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Opening the door for talent

April 7, 2010

Tomorrow’s world is not going to be about capturing ever-depleting natural resources, but about a scarcer commodity: top-flight talent. A global war for talent is already underway and India should act fast.


IT IS now widely acknowledged that the value of a company or the wealth and power of nations will increasingly be determined by their human capital. Already, in the knowledge sector — a rapidly growing part of the global economy — financial capital matters but little; it is technological capability and intellectual capital that are the key determinants of success. Globally, the economic crisis from 2008 saw the more astute companies retain their key talent, even as they had to lay off people. In India, some companies chose to freeze — or even reduce — salaries and bonuses; a few resorted to lay offs too. Yet, India was far less affected by the economic meltdown; this, and its growing attraction as a high-growth and challenging economy, presented a rare opportunity. Here was a chance for the corporate world, and equally for universities and R&D organisations, to scour the global talent pool and pick up the best and brightest. Unfortunately, few Indian organisations did so.

Talent, today, is very mobile. India, once a major exporter of unskilled manpower, has evolved to one that is a source of highly-skilled expertise. Such immigration — even of a temporary nature — continues to worry some countries, and has become a political issue. Many see it as “taking away the jobs” of locals by bringing in low-wage labour; others worry about the impact on local societal values, norms and culture. Countries are introducing filters — linguistic proficiency, salaries, educational qualifications — and quantitative limits to keep out the unwanted. Such restrictions (like the quantitative limit on H1 visas in the US) are seen by many as being unfair non-tariff barriers to free trade. India, with its large number of highly-educated people, is disadvantaged by such restrictions, which affect its high-potential exports in services like IT-BPO.

At the same time, developed countries face shortages of specific skills, and need to “import” people to meet these requirements. Further, these countries have derived considerable economic benefit from such migrants. A recent study, by the World Economic Forum and Boston Consulting Group, has quantified both these aspects. It indicates that the US will need to add 26 million workers to its talent pool by 2030 to sustain its historical economic growth, while Western Europe will need to add 46 million. With regard to the contribution of highly skilled migrants, this is estimated to be over $1.6 trillion in the US and $227 billion in UK. Little wonder, then, that eminent journalist and author,
Tom Friedman, is a self-confessed “pro-immigration fanatic”.

Work in any high-tech area requires the very best talent. This implies putting together teams that comprise the best experts, irrespective of their nationality. Companies do this in different ways; one is by setting up centres in various countries (thus tapping talent wherever it is) and connecting them through communication links and collaborative work platforms, so as to create a seamless “global” team, virtually. For developed countries, such globalisation (exporting work, instead of importing people) is one way of trying to handle their massive shortage of human resources: a problem that is exacerbated by ageing populations and low birth rates.

WHILEIndia is — and will continue to be — surplus with regard to overall human-power requirements, it is also short of high skills, especially in specific areas. The WEF-BCG study indicates that in 2020 and 2030 India will face a shortage of high-skills talent in sectors like IT and leisure, and more pronounced gaps in manufacturing and engineering construction. Even today, there are shortages in many areas of technology, in teaching/research and in industry. Plans to rapidly ramp up the education throughput may not produce a sufficient quantity of highly-skilled people of the right quality. Therefore, if a skills gap is not to affect technological progress or economic growth, India too — like many developed countries — may have to “import” talent.

In addition, if innovation is to be a booster for economic growth, more effective delivery of social services and for more holistic development, it must seek out and lure such talent, globally. Many — but not all — may be of Indian origin; attracting non-Indians, too, will be necessary. Tomorrow’s world is not going to be about “capturing” ever-depleting natural resources, but about a scarcer commodity: top-flight talent. A global war for talent is already underway.

Many countries have recognised the need to attract global talent, and have devised appropriate immigration and work permit policies. The US sees the H1 visa as a way of opening doors to highly-skilled people; UK and many European countries have visa and work permit rules that facilitate the inward flow of talent. Singapore has policies which proactively attract talent. Israel opened its doors to Russian and other European migrants; many credit its great success in the high-tech area to the consequent flow of high-calibre talent.

Sadly, in India the awareness of both the challenges and opportunities seems to be low; worse, the bugbear of security is being used to not only discourage foreigners, but actually ban them from certain sectors. Visas, too, have been made difficult. Instead, we need to encourage those with high skills (including researchers and professionals), entrepreneurs and innovators, to work in India. Special visa categories, including “founders visas” and a “talent visa” should be created, to facilitate entry of such persons. They will not take away jobs; rather, they will create both jobs and wealth for India.

It is well known that a substantial percentage of foreign students stay on in the host country for at least a few years after graduation. Attracting bright foreign students is, therefore, an important element of a long-term talent policy. While China might outbid India for natural resources, we have a fair chance of being a more attractive study-destination, particularly for the brightest students from Africa and most of Asia — if our policies encourage them.

It is time for India to open its doors to the world, again, as it once used to.

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3 Comments
  1. It’s great to see this entry. Not only is India facing increased competition, people are restless and they are moving from place to place trying to find a role where they feel appreciated and can grow their careers and can earn a respectable compensation. However, compensation and throwing money at the problem will not solve the main issue, the need for people centric leaders.

  2. Sure there will be talent shortage in a few years. However opening Indian education to foreign students may not be a viable solution:

    1) University capacity is highly constrained. Domestic demand for education is outpacing supply.
    2) Shortage of teachers ensures that this problem will remain for next few decades

    Please throw more light on “bugbear of security is being used to not only discourage foreigners, but actually ban them from certain sectors. Visas, too, have been made difficult.” The only case I know of is the restrictions on Chinese companies.

  3. Talent has always been in short supply and will be in future also. What we do to attract, retain and recognize talent is the real question. Companies in India during 2008-2009 meltdown actually by design and intention threw internal talent out of the door on account of ‘best’ cost cutting ways CEOs could think of. If India Inc has to lead in global talent space, KM should become a central part of every organization’s go to market strategy. Preventing knowledge leakages should become highest priority. Leveraging existing tacit knowledge with the available talent pool should become more important than any other corporate initiative. Talent pool growth has to be ensured by right HR strategies. When will India Inc adopt to non perception based ‘objective’ performance management systems powered by KM maturity model?

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