 14 14

Kol 16 58 3 1 15 12 4 8 2 20

15 54 2 2 13 11 3 9 3 20

14 63 - - 19 14 - 8 - 22

Chn 16 66 12 7 10 6 9 8 11 9

15 62 10 9 11 3 9 8 12 8

14 64 9 9 9 5 6 7 10 9


Pun 16 77 17 14 5 3 21 18 3 6

15 79 16 18 3 1 22 17 3 5

14 75 20 20 - - 20 16 - -

Hyd 16 64 8 10 4 11 8 15 4 7

15 63 8 11 4 10 8 15 5 5

14 57 6 7 0 10 2 10 - 7

Ahd 16 73 4 2 23 5 6 17 5 24

15 68 2 3 20 3 5 14 2 25

14 54 0 0 18 0 0 12 0 23

8.2 Business Outlook Index – city-sector drilldown

City Quarter Total Sector

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

Mum 16 54 12 7 7 6 16 9 5 6

15 52 13 10 5 4 13 7 2 6

14 42 8 8 5 2 10 5 -2 6

Del 16 52 9 2 6 15 7 7 9 10

15 49 9 2 5 15 3 6 7 9

14 40 6 1 5 12 -2 4 3 9


Blr 16 79 16 7 9 2 14 13 13 12

15 73 15 8 9 2 9 11 13 10

14 56 11 7 8 - 5 8 9 8

Kol 16 77 7 5 20 6 7 17 5 23

15 76 7 5 19 6 4 16 2 22

14 39 0 0 13 0 8 4 0 5

Chn 16 70 8 19 7 5 6 11 10 16

15 72 9 21 7 5 5 10 11 15

14 69 8 18 8 5 4 8 13 11

Pun 16 83 15 20 3 2 24 16 7 9

15 80 17 22 2 2 21 15 3 7

14 75 16 21 0 0 23 14 0 0

Hyd 16 80 14 9 15 5 7 12 3 21

15 74 14 9 16 3 4 11 1 19

14 63 10 8 16 - 3 10 - 16

Ahd 16 77 4 4 22 6 2 22 3 22

15 77 5 4 21 5 2 21 2 22

14 59 0 0 20 0 0 19 0 20


8.3 Attrition Trends – by city

Attrition trends crane upwards marginally for the forthcoming quarter, the increment reflecting
bullish market sentiment and stabilized hiring patterns by employers. City-specific
characteristics stay the same while almost all cities witness slight increase in attrition rates.

8.4 Attrition Trends – by sector

Sector-wise attrition trends exhibit a pattern similar to those with cities. The marginal increase
is across the board with ITeS and Infrastructure breaching 10% levels at both quarter and
annual timescales of attrition.


13. Employment & Business Outlook: a trend
analysis

9.1. Trends flip for the Indices
9.2. City & Sector-wise analysis
9.2.1. Cities profiled by the most/lease impact across sectors
9.2.2. Sectors profiled by the most/lease impact across cities


9.1 Trends flip for the Indices

While it is a known phenomenon that the two indices – for the Business and the Employment
Outlook – are closely correlated, a recent trend is becoming increasingly noticeable. Over the
most recent two quarters, the Employment Outlook Index is trailing the Business Outlook Index
– as seen at the tail end of the two trend lines in the below chart – for the first time in 9
quarters.

Employment & Business Outlook Trends
[over the past 9 quarters]
80
R² = 0.974
70

R² = 0.943
60

50

40

30

20

10

0
8 9 10 11 12 13 14 15 16
-10

Average of Total Index_E Average of Total Index_B
Poly. (Average of Total Index_E) Poly. (Average of Total Index_B)

Trends for Business and Employment Outlook correlated at 84.6%

This implies an important shift in the hiring behavior of businesses. Historically, employers’
sentiment for hiring was higher than their business sentiment, during any given quarter. With
business sentiment improving consistently over 6 subsequent quarters, the employment
market seems to be gradually sobering their hiring sentiment. This sign of maturity is more
evident when one looks at the trend lines for the 16th quarter.

Apparently, the Employment Outlook is at a high but is very likely to flatten – even if business
sentiment increases over the next few quarters. This could imply a more stable employment
regime for the foreseeable future.


