|
|
| 21st Annual EFSI Endowment Lecture at IIT Madras |
| The changing face of employer-employee relations
in India |
|
 The
Chairman of the Sanmar Group, N Sankar, delivered the 21st annual
EFSI (Employers’ Federation of South India) Endowment Lecture at
IIT Madras on 10th November. Prof M S Ananth, Director, IIT Madras
presided over the function and N R Pai, President EFSI, welcomed
the gathering. Prof K Elango, Dean (Academic Course), proposed a
vote of thanks. We feature below some of the observations he made
in the course of a detailed presentation on the changing employer-employee
dynamics.
India today has a unique advantage since it offers engineers, accountants,
software professionals, managers and scientists of world-class
intellect and capability, at significantly lower cost than what
obtains in the west. This is the reason for the surge in
outsourcing activities such as software development, business process
outsourcing etc to India. The significant cost savings came in handy
to western corporations affected by the economic downturn and by
low-cost offshore competition.
|
| However, this advantage that India enjoys
will be under increasing pressure in future. While the sharply
increasing remuneration levels for professionals in India has been
very welcome, it of course reduces the gap between levels here and
in the developed countries. Make no mistake, ultimately economics
will win. The best value for the lowest cost is what all consumers
look for, and this applies equally when the commodity on offer is
grey matter. |
| Due to their own economic compulsions, the salaries
paid to management professionals in western countries have levelled
off in the last few years. There is also the downward pressure exerted
with the recent emasculation of top level salaries after the recent
scandals relating to CEO pay in companies like Enron, Worldcom, Tyco,
and even the NYSE. This will ensure that for the next several years,
salary levels in the West would remain flat. With the inflow of business
to India, the tendency is for remuneration levels here to increase,
and the delta between the West and India will continue to narrow.
Throw in the fact that China is on an aggressive campaign
to upgrade its manpower to international standards to participate
in these lucrative fields, and you can see that there is going
to be considerable competition in the future for our brain power. |
| Thus, while price-based market penetration of Indian
manpower may continue for some time, eventually we will have to support
this substantially with the quality of the people on offer from India.
I am sure all of you share my conviction that India produces
technical and management professionals who are equal to the best in
the world. But, we will have to strive to maintain and improve this
quality and keep them at the boundaries of global excellence. |
| It is here that institutions like IIT play a big
part. It is my personal conviction that the contributions of the IITs
to the globalisation of Indian manpower, and therefore Indian business,
over the last four to five decades have been immense. But these and
other similar institutions will themselves face challenges as they
are forced to become increasingly commercial. Subsidies and other
forms of support will continue to be phased out, and the institutions
will have to work like other global institutions by creating fresh
sources of revenue. Here the IITs, including IIT Madras, enjoy a big
advantage in that Alumni funding is normally a very good source, and
considering the success that IIT grads have enjoyed worldwide, I am
sure a concerted campaign to tap their goodwill will yield results.
Another area I would commend to IIT for study is that of commercializing
its research activities on a larger scale. Sponsored research,
better control of intellectual property arising from its own labs,
cooperation with other research institutions around the world in niche
areas, all these show potential, and I have no doubt are already under
consideration by Prof Ananth and his colleagues. |
| With all this, I can visualize a time in the not
too distant future, when the brain drain that we talk of so much,
is substantially reduced, not through compulsions or regulations,
but by providing greater opportunities and rewards right here
in India. This can happen both by domestic industry expanding
and absorbing more and more of these bright young people, and also
by increasing substantially the work being done here on the ground
for international clients. This process - outsourcing - has become
considerably easier and far more effective with the communications
explosion of the last decade, and by leveraging on the potential of
the Internet. |
| A note of warning - a concomitant of this globalisation
of Indian manpower, would be that western practices may creep in to
our employer employee relations. Hire and fire, job uncertainty, job-hopping,
etc., etc. are all possibilities that are not in anybody’s interest.
It is here that I hope both employers and employees will learn from
the experience of the west, and leap-frog forward to a situation where
there is greater understanding on both sides of the table and appreciation
of the mutual interdependence of Employer and Employee,
improved systems of individual evaluation and focused training, and
a highly responsive remuneration system. I am confident such initiatives
will lead to our Employers and Employees working effectively together
to progress India into the top five developed nations of the world
- no longer a distant dream, but a real, albeit hard to achieve, probability
- by the middle of the 21st century. |
| We are today at the cusp. Having come through the
fire and brimstone of the 90’s, many sectors of Indian industry are
beginning to show significant success on a global level. Just in the
last few months, there have been huge global acquisitions by
Indian corporations in the fields of telecommunication, truck
manufacture, steel, and so on. Domestic industry is showing excellent
results, and the stock markets are reflecting the newfound confidence
of business, which I am told is at a nine-year high. Just in the last
year, we have faced the four horsemen - drought, spiraling oil prices,
a war situation, and a global economic slow down. Any one of these
in the past would have driven India to a Balance of Payments crisis,
whereas we are groaning under a growing surplus of foreign exchange.
The ambience in which business operates is far, far freer,
and more responsive than ten years ago, although there are
still a few glitches to be straightened. The portents could never
be better for India to make it to the top rung of developed nations
in the next few decades. Personally, I am confident it will happen. |
| The Hindu, Wednesday, November 12, 2003. |
 |
 |
 |
|
