Ma Foi unveils new Macro Economic Model of Employment Survey

Chennai, October 21, 2006: A resurgent Indian economy, upbeat and more bullish than ever before, has translated into a surge in the organised labour market, with the dynamism expected to be sustained throughout the year, and spilling over into the next year, according to findings of a recent employment survey by Ma Foi.

The Ma Foi Employment Survey (MEtS) is a study on the Indian employment trends and opportunities conducted by Ma Foi Global Search Services Ltd. (MGSSL).It was started in November 2004 and is the largest comprehensive study undertaken to understand the employment trends in the organised sector for the first time in the Indian Subcontinent.

Presenting the survey findings, K. Pandia Rajan, MD of Ma Foi Management Consultants Ltd. said, “We have revamped MEtS to enhance its salience by linking it to the macro economic trends driving industrial growth and employment generation in the national market.”

The MEtS Survey covered 2143 companies across the 9 industry sectors, viz.

1. Banking and Financial Services
2. Construction
3. Communication and Transport
4. Energy
5. IT and ITES
6. Mining
7. Manufacturing
8. Retail
9. Other Services

MEtS Methodology:

In the new format, MEtS captures the industry trends through two channels. The first is a sample survey, conducted by TNS, capturing employer’s response on the net increase/decrease in their employee numbers. This is represented through the Ma Foi Employment Index (MEI) and measures the pace of recruitment activity of the employers by indicating the net percentage growth in their employee base over the past 6 months.

The second channel is the MeM (Macro Economic Model). The MeM is a new model developed by Ma Foi, with a specialist team from ISB, with the intention of making the survey more robust and dynamic.

The MeM is a statistical model based on the economy as well as industry specific factors to assess the growth in the total organised labor market. This model identifies a causal link between the macroeconomic developments and the employment trends.

Commenting on the new model, Sangeeta Sabharwal, CEO, MGSSL said "MEtS has been positioned as a tool for various stakeholders to calibrate hype vis-à-vis reality with respect to employment trends in organised sector in Indian market.”

Key Findings

Of the 2143 respondents covered in the MEtS survey, more than 52% of the respondents have increased their workforce, while about 37% have not affected any change in H1.

In H1 2006, IT & ITeS continued bullish hiring at 11.91%, followed by Construction segment at 6.43%. The infrastructure boom is closely linked to the growth of the IT industry and is amply reflected in these figures. The overall percentage increase of employee numbers over the last 6 months is 2.89 % across all sectors. Commenting on the MEI for the top 500 companies in these 9 sectors was also mapped to benchmark industry against top performers in each segment. The MEI for the industry leaders was slightly higher at 2.95%. About 63 % of the respondents have increased their workforce, while about 28% have not affected any change in H1.

In terms of industry sectors, the overall consistency was maintained with the 5 lead sectors here too being IT & ITES, Construction, Communication & Transport, Retail and Other Services but with higher fluctuations in their MEI’s ranging from 16.15% and 10.67% in IT& ITES and Construction to 3.92 %, 2.59% and 2.14% in Communication & Transport, Retail and Other Services respectively.

Similar trend of the private sector players maintaining the lead here is seen with an MEI of 14.06 %, though in terms of employee strength, companies with less than 100 employees clearly outshone the others with an MEI of 14.29%.

Employee strength wise, companies with employee strength in all three categories, up to 100, between 101-500 and 501-1000 were running neck to neck with the MEI of 4.6%, 4.93% and 4.82 % respectively, while companies in excess of 1000 employees had a relatively lower MEI of 2.56%.

As per the survey, in the top 20 hirers, the maximum numbers have been projected from the IT/ITES sector followed by Manufacturing, Transport & Communication, Energy and BFSI. 60% of these companies are from the private sector.

Manufacturing led the pack followed by BFSI, Mining, Energy, and Transport & Communication with half of these being companies in the public sector.

Analyzed by ownership, the private sector companies have clearly taken a lead in generating employment with an MEI of 6.26%. The contribution of the public sector was comparably negligible at 0.09%, while the public sector was at a steadfast 2.44 %.


