India’s talent shortage paradox – and how your company can mitigate it

It’s ironic. Worldwide, one of the biggest challenges faced by enterprise leaders today is the shortage of skilled labor. Despite India producing a large number of highly qualified professionals each year, employability remains a significant issue in the country. The irony in the experienced skill availability space in India is the coexistence of numerous open roles across industries and a significant bench or underutilisation. As a result, the Indian market shows a skill inventory mismatch that is directly contributing to the erosion of operating margins for many industries.

For instance, in the professional services industry, where employee costs constitute a significant portion of the profit and loss (P&L) statement, adjusted utilisation often falls short of the targeted levels. Consequently, enterprises in the professional services sector maintain a large bench while simultaneously seeking to fill numerous hiring requirements. Around the world, the demand for certain skills fluctuates and workforce resilience and agility are indispensable for business viability. 

To help mitigate this critical challenge, Indian companies in skilled labor-intensive industries – such as automotive, healthcare, pharma and life sciences, and construction – should consider adopting a strategically managed approach.

Three tips to help mitigate skilled labor shortage

1. Understand skills: Understanding skills in today’s continuously changing environment is challenging. Managing skill definitions in alignment with internal role demands and external industry trends is even more difficult. Ideally, there should be proper alignment between roles, hierarchy levels, and skill requirements. Once this alignment is achieved, career progression processes can become well-defined, training plans more crystallised, and hiring and contracting requirements optimised. The fundamental requirement is to have a skill unit definition across the enterprise and to identify near or similar skills accurately. Skill units can have different levels, and different skill units across levels can be combined to define a career level attached to a role. Creating and updating this process periodically is challenging due to its complexity. Oracle HCM CloudOpens in a new window applications can help align skill definitions and leverage AI models to keep them in sync with industry trends.

2. Long-term strategic planning: Deciding whether to hire, contract, or cross-train to fill an open position or role should be optimised based on opportunity cost. This decision should consider the fulfillment path after comparing the cost of fulfillment with the opportunity cost for delays or lost opportunities. Currently, these decisions may be based on individual experience or judgment. It is essential to carry out a long-term, probably half-yearly, skill forecasting process. This process should associate notional costs for hiring and lead times, costs of contracting or outsourcing, and costs of cross-training and lead times. A cost optimisation exercise for a fulfillment plan against the skill forecast will help improve the bottom line and significantly reduce the skill inventory mismatch, thereby improving utilisation. While there are not many tools available in the market for this exercise, Oracle Workforce Management CloudOpens in a new window can provide your organisation with a robust approach to address this requirement.

3. Predicting Shortfalls: While skill planning and long-term strategic fulfillment plans are essential, your organisation should take steps to address shortfalls. The best way to do this is by predicting potential attrition, especially for critical skills. Several factors can be aggregated to identify attrition with a certain level of accuracy, such as skill niche vs. compensation benchmark, duration of current role, progression history, manager history, home/preferred location vs. job location, annual increment history, and performance ratings. Several AI and machine learning-based solutions can help achieve a good level of prediction. PwC has built such an AI/ML-based solution leveraging Oracle PaaS and Analytics CloudOpens in a new window.

These strategies can help manage your organisation’s talent supply chain challenges and reduce the key problem of skill inventory mismatch in the industry. However, this is not an easy problem to solve using tech solutions unless your organisation prioritises data consistency. It becomes easier once skill data, forecast data, employee data, performance data, work history data, and compensation data reside in a single uniform data model. Oracle HCM Cloud, Workforce Management Cloud, Analytics Cloud, and Oracle Autonomous Database with underlying artificial intelligence (AI) and machine learning (ML) capabilities can be leveraged to create an integrated platform to address this significant industry pain point.

Getting the right people in the right roles

CHROs are sensitive to the challenges of matching skills to roles and developing the capabilities needed for the future. On one hand, they are challenged with filling open positions. On the other hand, they are tasked with upskilling their teams for the vitality of their enterprises. To ensure human resources (HR) plays a pivotal role in driving organisational strategy, chief human capital management officers (CHROs) must invest in developing HR professionals who possess the vision, agility and business acumen to navigate an ever-changing landscape.

The collective challenges of building skills, succession and retention, and placing the right talent in the right roles underscore the anxiety and concern CHROs have about ensuring their organisations have the people and skills needed to thrive in the future. We often meet with HR leaders who are looking for technological solutions to help them address a host of business challenges. In this context, we advise them that Oracle HCM Cloud applications can help align skill definitions and leverage AI models.

Unlocking the power of data-driven strategies

• Showcase HR impact on business performance by providing compelling data highlighting the direct link between HR priorities and overall business outcomes. Also incorporate benchmarks that help leaders understand how their organisation compares to companies of similar size/stage/industry, and to a leading practice overall. This approach can help drive greater engagement, demonstrates the tangible value HR brings to the organisation.

• Unveil successes by sharing comprehensive and accurate data that showcases specific achievements in employee engagement, talent retention and productivity gains. This strategy would drive greater engagement, reinforcing the importance of data driven insights. While there are not many tools available in the market for this exercise, Oracle Workforce Management Cloud provides a good approach to address this requirement.

• Empower with workforce analytics by harnessing the potential of advanced analytics to uncover valuable insights and recommendations on workforce trends and performance metrics. This data-driven strategy provides HR leaders with actionable information to make informed decisions. Several AI and machine learning-based solutions can help with prediction. PwC has built such an AI/ML-based solution leveraging Oracle PaaS and Analytics Cloud.

The workforce of tomorrow

Around the world, through the ups and downs of the talent marketplace, CHROs are seeking tech-powered solutions to help them outline a plan to reach workforce resilience. Oracle’s HCM platform offers a flexible and innovative HR management solution to help them focus on upskilling their workforce, recruiting the right people for the right positions, and improving HR data visibility to drive better decisions.  

Our team at PwC helps organisations reimagine their talent management strategy leveraging Oracle solutions. We also leverage our own industry-specific model systems and accelerators. Let us help you unlock the value of cloud technology and AI to gain the insights you need to build a stronger, resilient workforce.  

Learn more about how PwC can help you extract value from your Oracle HCM investment.