In Conversation with S.V. Nathan, Partner, and Chief Talent Officer, Deloitte India on Impact of US Recession on Indian Job Market
S.V. Nathan has over three decades of experience in HR management, across diverse industries including Manufacturing, Hospitality, IT, Telecom, and Professional Services.
He is a respected voice of the HR profession in India, Nathan speaks regularly at several national and global forums on contemporary HR matters. He was conferred the ‘Distinguished Alumnus Award’ by XLRI by his Alma Mater.
He was acknowledged as one of the top 25 thought leaders in the Digital space by SAP. He was also recognized as one of the top Power Profiles in HR by LinkedIn and Twitter. His blogs and posts on #OfficeTruths on LinkedIn are very popular.
Nathan currently serves as the National President of NHRDN the largest body of HR professionals.
Q- There are many reports which are indicating that the US economy might tip into a recession by the end of 2022 or early 2023. These concerns intensified when IMF warned that the world could soon be on the brink of a global recession. The companies like Oracle, Google, and Twitter are laying off employees. How do you see its impact on the Indian job Market?
I’d start off by saying a couple of things. We had recession in 2000, 2008 and in 2016. So these are cyclical and it’s a little strange that it is coming in a little early and it’s on the backdrop of a certain war in one place and geopolitical instability. All of these add to a certain sense of fear and anxiety in the market.
It was said that when the US sneezes, India catches a cold. That was what it was earlier. That’s slowly changing. They’re changing for different reasons. The first which is happening in the US is certainly people are worried; people are looking at how they can cut costs. The first biggest cost, depending on how the industry they are in is the people cost. So if you look at all the names that you have mentioned right now, they’re all in places where you could have a sizable chunk of what they have as cost, as people cost. So the first thing that they would do is they would want to reduce people cost.
Does the work go away? No! Somebody has to do that work. That work more likely will be offshored to a cost-effective country like India. So for every dollar that is spent in the US, all they have to do is spend 33% in India. Okay, well, in today’s day and age, India is getting a little more expensive, but still cheaper than the US and great talent, making India a talent destination. So, I see the possibility of more work coming into a lot of these service companies and a lot of the global in-house centers in India.
I see that there would be a minor blip more to the fears but the actual job in the markets that we see and opportunities are not going to come down anytime soon. If you look at what is happening within India, India is growing. There is perceptible growth. We have always a big preponderance of whether we are growing enough, and whether more people are getting jobs. All of that indications clearly prove that when we are moving into manufacturing, when you’re moving into engineering, when you’re moving into services, all of these the moment you start to work harder over there, there are more jobs available.
If you look at certain policies that have been enunciated by the government, it makes it a lot easier for more employment and employment generation that comes into the form. So, I know it’s a long answer, but I believe that if there are fears about recession, they are more likely to affect the stock market than the job market.
Q- If you see the first quarter results in India most of the IT companies were slowing down hiring, they have recruited fewer numbers than the previous quarter. That was just a concern, fear, or an impact of US Recession?
I don’t think that’s going to be an impact. Look at it this way; the projects that are taken by these organizations are multi-year projects. They are not like things that can be done overnight. The second reason that I would believe in the company that you just mentioned they are looking at a certain growth rate, with growth comes additional profitability. And that’s what people these things show up in the books.
So I would see these numbers. Certainly, there could be a slowdown in the US markets, but whether it affects us to a point where we will have to get really seriously worried about it, I think only a few quarters down the line will tell us. I am very optimistic because, in the IT industry, we saw a very similar thing which happened in 2008, 2000 was the year that defined the entire IT industry.
And I’m talking about something that happened almost 20 years ago. But that’s a lesson which we can pick from history. After every one of those dips in the US, there has only been a huge rise. I would really believe that we have to start to prepare for what happens tomorrow.
Q- So, in such a time of recession fear how can HR People prepare for the future?
It’s a very good question. I think we have to be far more innovative. If you look at what happened in the recent past, the covid has had a tremendous run on people and their well-being. Trying to get talent into organizations has been a huge challenge because of which everybody started to pay unnatural hikes for hiring in organizations.
So it led to almost many of us changing our own tapes. It’s going round and round. I don’t think this is a good thing that you could do for any industry. But sanity is slowly coming in. People in HR can do three things. One, get far more cost-conscious. Second, get far more productivity conscious which means looking at what is happening in the business and finding out those areas of productivity that you can work very closely with the business. And the third one is to find ways of making sure that for the future work that comes in, there are people ready and you don’t have to buy them from the market, but you can build them from what you have from these colleges.
Q- How do you see Compensation Trends in FY23 in India?
Last was a good year, in fact it was the best year after a very long time. If we see that in difficult times even in last five year we had a rage of 8-10% of salary hike. I don’t think that is going to change. This year I think it wouldn’t be less than that, it will be more bearing towards 10%. It has been a good year and the momentum may come down in FY24, but FY23 is still a good year.
Q- Any concluding remarks?
One, I think we need to redefine the role of HR. It needs to start with defining our purpose. The covid has had a high impact on work, workforce, and the workplace. The wellbeing of employees has taken a hit. HR leaders and managers need to be stewards of people and their wellbeing, especially the mental well-being.
We used to speak about the servant leader, a role that got lost and it is time to rediscover that role within HR. Also, can we look at HR professionals getting to be a lot more cost-conscious? That is at one end. The other one is getting to be a little more innovative, making sure that there are new talent models that we can bring in again to support the business. Because what the business needs to do is the availability of talent at the right cost and make sure that this is the talent that will continue to stay with us.
There are other models like the Gig model, which means you can use talent for a certain period of time and then after which they can go back. I think we need leaders and people and human resources to start to look at innovatively. What can be done within organizations that can address some of these issues.
Lastly, the role of HR has come of age and it is for us to rise and shine. An opportunity of a lifetime, to create and define moments of positive employee experience that will stay with them. A time of reckoning. A time of redefining our roles, our purpose and our contributions.
Thank you, S.V. Nathan!