Mumbai: Indian industry’s scorching growth rates, especially in some of the new, emerging sectors, has resulted in businesses increasingly attracting talent from government establishments.
Companies in the steel, oil and gas, telecom, banking, insurance and aviation sectors, in particular, have hired extensively from government-run organizations.
People like Anish Arya, who is one of many public sector employees who have jumped ship. “I joined the State Bank of Patiala in 2003 and, about three years later, I left to join a private company,” he says. Though his stint at the bank taught him a lot—he worked in retail banking for two years and then spent a year in the forex and treasury departments—he knew that there was a limit to how far he could go over a period of time.
“The growth in the public sector is slow. That is the main reason for dissatisfaction,” he says.
It didn’t help matters that in the three years that he was with the bank, he also saw many of his seniors leave. “Attrition levels are quite high,” he says. “And now people don’t mind leaving the security of a government job to join the private sector because they get a better deal there.” Arya is now a financial application consultant for banking at a large global information technology company that he didn’t want identified.
Like Arya, S. Thangapandian, head, marketing, Essar Oil Ltd, started his career with a public sector company, Hindustan Petroleum Corp. Ltd, where he worked for 12 years before shifting out.
“While the private sector has a performance-oriented reward system, the progression in the public sector is based on other factors, such as seniority,” he says, adding that the private sector also gives a lot more elbow room.
Thangapandian is one of the many executives that the Essar Group has hired from government organizations, mostly for its steel, oil, energy and construction businesses.
Adil Malia, group president, human resources at Essar Group, says there are some key advantages in hiring from public establishments.
“The government is a training ground for some of the best people,” he says. “They are involved in processes where the decision making takes into account the interests of every stakeholder. So, they are good at taking a holistic view.”
In some of these sectors, Malia says, the expertise lies in government employees because the sectors were handled mostly by the government. “If you want to hit the ground running, you have few options but to hire from public sector enterprises,” he adds.
The banking sector, for instance, has grown rapidly over the past few years. Currently, India has 88 scheduled commercial banks, 28 public sector banks, 29 private banks and 31 foreign banks. They have a combined network of more than 53,000 branches and 17,000 ATMs.
According to a report by Icra Ltd, the rating agency, the public sector banks hold more than 75% of total assets of the banking industry. Private and foreign banks hold more than 18% and 6%, respectively.
“We regularly recruit from the public sector,” says Zubin Mody, senior vice president and head, HR, at IndusInd Bank Ltd. Like many of its counterparts in the private sector, IndusInd Bank did not have too many options but to recruit from the public sector banks, at least for some of the specialized functions.
“Most of the people from the public sector are excellent in terms of functional knowledge and are well-trained in a variety of areas such as banking operations, general banking, forex and treasury. In addition, the skills that they have are not easily available in India. And given that demand for these skills is very high we have to look at this pool for talent,” adds Mody.
Demand from the oil and gas sector too has resulted in increased migration from oil PSUs (public sector units).
“Public sector companies have been doing cutting-edge kind of work in all areas of the oil business. This kind of expertise has not been there in the private sector so public sector employees get picked up like cherries,” says S. Mohan, executive director, human resource development at Bharat Petroleum Corp. Ltd
In addition, Mohan says, most of the leading public sector companies, including Bharat Petroleum, go through elaborate recruitment processes. “This means that we have a crop of people that are in demand,” he adds.
Especially in the oil sector, the large-scale private investments have resulted in significant attrition in the PSUs. In a way, the government is a good hunting ground because of its sheer numbers. As on 31 March 2004, the Union government alone had more than 3.1 million employees. “The number has actually gone down, primarily due to downsizing,” says A.S. Khan, of the directorate general of employment and training, ministry of labour.
“Attrition levels has actually doubled in terms of percentage from what it was three years ago,” says Mohan. “This is because multinationals and private players are pitching the compensation levels much higher. Also we are seeing people move to other high-growth industries, such as retail.”
In the case of oil PSUs, the compensation at senior levels could be a 50-100% higher in the private sector compared with the public sector. A study by Hewitt Associates found that while the top management in public sector oil companies earn an average of about Rs26 lakh, the average pay for a similar post in the private sector could be almost Rs2 crore.
While PSUs are a good head hunting ground for corporate India, defence services have also been an attractive source of talent, especially for the booming aviation and healthcare industry.
“In recent times, more doctors from the defence seem to be joining the private sector,” says Col. Kumud Rai, director , vascular surgery at Max Healthcare. “The armed forces has many superspecialists who are well qualified. They might leave for a variety of reasons. One, the job is transferable and secondly the compensation in the private sector is much better.”
The private sector also adds value beyond the usual higher compensation, say those who have worked with both types of organizations.
“Working with the private sector gives you a good experience in understanding business issues. It also instills more efficiency and necessitates people to take quicker decisions,” says P.V. Appaji, former executive director, Pharmexcil, the pharmaceuticals export promotion council which is a public-private partnership. Dr Appaji has recently taken up another assignment with the government.
But, recruiting from government organizations does pose some unique challenges to the private sector.
Shiv Agrawal, CEO ABC Consultants Pvt. Ltd, says apart from the fact that there are regulations governing people moving to industry, there are other factors including their having to forfeit many of their benefits, such as pension, accommodation and job security that makes some people reluctant to leave government service.