India Dispatch: As the country welcomes in a new year in bullish mood with its growth accelerating, a chronic shortfall in professional staff and labourers across the construction sector, a key driver of that expansion, threatens to put the brakes on many major projects
India Inc runs dry of skilled workers
In Mumbai corporate circles two topics dominate the conversation - India's growth story and how this year will be the "making of the country". The mood is definitely bullish
But despite all the optimism, experts warn the country's much-lauded growth could be in danger because there are not enough people who can build India Inc.
For the construction sector, the New Year brings grim news. It is already burdened with a shortage of unskilled labour across the country but now the sector is predicted to be further hit by a serious shortfall of skilled workers.
Federation of Indian Chambers of Commerce and Industry (Ficci) and Royal Institution of Chartered Surveyors (Rics) have both warned that the sector is severely starved of proper staff.
By 2020, the construction industry will need 5 million civil engineers, architects and planners but the country is expected to produce fewer than 1 million of these professionals, says Rics.
"The industry has seen a massive increase in the last few years, especially the real estate segment due to the swelling housing needs," said Pooja Gianchandani, the director of skills development at Ficci. "Whether it is the ambitious low-cost housing schemes and programmes of the government or the demand for modern homes, each of these require a pool of specialised and trained manpower that cuts across professionals like engineers, architects, designers and so on."
The construction industry is one of the most critical drivers of growth in India with a compound annual growth rate of 12 per cent.
There is big money at stake. The Indian government is planning to invest US$100 billion (Dh367.31bn) in infrastructure over the next three years, which means huge deals for construction companies.
The experts say companies in the construction and property sector are flooded with orders that should nearly triple their annual sales. But the completion of housing projects within budget and on deadline has become a major issue because of staff shortages across the board.
"The industry needs support service staff, too, to ensure timely completion of projects, which includes skilled workers from transport, logistics, cement, shipping and other industries," Mr Gianchandani says.
Industry watchers say a shortage of skilled resources has been responsible for slowing down construction activity by an average of six months to a year. As a result of this shortage, development firms have been compelled to import architects, designers and planners from countries such as Singapore, Thailand, Australia and New Zealand on handsome salaries, thereby pushing up project costs and affecting profitability. The sector is also suffering from image problems, according to Sachin Sandhir, the managing director of Rics South Asia.
"The lack of quality talent has affected the image of the sector to a fairly large extent," he says. "There is a pressing need to adapt and learn new ways to do business, which in turn will aid all practitioners involved throughout the real estate development process to stay abreast of the knowledge curve and strengthen their ability to survive the paradigm shift taking place in global realty markets."
Lack of staff affects all aspects of construction, not just the housing sector.
The World Bank said in its recent report India had about 110,000 highway engineers. China, by comparison, had five times that number when it started to modernise its road infrastructure in the 1990s.
"As it competes for skilled manpower with other booming sectors, the road industry faces increasing turnover of its experienced staff, dwindling appeal to fresh talent, and several other constraints in the investment climate that inhibit its operations and attractiveness to firms, both domestic and foreign," the bank said in its report.
So why don't people want to work in construction?
Firstly, it's about money.
"India's engineering graduates are frequently lured into better-paid jobs in computer science, information technology and financial services," says Ravi Kant Gupta, a director at MyPropertiesClub.com. "Many fail to find suitable jobs among India's handful of big construction companies and even the medium-sized family owned businesses are unable to offer competitive packages."
Secondly, the industry's needs are not matched by the educational institutions.
"India has too orthodox academic structures with limited room to adapt to innovation and market needs," Mr Gupta says. "Our curriculum does not explicitly capture emerging specialised skill-set requirements and there is a lack of adequately trained faculty that is aware of latest and emerging technologies."
Thirdly, infrastructure projects are too slow-moving for hungry young graduates.
"Another marked reason is the government's failure towards quick implementation of infrastructure projects has affected the job generation and retention in this sector," says E Balaji, the chief executive of Ma Foi Randstad, a recruitment consultancy.
Fourthly, it's about lack of cooperation between people who have different skill sets.
"At present, most of the stakeholders across the built environment operate within their respective domains with limited inter-linkages among themselves," says Mr Sandhir. "This has created different silos of knowledge base for different domains, with little understanding or sharing of knowledge across various facets of the built environment."
But companies are fighting back. Bluechip construction companies such as L&T, Gammon and Godrej have set up their own inhouse training schools to meet the industry demands for quality labour.
And many organisations in the construction sector have begun to partner academic institutions to either train staff for plumbing and masonry work, or to set up inhouse training programmes.
"Although efforts are being made by institutions such as the Construction Industry Development Council and National Skills Development Corporation to train and upgrade the skills of the workers across companies," says Mr Balaji.
But there is much more that can be done.
"The skills gap has to be bridged by improving the skills of the potentially employable class of workers and render them fully employable," Mr Balaji says.