MEI - By sectors

Ind. Sectors No of Companies MEI-Track5
1 IT & ITeS 207 11.91
2 Construction 63 6.43
3 Communication & Transport 82 4.75
4 Retail 73 3.18
5 Other Services 182 2.08
s6 Manufacturing 1309 1.90
7 Energy 60 1.21
8 BFSI 153 1.12
9 Mining 14 0.16
Total 2143 2.89


.

Ind. Segment No of Companies MEI-Track5
1 IT & ITeS 30 16.15
2 Construction 4 10.67
3 Communication & Transport 3 3.92
4 Retail 14 2.59
5 Other Services 6 2.14
6 Manufacturing 190 1.17
7 Energy 19 1.03
8 BFSI 23 0.48
9 Mining 1 0.00
Total 290 2.95


MEtS: Macro Economic Model ( MeM)
The Macro-Model is a statistical model based on the economy as well as industry specific factors that envelope all the firms in a particular representative industry sector.

For each sector, a set of 3-4 macro factors have been identified that affect the labor movement and these factors, which are specific to each industry, have been moulded into a statistical model to assess the growth or otherwise in the total organized labor market. Variables include macro economic factors like growth in Population, Real GDP, Bank Lending Rate, Urbanization, Infrastructure, Industrial Output, Road Density, Teledensity, Power consumption, IT exports etc.

Predictions

VERTICALS Jan 2006 Aug 2006
BFSI (-)1,49,400 (-) 1,31,120
Communication and Transport (-)25,350 10860
Construction 9790 8540
Energy 8420 19,620
IT and ITES 6,72,390 7,04,400
Manufacturing 17,530 23,000
Mining 16,150 (-) 7090
Retail 14,050 15,620
Services 57,930 3,86,210

PREDICTIONS for the year (as given in Jan 2006): Total Growth: +6, 21,510
PREDICTIONS for the year (revised in Sept 2006): Total Growth: + 10,30,040

This year MGSSL highlighted the Infrastructure vertical, with plans to focus on the other eight sectors in subsequent findings. As one of the leaders in the industry, Larsen & Toubro’s K. V. Rangaswami, Executive Director and Head, Construction Division, averred that: “Employment Studies give some very good insights into the staffing needs of various industries, and they certainly help companies to reorient and guide their HR policies. With construction and infrastructure growing like never before, the Ma Foi Study covering this sector is indeed very timely and given the methodology adopted, of linking all these indicators in an unprecedented manner, we believe it will be a good benchmark”




Note to Editors:

About MGSSL
Ma Foi Global Search Services Limited, provides executive search services on a retainer basis for companies. MGSSL offers three main services: Executive Search, Interim Management and HR Statistical Research. MGSSL has thus far seen a closure of 732 assignments at the top-management level, of GM’s and CEO’s. The MGSSL team consists of 45 highly qualified professionals, including skilled and experienced Consultants, Analysts and Researchers. MGSSL is an active member of the International Search Networks – (IESF) International Executive Search Federation and The Taplow Group.

About Ma Foi
Ma Foi is a 14-year-old public limited company. Having started in 1992 at Chennai with a focus on recruitment services, Ma Foi has grown to become the largest HR services provider in India. Ma Foi is committed to offer people and people related services, enhancing the net worth of human capital. Currently Ma Foi has a presence in 8 countries through 74 offices – India, the UAE, the UK, Singapore, Sri Lanka, Malaysia, Oman and the US, and over 1334 clients including 164 Fortune 500 Companies. Ma Foi had posted revenue of Rs.213 Crores for the year ending December 2005.

For further details on Ma Foi visit www.mafoi.com


For further details contact:

K.Pandia Rajan
Managing Director & CEO
Ma Foi Management Consultants Ltd.
Chennai. India
Tel: 91-44-55228000
Email: kpr@mafoi.com
Website: www.mafoi.com
For Editorial Queries:
Bhuvana
Branch Head
Integrated Brand-Comm Pvt. Ltd
Chennai.
Tel: 044 – 28297148/49 / 9382330783
Email: vidhya@brand-comm.com