Current employment scenario – Banks and Insurance

While international banks such as Citibank and Bank of America, have gone in for major job cuts globally, India’s largest private sector bank ICICI Bank announced its plans to halve its hiring and go slow on promotions this year. It will hire only 9,000 as compared to 15,000 last year. Citibank has announced a cut of as many as 15,000 jobs globally. That may impact India as well, primarily in operations and transaction processing.
Talent crunch is going to be a major challenge for the sector in coming years. It is for this reason that many private insurance houses are increasingly tying up with local colleges to induct fresh blood. While insurance sector remains unsure of requisite talent at lower level, banking sector would suffer at middle and top management. The insurance sector has witnessed a 30-40% drop in senior level hiring.
However, insurance sector has found an interesting way around the situation. Instead of quantity, companies are trying to recruit quality workforce capable of handling multiple operations. HR consultants say that insurance companies are now moving away from direct selling agents (DSA) model. Now their own employees manage the task, rather than outsourcing it to a DSA. Bajaj Allianz, for instance, has its own health administrators rather than third party administrators (TPAs); service engineers instead of a separate team to manage motor claims. So, the work that was typically outsourced is now managed internally. Most insurance companies are venturing into direct marketing, cutting down the need to hire aggressively. Bajaj Allianz had a 33% growth in hiring last year; this year it would not be more than 25%.
ICICI Prudential Life Insurance also plans to hire less this year. HR head at ICICI Prudential Life Insurance, concedes that the reduced hiring is also because the company had added large headcount last year. ICICI Pru went in for aggressive hiring in 2007, when it increased its staff strength from 16,000 to 30,000. This year, however, it plans to hire just 6,000.
Almost everyone acknowledges dearth of talent in the industry. So, instead of just adding numbers, the companies hope to build their own talent pool by tying up with education institutes. They have tied up with 21 management institutes to offer PG diplomas in insurance for fresh candidates. They have recruited 2,000 candidates through this route in the past six months and are likely to ramp that up to 6,000 this year.
It’s an irony of sorts. While the Indian retail industry is set to become a $430 billion industry by 2010 with organized retail hitting $90 billion revenue mark, Indian employers are circumspect about their hiring intentions. While the wholesale sector could have been affected by high commodity prices, the retail sector is said to be affected by lower investments.

Entry of new players and ensuing scramble for talent should result in increased hiring. This is however, conspicuous by its absence in case of retail as of now. High level of attrition, particularly, at frontline level is due to the movement of employees within the existing players. Like in manufacturing, 80-85 % of the employees in retail work at the front-end. The sector has been considered the last refuge of the unemployed as high educational qualifications are not a precondition. However, this may see a change with retail giants focusing on quality over quantity.