In a market where demand for employees outstrips supply and companies are falling over themselves to hire the people they need, the telecom sector is perched above other industries, able to attract the creme de la creme.
While real estate, banking and financial services, oil and gas services, and hospitality have all seen a substantial surge in salaries in the past few years, it is the telecom sector that is paying the top salaries and is able to cherry-pick talent.
The recent Outlook Business-Hewitt Associates Salary Survey, 2008 of 540 companies across 19 sectors and 22 sub-sectors indicates that, to hold on to their talent pool, telecom companies are lining up an average salary hike of 17.6 per cent this year ?? the best among the sectors surveyed.
And unlike all the other sectors, in telecom, it’s not just the senior and middle management that will get richer; the ones at the bottom of the ladder can also expect to walk away with fatter pay cheques. “This is a rare occurrence in India’s HR circles. But then, these are unusual times for the telecom sector,” says Nikhil Garg, managing partner with Delhi-based HR firm, Quorum Consultancy.
Overall, the Indian job market is vibrant. A growing economy (averaging at over 8 per cent for four straight years) led by the success of high-growth industries such as telecom, IT, automobiles, hospitality, finance, retail, and agri-services has injected a sense of self-assurance into Indian business. The result has been acquisitions, expansions and investment in the past few years.
To feed their growing ambitions, companies have stepped up their hiring actively at all levels in pursuit of the right mix of cutting-edge leadership and skill sets which they hope will set them apart from the pack.
In the telecom industry, the manpower supply gap is expected to be 10 per cent in 2008. In hiring and retaining staff, companies are offering hefty CEO packages, handsome sign-on bonuses, ESOPs, international travel for middle management, and loyalty bonuses to junior management.
Such is the golden goose reputation of the telecom sector that a common refrain in HR firms is that a job in this industry guarantees you a better car, a home, international holidays, club memberships, and numerous other perks.
Million dollar compensation packages are no longer confined to multinationals. Indian firms are matching them. Moreover, the salary is just one component of the package. Also on offer are large stock options, flexible plans, remote working with allowances, including accommodation, house maintenance allowance, medical reimbursement, travel for the employee and the family, club membership fees, etc.
The pay hike in 2008 for the telecom industry is expected to be in the region of 20 per cent. HR firms believe it could touch 40 per cent with the new telecom companies setting up business.
Currently, entry-level salaries in sales and marketing range from Rs 150,000 to Rs 300,000 per annum. Salaries for middle management start from Rs 900,000 onwards. At the senior level, well, that’s anyone’s guess. Anywhere from Rs 2.5 million upwards is possible.
While Sunil Bharti Mittal, CMD, Bharti Airtel, takes home Rs 195.51 million, Anil Ambani, chairman, Reliance Communications (RCOM) has a pay cheque of Rs 25 million (2006-07).
Akhil Gupta, lead director, telecom, Bharti Enterprises, nets Rs 49.53 million. Bharti Airtel’s president and CEO Manoj Kohli receives Rs 32.08 million. In 2007, Sanjeev Aga, managing director, Idea Cellular, was paid Rs 16.05 million while N. Srinath, MD, Tata Communications, took home Rs 8.58 million.
It’s a different story for public sector units such as Bharat Sanchar Nigam Limited (BSNL) and Mahanagar Telephone Nigam Limited (MTNL). The pay of their CMDs is restricted to the defined government pay structure.
The demand surge
The salary hikes in India acquire significance when juxtaposed against the raises in other countries. In China, the average hike is 8 per cent while in the US, where the economy is currently witnessing a downturn, the figure is closer to 5.5 per cent and could dip further south. Experts expect India to be the only country with doubledigit salary growth over the next few years.
The swelling size of compensation packages is directly proportional to the increase in demand for trained personnel. Since the telecom industry started taking rapid strides forward, all major operators ?? Bharti, RCOM, Vodafone, Idea, BSNL and MTNL ?? grappled with the task of putting the right person in the right job, whether the job was managing growing corporate needs, handling marketing or technology change, or working out financial strategies.
