War for Talent Just Got Skewed
It is well known fact that there is a shortage of quality talent, be it for STEM or business skills. Companies, both small and large, have been competing in this war for talent globally, and looking at innovative ways to attract the right talent for many a year. While larger companies typically have more resources and deeper pockets, the smaller ones are more agile in offering workplace flexibility, greater job responsibilities, and an enhanced employee experiences. However, in these uncertain times, the domino effect of COVID 19 on companies and economies means that the war for talent just got majorly skewed. It is likely to divide the corporate world into two parts, the have and the have nots.
There are visible positives coming from a section of the corporate sector, where companies are committing to abandon layoffs despite COVID’s impact on their business. To manage the financial impact, these companies have frozen hiring, deferred promotions, bonuses and hikes, and some have even announced pay cuts. These steps are not limited to companies of a specific size, but rather span large (including the Fortune 500) companies, mid-sized ones, and start-ups alike. Then there is a spectrum of companies that have already announced redundancies. There are a number of stats that vividly portray the grimness of the situation, but one that stands out from recent memory. Last week alone, the number of unemployment claims in the US rose by more than 3 million. Although a fair cross section of these could be relative labour intensive front line roles, it does symbolically represent what people are going through at this time.
As economies of Western Europe and the US take a beating, and prepare for a possible recessionary period, there is a small silver lining for the job seekers. Some large companies, particularly captive units, are continuing to ramp up their talent pipeline. This hiring activity, typically centered on junior (not entry level) to mid-level positions, is driven by twin factors. One, companies with deep pockets have identified this time as an opportune time to on-board talent at relatively attractive price points. To draw a parallel with the stock market, a bear run is probably one of the best times to make an investment if you have deep pockets and are in the game for long term returns. Two, there is consensus about COVID’s impact on demand and businesses being a short term phenomena, though no one knows whether the peak of this impact will last for 2 months or 6 months. With that in mind, the hiring activity over the next 6-12 months could create greater disparity between talent profiles of companies, especially those in the services sector. A quick walk down memory lane to revisit learnings from 2007-08 crisis tell us that companies that could afford continuing to invest in people and building capabilities came up trumps when the markets opened up with pent up demand.
The implication of all of this is that there are companies that do need to completely pull the plug on hiring, and may even need to resort to pay cuts or redundancies, to stay alive. However, then there are companies, driven by the strength of their balance sheet, that aren’t in as tough a spot. For the latter, it is imperative to continue with hiring, although at more prudent levels, to create greater talent differentiation vs. their competition. For services roles, some of this prudent hiring will happen in the home countries, while a large part of this is expected to happen in offshore regions as the cost arbitrage still makes a strong business case for building sustainable companies (especially as the topline gets impacted!).
