Manufacturing loses talent to IT

By SiliconIndia   |   Tuesday, 21 November 2006, 06:00 Hrs
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Bangalore: The lure of working in the IT sector, coupled with its persistent hunt for fresh talent is having its side effect. According to a report appearing in the Economic Times, the manufacturing sector, the other major recruiter of freshly passed engineers is bearing the brunt of huge entry-level hiring by the big IT firms.
As a result, manufacturing firms have no option but to settle for the second best, reflected in their relaxation of entry-level criteria. Moreover, they are also having a problem in retaining entry-level engineers.

“Earlier engineering, infrastructure and other manufacturing companies had stringent educational qualification requirement. They used to hire freshers from top 10-20 engineering institutes in India. But now that is not the case as they are forced to compete with IT industry, which is hiring not just software engineers but also mechanical, civil, electrical and chemical. Therefore manufacturing companies are relaxing entry-level qualification criteria,” E Balaji, executive director of Ma Foi Consultants was quoted by ET.

What’s also affecting the migration of talent from the manufacturing sector is lack of specific estimates of job creation in India; HR experts say that at least 1 lakh jobs could be created in the sector in fiscal ’06-07.

Another important issue for the manufacturing firms is employee retention at the entry level. To address the problem, companies have been forced re-look at their salary structure, particularly of the freshers. They are also using retention strategies like job enrichment programs and luring engineers with opportunities to work abroad.

"Though the remuneration in the manufacturing industry is not on par with the IT sector, it has certainly increased significantly. Currently, pay package at entry level stands at around 2.5-3 lakh,"says Shiv Agarwal, CEO of ABC Consultants.

The manufacturing sector’s salary package for the entry level has witnessed 20% rise in last one-two years. It was around 1.5 lakh. Two years ago.

“However, small scale manufacturing companies with turnover of 50-200 crore are not able to pay high salaries, leading to inability to hire quality engineers,” says Nirupama VG, associate director, TeamLease. Even if these companies do manage to hire quality manpower, retaining them is very difficult.

She added that the poor faring of manufacturing firms on the salary vertical in comparison to the IT companies makes youngsters sway towards the latter.

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