But while generous salaries are a key differentiator in retaining talent in the short term, they are not an absolute safeguard against people quitting. Even the most attractively wrapped compensation packages and retention tools have not helped to arrest churn. According to Watson Wyatt’s survey, attrition continues despite employers offering fast-track career paths, global salaries and facilities ranging from music rooms to gyms to their employees. In fact, the attrition rate continues to be as high as 16 per cent across industries.
In telecom, where competition is stiffer, the attrition rate is over 25 per cent. Senior officials in the telecom industry have, on various occasions over the past year, told tele.net that their single biggest challenge is arresting attrition.
Trupti Vyas, an HR consultant, who has been hiring for the telecom sector for the past five years, agrees: “This is possibly the sector with the highest rate of attrition, even higher than in IT. It’s a sector where jobs are mushrooming by the minute and there’s a dearth of qualified people to fill them.”
The situation will only get worse with new entrants such as Datacom (Videocon), Sistema, Swan and Loop (BPL) coming in. Datacom has already been on the prowl, tapping into the best resources in the industry, particularly those with sectorspecific skills. The scale of new hires is estimated to be huge with pan-Indian operations requiring companies to employ at least 3,000 employees directly and many more indirectly.
Apart from the new entrants, global players like Alcatel-Lucent, Motorola, IBM, ZTE and Nokia Siemens Networks (NSN) are all looking to expand. Everyone is going to be fishing in the same talent pool. IBM, for one, is looking at operating six global delivery centres from India, apart from setting up sophisticated R&D facilities. And NSN is moving its global services business unit headquarters from Germany to India.
Poaching game
With growth putting pressure on talent, it’s no wonder that good people are being constantly sought and hunted. Poaching in the industry is more ruthless than in wildlife sanctuaries. A recent shuffle at the senior management level in the industry is a case in point. Following Alcatel-Lucent’s South Asia head Ravi Sharma joining Datacom as CEO, an entire 15-member supply chain team of Alcatel India, led by D.P. Singh, joined the Videocon subsidiary’s turf.
Swan Telecom appointed RCOM’s Maharashtra head, Atul Jhamb (who had earlier been with Bharti) as its CEO. Unitech Telecom is also learnt to have made offers to the entire regulatory team of Aircel Cellular.
At the CEO level, the job switches hurt organisations more. Leaders are always at a premium. HR heads are constantly on the lookout for chief technology officers and seasoned network planners. They are especially targeted by new firms as they engage large equipment manufacturers for their rollout.
Next on the demand curve, according to Hewitt Associates, are regulatory professionals and government liaison personnel. Unlike those in sales, marketing and customer care, these superspecialist professionals are key for start-ups. Such companies have little option but to pinch from existing operators, including BSNL, MTNL, the Department of Telecommunications and the Telecom Regulatory Authority of India.
Faced with an imminent poaching epidemic, the incumbents, meanwhile, are wasting no time in lavishing their attentions on valued staff. RCOM is offering its 20,000 employees an ESOP scheme. Tata Communications is recruiting freshers and giving them advanced training to meet the talent pool crisis. It is also allowing staff to choose the department in which they would like to work.
Bharti Airtel, apart from conducting training programmes for its employees, is also using a mix of cash instruments such as sign-on bonuses, targeted skill bonuses, birthday rewards, marriage allowances, and recognition awards to keep its employees faithful.
Public sector competitors, meanwhile, are hoping the recent announcement of the Sixth Pay Commission, which recommended an effective 28 per cent salary increase, will help retain talent.
However, S.P. Shukla, president, personal business, RCOM, feels that it will be the new players who will feel the impact of the talent crunch the most because both newcomers and industry professionals would prefer to work for established players.
No holds barred
Most recent surveys reveal that compensation remains a key factor behind job changes. Nearly 40 per cent of the employees surveyed say they would switch jobs for an increment of 30-40 per cent.
These pay packets, though, are burning a big hole in the pockets of telecom companies already facing thin margins. This is why most HR firms believe that large pay hikes cannot be sustained beyond a few years. “The indications are that salaries will flatten out once the new wave of hiring settles down,” says Garg.
It is also a vicious cycle. By overcompensating existing employees to fight a talent crunch, companies only feed attrition further. Prime Minister Manmohan Singh recently reprimanded the corporate sector for giving in to such excesses, suggesting that CEO salaries be capped. Reduced spending could help control inflation.
