Darryl Judd

If organisations are going to win the war on talent they must be prepared to invest in employee development, look to groom future talent internally and position themselves to attract and retain top performers. This was one of a number of key messages from the 2nd Annual SCMLogistics India Conference, held in New Delhi recently.

With unprecedented manufacturing growth and a booming domestic economy, fuelled in part by a rapidly growing number of middle class consumers, the global talent shortage is now being seen in India, the world’s second most populated country.

In the last fiscal year (2006-2007), India’s GDP has grown at a rate of 9.4% making it the second fastest growing major economy in the world. When measured in USD exchange rate terms, India is the twelfth largest in the world, with a GDP of US $1.25 trillion (2008). It is the third largest in terms of purchasing power parity.

India's economy is diverse, encompassing agriculture, handicrafts, textile, manufacturing, and a multitude of services. Although two-thirds of the Indian workforce still earns its livelihood directly or indirectly through agriculture, services are a growing sector and play an increasingly important role of India's economy.

With sectors like manufacturing, pharmaceuticals, retail, biotechnology, nanotechnology, telecommunication, shipbuilding and aviation growing at a rapid rate, the demand for quality and efficient logistics services is increasing. The Indian Government is moving to address core issues around infrastructure, and the regulatory environment and the fragmented nature of the industry is being overcome gradually.

The required pace of efficiency and quality improvement is demanding rapid development of capabilities of logistics service providers. And with logistics being a service-oriented sector, skill development is emerging as a key challenge facing the industry.

While skill issues exist in varying degrees in all segments of logistics, the most severe and immediate requirement for skill development is found to be in the road freight and warehousing segments, where the gaps are not only wide but also widening at a relatively fast pace.

Taking a deeper look at the work profile in these segments, specific skills that need to be developed, both in terms of quality and quantity, are truck drivers, loading supervisors, warehouse managers and seafarers.

According to a recent study by KPMG, truck drivers are the most critical skill gap in the road freight segment. The profession attracts largely illiterate people with no formal training for the job. The report estimates that while there are around 3 million truck drivers for M & HCV in the country currently, this number is likely to swell to nearly 51 million by 2015.

According to Mr Vineet Kanaujia, general manager of Safe Express, one of India’s fastest growing transport and logistics providers, “There are three main challenges that must be addressed:

“Firstly, becoming a driver in India is not considered to be an attractive employment choice and therefore does not appeal to graduates or the educated job seekers. Secondly, the industry is changing and with the introduction of new transport technology like GPS and e-tracking, we need to employ people who have good literacy skills. And lastly, the lack of training institutions means we can’t access a quality pool of people who we can invest in training,” Mr Kanaujia said.

Even if 50 per cent of all drivers in India were to be trained, almost 125 training institutes would be required to be set up in the next 7-8 years, similar in size and scale to Leyland’s Namakkal Driver Training Centre which trains over 50,000 drivers annually.

The KPMG report found that core issues leading to the existing skill gaps in the sector are:
• Poor image and lack of attractiveness for new recruits, arising from poor working conditions and relatively less attractive pay and progression incentives, in turn arising from the fragmented and unorganised nature of the industry.
• Rapid evolution in logistics management processes and operations with technological change and changing customer requirements.
• Absence of an institutionalised skill development environment.
• Emergence of attractive alternate career options leading to attrition (especially in sectors where logistics skills come in handy, such as retail).

The scale of the human resources challenge is dizzying. Six years ago, for example, Accenture Ltd (India) had 250 workers in India. By mid 2008, it expects to reach 35,000. In a bid to keep employees happy and focused, Accenture assigns a career counsellor to each employee and offers in excess of 10,000 online courses, from languages to Harvard Business School classes.

“People here are driven,” says Rahul Varma, Accenture's senior human resources director in India.

Not long ago, India's skilled labour supply seemed limitless. Today, companies face high turnover, escalating salaries, and shortages of qualified workers and managers. Less than a quarter of companies surveyed in 2006 in India by McKinsey & Co. said they were meeting recruiting needs. By 2010, McKinsey predicts, India will face a shortfall of 500,000 staff capable of working for multinationals.

Yet satisfying high career expectations can be tough. Just a few years ago, IBM, Microsoft, Hewlett-Packard, and Coca-Cola could lure all the top Indian grads they needed on the strength of their names.

“That is no longer the case. The demand for the same talent is high amongst a growing number of multinational companies, and job seekers expect more in terms of commitments to their future education, career development, promotions and salaries,” says Kim Winter, group managing director for global recruitment specialist, Logistics Executive Search.

According to a range of professionals gathered at the SCMLogistics India conference, the solution lies in a number of key initiatives that need to be adopted by companies if they are to be successful in containing the widening skills gap in future years. The industry must:
• Create of a robust institutional framework for generating logistics manpower.
• Create incentives for development of skills for logistics employees.
• Undertake initiatives to uplift the image of the industry.
• Accelerate the drivers of consolidation, integration and organisation in the industry.
• Invest in practical strategies designed to retain and attract staff in a meaningful manner.

Addressing the shortage of skills will require a collaborative approach by industry stakeholders. Market leaders would need to pull together their clout and resources to push for the establishment of an institutionalised training infrastructure, and create incentives for training by creating and mandating certification levels for recruits.

According to Mr Yezdi Nagporewalla, national industry director at KPMG India: “The government is needed to support industry players in their initiatives and provide for a more conducive enabling environment by continuing to upgrade infrastructure, accelerate drivers training and provide recognition by granting industry status.

“The lack of focus on developing talent and skills for the logistics sector is resulting in a significant gap in the numbers and quality of available talent in the sector. This gap, unless addressed urgently, is likely to be a key impediment in the growth of the logistics sector in India, and in consequence, could impact growth in industry and manufacturing sectors as well. This underscores the need for identifying areas where such talent and skill gaps are critical, and developing focused action plans to improve the situation,” he said.

Darryl Judd holds a degree in Economics and is the chief executive of SupplyChainJobz, a global careers portal. With more than 20 years' of management experience in the supply chain and logistics industry, Darryl’s expertise includes building human resources platforms for a successful business, managing business start-ups, change management, international and domestics executive management, profit enhancement, market development and business design solutions.

*Excerpt from MHD Supply Chain Solutions, May/June 2008 (pp.68-70)

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