The Hindu Business Line : Bracing up for IT competition

Traditional industries in the city are waking up to the reality of competition in the manpower space. And companies are going all out to retain employees.

Nandini Rangaswamy

As companies such as L&T and software majors prepare to enter Coimbatore, the question is: Can traditional industries retain talent in the face of better remuneration elsewhere? Already, a lot of churning is taking place but mostly in the textile space. But now engineering industry too seems to be waking up to the reality of competition in the manpower space.

Sustainable development

Nandini Rangaswamy, Chairperson, CII, Coimbatore Zone, says in her personal capacity as an industrialist, "It is very, very difficult now" to find qualified manpower at mid-level managerial positions and above in Coimbatore. The existing industries "feel threatened by IT" and the attractive salaries the sector offers. Cost of living would go up too, but the service industry would welcome this development since it would give a boost to the general economy.

She said unlike many tier-II cities, Coimbatore was already a highly industrialised town, and more investment would improve the city's economy. Though she's not against competition, development should be in a sustained way as not to hurt existing industries. D. Balasundaram, Managing Director, CPC Ltd, said compared to textile, the engineering industry, which is more professionally managed, faces less attrition as it offers better wages. While export-oriented companies would be able to face the pressure on wages, others would find the going tough. Many would be forced to shift their production bases further South where salaries were more affordable. Normally the engineering industry gives a 5-10 per cent annual pay hike, but qualified employees get up to 20 per cent. He added there was apprehension that the IT sector would draw their skilled employees with the glamour of international travel, something the manufacturing sector could not match.

J. Balu, President, Coimbatore District Small Industries Association (Codissia), said most of the major engineering companies in Coimbatore were working at full capacity and some were even refusing fresh orders. While a majority continue to expand their capacity, about 20-30 per cent of the companies were stagnating. As the entrepreneurial skill was high, the overheads were less and the products were cost competitive.

Smaller units hit

Smaller engineering units face more pressure on the rising wage front. "There is a limit to the wage burden they can absorb."

Even among the big players, there was intense competition in the compensation package between the old and new companies, with some of the newer companies matching IT/ITeS wages, as they did not want to lose orders. Balu added that like the textile mills, in the engineering industry too contract labour has come into existence.