In the final analysis, Sanjiv Sachar, partner, Egon Zehnder International, says, money alone will neither serve as an effective pull for good talent nor succeed as a retention strategy. Sachar believes that talent will only move if there is a strong belief in the ability of new players to grow. Telecom companies, in that sense, have managed to create a strong brand name.
Bharti Airtel, Tata Teleservices Limited (TTSL) and Vodafone are already rethinking the way they lead the business, putting in place strategies that align the workforce with the goals of the company. The hope is that healthy salaries, along with long-term incentive plans and aligning of employee performance with business goals will become the key drivers to sustainability.
Bharti is not only considered to be the highest paying telecom employer but has also gained a reputation for very innovative HR practices. “Even when we were small, we attracted good people, not necessarily IIT or IIM graduates but talented people nevertheless, who were innovative and ready to take charge,” says Mittal.
Though vulnerable to poaching because of its highly trained and efficient workforce, Manoj Kohli recently noted in a business daily that the company has the lowest attrition rate in the industry. “We are confident that most of our top people will stay. This is because we seek to retain them through bright prospects and better offers. Of the top 200 executives that we have, hardly a handful have left us over the past several years. We do our best to retain the soul of the company ?? creating an informal atmosphere where decisionmaking is done in consultation with our employees. We have been reviewing our organisation design and structure continuously,” he says.
TTSL, the telecom arm of the Tata Group, known for its long tradition of focusing on the welfare of its employees, has lost some good people to poaching. Today, HR plays an even more significant role than before. Apart from competitive salaries and the opportunity to progress within and across group companies, TTSL’s performance management system has become the crux of the company’s people-related initiatives. It follows the Tata Business Excellence Model, which focuses on leadership development, includes potential assessment systems, group training inputs and group resourcing.
Net, net, employers have realised that employees need not just money but also growth and learning opportunities in order to win ?? and hold onto ?? their loyalty.
Key movements
India’s thriving telecom sector promises tremendous new career opportunities. Big telecom operators are continuously in search of quality talent, with the search extending to the top. The recent issuing of telecom licences to nine operators has only heated up the recruitment scenario further.
In the past few months, the industry has witnessed a lot of movement at key levels as the new operators gear up to roll out services. Videocon-owned Datacom, for instance, brought in Alcatel-Lucent South Asia head Ravi Sharma as its CEO. Following this, Alcatel India’s entire 15-member supply chain team crossed over to join him.
Swan Telecom appointed RCOM’s Maharashtra head Atul Jhamb as its CEO. RCOM’s vigilance head Vinod Budhiraja too joined Swan.
Another new player on a hiring drive was Unitech Telecom. The company appointed Aircel’s Rohit Chandra as its CEO and thereafter made an offer to absorb Aircel’s entire regulatory team. Unitech also hired Ashok Sud, former president, regulatory and corporate affairs at Tata Teleservices Limited (TTSL), as its president, corporate affairs.
Meanwhile, Bharti Airtel lost Jayant Khosla, head of its mobility business for the western region, to the Future Group’s insurance business while Gopal Vittal, its marketing and communications director, moved to Hindustan Unilever as head of its home and personal care business. Bharti also lost its business services’ CEO Rajiv Sharma, its compliance and audit chief for emerging business Harish Dua, and CEO of its Punjab circle, Rajiv Jaitly.
Other key movements in the recent past include that of Prakash Bajpai, president of RCOM’s broadband operations, who left along with two other senior executives to start a new broadband business across 40 cities. BPL Mobile’s director and CEO S. Subramaniam also resigned, making way for Sanjeev Chachondia from Essar Telecom Infrastructure Limited.
Suresh Vedula left British Telecom to join Nokia India as its head, business mobility, while Tata Teleservices (Maharashtra) Limited (TTML) appointed Bharti Airtel’s Rajesh Puri as president, operations.
To put the situation in perspective, in the next one year, the industry will need some 40,000 executives, with each operator requiring 350-400 executives per circle as they launch operations. In light of this, it is expected that the current spate of hirings will continue until the new operators start services.
