Deloitte India’s Anandorup Ghose decodes latest India hiring trends with special focus on MSMEs’ travails – The Economic Times

lipped from: https://economictimes.indiatimes.com/opinion/interviews/deloitte-indias-anandorup-ghose-decodes-latest-india-hiring-trends-with-special-focus-on-msmes-travails/articleshow/82097401.cmsSECTIONSDeloitte India’s Anandorup Ghose decodes latest India hiring trends with special focus on MSMEs’ travailsET NowLast Updated: Apr 16, 2021, 11:35 AM ISTSynopsis

“The problem is more with the MSME segment which employees 12 to 14 crore people in the country, and where one can already see businesses shutting down. When that kind of stuff happens, it creates challenges in terms of work coming back.”

Anandorup Ghose, Deloitte India, explains how the fresh wave of the pandemic might hit hiring by Indian companies. Edited excerpts from his interview to ET Now:

ET Now: Which spaces do you think will continue to see robust hiring? For all this sunny IT/ITeS hiring outlook, do you think there will still be weak pockets — especially in services — over the next couple of quarters?
Anandorup Ghose: I would divide the conversation into three parts. If you look at the overall sentiment, there will for sure be a dip over a period of time. I believe that last week was an aberration. I am sure that when you are reporting 2 lakh cases a day, you will necessarily see people slowing down little bit on hiring.

That said, I think it is a temporary phenomenon across the white collar space. That is the important differentiation I want to make. The white collar middle management, junior management, senior management hiring will probably see a very temporary slowdown. But it will come back again because right now we have an end in sight because of vaccines.

The problem is more with the MSME segment which employees 12 to 14 crore people in the country, and where one can already see businesses shutting down. When that kind of stuff happens, it creates challenges in terms of work coming back.

But as for the broader white collar segment, we will probably only see a very small, temporary slowing down. It will probably come back fairly soon.

So, while the white collar segment grabs the headlines, it’s the MSME space that accounts for most of the jobs. With reference to what you think, can one identify specific areas in the MSME space where the pain could be more? Is there any way to prevent job losses there?
Absolutely, it is what drives the country. Here is an example to make clear why things are tougher for MSMEs at this point.

In a company’s P&L statement, salary is the single most inelastic cost. All other costs go up and down — power goes up and down, fuel goes up and down, raw material goes up and down. But not salary. That takes time to change.

Also, salary cost is a cash cost that you have to pay at the end of every month. Many other cost have a credit period — you can pay them later also.

Now, think of MSMEs. As soon as there is a cash crunch, the first reaction of the proprietor of an organisation is: how do I save on cost/how do I pay my fees?

Some react by requesting workers to not come to work for the next few months, and by extension, not paying them for that period. In a broader sense, it essentially means that there is no employment for a set of people because there is no cash to pay them.

Large organisations still have the ability to borrow money and pay salaries. That is not possible for most MSMEs. It leaves them, and by extension the workers, in the lurch.

As for the question of doing something about it, I do not have a solution. Revival is going to depend on people going out of their houses. It’s as simple as that.

Take, for example, such businesses as a travel agency or a cab service. Their most basic business requirement is people going out and doing things. When the situation demands that people not go out and do things, these businesses slide farther down a slippery slope because their ability to employ and pay people is lost.

That is how I would look at this particular segment. There is very little to do about it at this point of time.

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