Services sector outpaces manufacturing on the Indian jobs front

Israel plans to bring in 70,000 workers from abroad, including 10,000 from India, to boost its construction sector. The fact that thousands of Indian workers are nonetheless queuing up to secure a job in a conflict zone abroad is a consequence of a jobs crisis at home. Despite the country’s apparent economic growth, many Indians, including graduates, are struggling to secure a sound source of livelihood.

Employment in manufacturing fell again, especially in labour-intensive manufacturing where it has been declining for the last five years following the botched implementation of demonetisation. Around 60 million workers returned to jobs in agriculture, reversing the structural change in employment that had been underway for 15 years. Manufacturing and BFSI (Banking Financial Services and Insurance) sectors lead the charge with a robust 25% hiring intent, indicating a strong focus on industrial expansion and talent acquisition in the financial domain. With an expected 20% surge, the automotive industry, internet business and Global in-house Centers (GIC) sectors also remain optimistic.

Their positive sentiments for the automotive industry reflect expectations of heightened demand. This trend underlines the continued importance of technology and global operations. The pharmaceutical industry also demonstrates solid intent at 16%, emphasising sustained growth in the healthcare sector. Conversely, the information technology (IT) sector takes a more measured approach with a three per cent hiring intent, indicative of nuanced strategies amid evolving industry dynamics.

Noteworthy is the projection of Maharashtra, Delhi, Bangalore, Hyderabad and Tamil Nadu as the top five places with the most talent pool availability. Emerging industries such as battery energy storage, green hydrogen, and biotechnology are poised for investment-led growth, creating opportunities for job seekers and foreign companies alike. India has a large working-age population (people between 15 and 64 years of age), so the demand for jobs is immense. The country needs to create up to 12 million jobs each year for the unemployed, new workforce entrants and surplus agricultural workers to be able to secure non-farm work.

“Revenues of GCCs in India have grown nearly 4x at a CAGR of 11.4% over last 13 years to $46 billion as of FY23. The number of GCCs has more than doubled from 700 to 1,580 over the same time period, with the sector adding around 1.3 million employees (11.6% CAGR), taking the total employee headcount to 1.7 million in FY23,” says a report by Goldman Sachs titled ‘India’s rise as the emerging services factory of the world’.

It goes on to add that “Over the next few years, we expect strong growth in high-value services to continue and domestically drive top-end discretionary consumption and commercial and residential real estate demand”. It said the services exports grew to nearly $340 billion in 2023 at a CAGR of around 11% from 2005 (nearly double the global growth) outpacing goods export growth. “As a result, India’s share in global services exports rose from under 2% in 2005 to 4.6% in 2023, while India’s share in goods exports only increased from 1% in 2005 to 1.8% in 2023,” said the report. It said within services, computer services remain the dominant sub-sector, accounting for nearly half of India’s services exports in 2023. However, professional consulting exports have been the fastest growing sector.