9.2 City- and Sector-wise analysis

As the employment market reaches a stage of consolidation and stabilization, the
characteristics of each of the cities and sectors become more and more predictable. The below
analysis profiles cities and sectors based on the variance in Business and Employment Outlook
for each city-sector combination, and illustrates cases where there is high or low incidence of
indices.

9.2.1. Cities profiled by the most/lease impact across sectors

City trends by sectors: Bangalore
FS
10
9
8
Tel H&P
7
6
5
4
3
2
1
RMF 0 Inf

M&E IT

ITeS

Average of Sector Index_E Average of Sector Index_B


City trends by sectors: Mumbai
FS
8
7
Tel 6 H&P
5
4
3
2
1
RMF 0 Inf

M&E IT

ITeS


The Employment and Business Outlook indices are relatively higher in case of Bangalore and
Mumbai, for as many 4 sectors each. Bangalore seems to be favoured by IT and Healthcare &
Pharma while it fares modestly on Telecommunication and Manufacturing & Engineering.
Mumbai does well on Infrastructure, IT and Financial Services and scores decently on
Healthcare & Pharma, Retail & FMCG and ITeS.

On the other hand, Pune and Ahmedabad have sentiments leaning more towards just 4 sectors
in all – Pune favours IT and Manufacturing & Engineering, and Ahmedabad is primarily a
Healthcare & Pharma hub with a modest score on Manufacturing & Engineering.


City trends by sectors: Pune
FS
18
16
14
Tel H&P
12
10
8
6
4
2
RMF 0 Inf

M&E IT

ITeS


City trends by sectors: Ahmedabad
FS
16
14
Tel 12 H&P
10
8
6
4
2
RMF 0 Inf

M&E IT

ITeS



9.2.2. Sectors profiled by the most/lease impact across cities

Sector trends by city: Infrastructure
Ahd
9
8
7
Pun Blr
6
5
4
3
2
1
Mum 0 Chn

Kol Del

Hyd


Sector trends by city: Financial Services
Ahd
12

10
Pun Blr
8

6

4

2

Mum 0 Chn

Kol Del

Hyd


Sectors profiled by city present a converse view of employment market sentiment.
Infrastructure has Pune, Mumbai, Kolkata and Hyderabad as the most sought after cities.


Financial Services businesses predominantly favour Kolkata and Ahmedabad and are otherwise
modestly spread across most other cities.

IT has its sentiments biased heavily in favour of Pune while Hyderabad is a distant second.
Likewise, Telecommunications businesses favour Delhi the most, while Bangalore and Chennai
are a distant second.

Sector trends by city: IT
Ahd
18
16
14
Pun Blr
12
10
8
6
4
2
Mum 0 Chn

Kol Del

Hyd



Sector trends by city: Telecommunications
Ahd
10
9
8
Pun Blr
7
6
5
4
3
2
1
Mum 0 Chn

Kol Del

Hyd



-

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]
10 10 10 8 11 11 12 8 80

Retail & FMCG
[R&F]
25 13 10 10 11 9 9 10 97

Financial Services
[FS]
11 9 12 10 10 10 11 9 82

IT
9 10 12 9 10 10 9 8 77

ITeS
8 9 11 6 10 10 9 9 72

Infrastructure [INF]
10 11 10 7 7 10 10 8 73

Telecom [TEL]
12 12 14 8 8 10 6 7 77

Healthcare & Pharma
[H&P]
9 10 9 8 8 9 7 6 66

Total
94 84 88 66 75 79 73 65 624

Business Size Breakup

Small Medium Large
[Up to 249 employees] [250 – 999 employees] [1,000 or more employees]
Mumbai 24 58 12

Delhi 15 55 14

Bangalore 25 46 17

Kolkata 15 45 6

Chennai 16 42 17

Pune 14 51 14

Hyderabad 13 49 11

Ahmedabad 21 34 10


For more information:
http://twitter.com/be_in_touch
http://facebook.com/intouchanalytics
http://linkedin.com/companies/305009


TeamLease Employment Outlook Survey - Oct-Dec, 2010

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