Software companies to hire more employees in next decade than in past 50 years: Sabharwal of TeamLease

Manish Sabharwal

Manish Sabharwal, vice chairman of publicly listed human resources firm TeamLease Services, says productivity of states, cities, sectors, firms and skills must be raised for wages to increase. He told Moneycontrol in an exclusive interview that the future belongs not to the strong but to learners who take personal responsibility for their learning. Edited excerpts:

Is the economic slowdown for real? Though startups and some companies have tightened their purse strings, there seems to be no impact at scale.

The economic situation has much in common with the opening line of Charles Dickens’ A Tale of Two Cities: It was the best of times and worst of times. Obviously, the bigger the binge, the bigger the hangover. Central banks were slower than they should have been in raising interest rates and should not have weaponised quantitative easing. This excessive liquidity led to excesses in public market equity valuations, private equity and venture capital. But it also created opportunities for first-generation entrepreneurs to create unique companies that leveraged India’s public digital goods, growing consumption and better infrastructure. The view from my vantage – and it may be fair to characterise this as Corporate India not India – looks pretty decent.

To what extent have jobs been affected in this fiscal year? Do you see red flags in the coming quarters?

India’s macroeconomic indicators always play hostage to energy prices and clearly, the weather at the moment has been complicated with the Ukraine war’s impact on oil. But Covid, painful medically, has accelerated the ongoing structural changes that are replacing self-exploitative informal jobs with formal jobs. Obviously, some jobs are going and some are coming, but that is normal in a modern economy. Overall, I don’t think there has been any huge uptick in unemployment since April nor do I see any surge on that front in the coming quarters. Two obvious caveats to this view are that I am the waiter not the chef in the job market and my employment view is Corporate India not India.

Which sectors will be able to withstand the pressures, as far as jobs are concerned? And which are the ones under the hammer?

The useful cut for measurement is not sectors but companies. The days of a rising tide lifting all boats are gone. Total employment in software is going to go from 5 million to 10 million. The industry will hire more in the next 10 years than it has done in the past 50 years. The big companies in FMCG, FMCD, financial services, e-commerce – domestic consumption – are getting bigger by bulking on their employee numbers in sales, customer service and logistics.

You have always said India's problems are not jobs but wages. What's the situation now as far as wages are concerned?

This distinction is important because if you think the problem is jobs you will throw money from helicopters, mandate a three-day work week and take away shovels from people digging and give them spoons. Current wage growth demands are obviously being distorted by inflation, but overall wage growth must reflect the productivity growth of five places (of which only two are geographic) – states, cities, sectors, firms and individuals. There is nothing called poor people but there are people in poor places. I think wage growth is happening wherever productivity is rising, as it should.

How are other emerging economies faring with regard to jobs?

Our large domestic markets – we are fifth in the world in total GDP but only 138th in per capita GDP – differentiate us from other emerging economies that have higher total factor productivity (reflected in per capita GDP). Many economists imagined the economy to evolve like China; a job explosion driven by a transition from farm to non-farm jobs in manufacturing exports. We hope this will happen but it would be delusional to not acknowledge that global trade growth and labour intensity of manufacturing have changed. I think it would be arrogant to call it a new growth model, but clearly, India’s service exports and domestic service growth are different from the sequencing that smaller countries in South East Asia followed and surely diverges from the China journey. This has also acted as a shock absorber in the current economic situation, so I’d say we are doing better than others.

What lessons can we learn from some of the advanced economies with regard to solving our wage problems?

It is clear that you can’t raise wages with fiscal policy or monetary policy without creating painful macroeconomic problems like indebtedness, inflation, currency challenges and much else. There is no Diet Coke – the taste without the calories – in economics. Our biggest lesson is that we need to raise the productivity of five places (states, cities, sectors, firms and skills) via five policy interventions (urbanisation, formalisation, financialisation, industrialisation, and human capital). We need to pursue bold structural reforms and the only way to help the majority of our labour force that toils in the informal and farm sector is to create high-wage, high-productivity non-farm jobs in formal firms.

What's your sense of the economy – both internationally and India? What are the short-term challenges and when will the clouds (if any) will clear?

India has many challenges but our trajectory is onward and upward. The global economy is looking dicey for many reasons but the biggest one is the overhang of excessive government debt and ageing (both may be related) on future prospects. India’s attractiveness is being helped by China’s policy flip. I hope Xi Jinping not only gets a third term but a life term because foreign investors have lost $1.5 trillion in the last two years. They held their nose when they were making money and China was geopolitically “biding its time and hiding its strength”. The two big trends in supply chains – moving from just-in-time to just-in-case and “friend-shoring” – are winds at India’s back.

How do you see the apprenticeship scene developing post-pandemic? Has it given further impetus to internship and apprenticeship as a concept?

The New Education Policy 2020 is a bold and overdue attempt to remove the poisonous partitions between education and employability. There are five design principles for skills we have learnt over the last two decades – learning by doing, learning while learning, learning with qualification modularity, learning with multiple modes of delivery, and learning with social and employability signalling value.

Apprenticeships combined with degrees synthesise all these five design principles. NEP creates the regulatory framework to explode degree apprentices and students and employers have begun to rapidly adopt degree apprentices. We anticipate 10 million new apprentices in the next 10 years with a few, small regulatory tweaks.

What would be your message to jobseekers at this point?

The world of work, organisations and education has changed. The life expectancy of a Fortune 500 company has come down from 64 when the first list came in 1955 to 14 now. In a world where Google knows everything, learning how to learn matters more than knowing. And work-from-home means work-from-anywhere but there are limits to learning in not working from the office (soft skills are not taught but they are caught).

My parents had a 35-year career, I will have a 45-year career but my kids will have 55-year careers. This means that having a lifelong learning plan is key because the upfront 10+2+3+2 model of education is a train that has left the station. The future belongs not to the strong but to learners who take personal responsibility for their learning because the definition of strong is changing faster and more frequently than earlier.