In a positive development for the Indian economy, the country has experienced a significant surge in headcount across various sectors, registering a remarkable 12% increase. Despite ongoing global turbulence, this surge reflects the resilience and growth potential of the Indian workforce.
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The number of people working in India’s various sectors has increased by 12% over the previous year, according to data from business services provider Quess. This surge demonstrates the country’s ability to maintain steady economic momentum in the face of global turbulence. The sectors primarily contributing to this increase include professional services, manufacturing, BFSI, e-commerce, and IT/ITes.
India’s current employment scenario
India’s population in the 2001 census was 102 crore, with a working population ratio of 39.11% (39.89 crore). In 2011, the population was 121 crore, with 39.78% of them (48.13 crore) employed. Applying the same logic to 2022, approximately 40.45% (57 crores) of India’s estimated population of 141 crores may be employed or working.
Also, India’s unemployment rate, as per the PLFS 2021-22 annual report, is 4.1%, with a UR of 4.4% among men compared to 3.3% among women. The unemployment rate in urban areas is higher, at 6.3%, compared to 3.2% in rural India. The employment rate in India increased to 45.20% in the first quarter of 2023 from 44.70 per cent in the fourth quarter of 2022.
Informal jobs dominate the Indian labour market. PLFS’s annual report 2020-21 shows 46.5% of India’s working population is in the agriculture sector (cultivators and agricultural labourers), the largest of the informal sectors. 75.3% of the remaining working population is employed in non-agricultural informal sectors.
Therefore, cumulatively, around 86.5% of India’s working population is engaged in the informal sector, while around 13.5% of them (7.69 crores out of 57 crores) are estimated to be employed in the formal sector with social security benefits, as per the PLFS report.
Despite uncertainties caused by various factors, including the COVID-19 pandemic, global uncertainties, and geopolitical events, India’s headcount growth stands as a testament to its strong economic foundation. This growth signifies the country’s ability to attract and retain talent, creating employment opportunities and contributing to its overall economic progress.
Thriving industries contributing to growth
The current global turbulence has had a significant impact on industries worldwide. Companies have been cutting costs over the past few months, but India’s employment prospects have improved due to the country’s improved FDI inflow and financial situation. Here are some of the growing industries that are helping to drive the growth in headcount:
- Professional services: The number of employees in the sector of professional services has doubled since last year. This growth can be attributed to companies seeking external expertise to expedite business operations and navigate global uncertainties. Areas such as taxation, business consulting, risk advisory, technology services, and ESG services have particularly contributed to this growth.
- Manufacturing: The manufacturing sector has experienced nearly a 50% increase in headcount. This surge is a result of strong sales of Indian products both domestically and internationally, leading to increased production and employment opportunities.
- BFSI (Banking, Financial Services, and Insurance): The BFSI sector exhibited robust growth at 16%. This sector in India has remained steady due to Indian banks holding their ground amidst challenges faced by banks worldwide due to factors such as strong domestic demand, enhanced credit conditions for borrowers, and strengthened solvency and funding. The sector’s growth has contributed significantly to the overall headcount surge.
- E-commerce: The e-commerce sector also witnessed 16% growth, driven by widespread smartphone adoption and increased internet penetration. Additionally, the government’s initiatives to promote digital transactions and foreign investments bolstered the growth of the sector, leading to an increase in employment opportunities.
- IT/ITes: The IT/ITes sector, while witnessing 9% growth, reflects caution due to uncertain economic scenarios and global challenges. Factors such as inflation, recessionary concerns, and geopolitical events impacting global markets have influenced the sector’s moderate growth.
Future outlook
The surge in headcount across multiple sectors in India means well for the country’s economic outlook. With continued investments in crucial sectors like energy and infrastructure, employment growth is expected to gain further momentum.
While the headcount surge in India’s various sectors is undoubtedly positive news, it is essential to acknowledge the challenges that may arise. Uncertain economic scenarios, geopolitical tensions, and potential disruptions in global markets can pose hurdles to sustained growth. Moreover, the ongoing need for upskilling and adapting to technological advancements presents a challenge for both employers and employees to maintain a competitive workforce.
The Indian government’s efforts to create a business-friendly environment and attract foreign investments will likely contribute to sustained growth and the creation of more job opportunities. As India maintains its position as one of the world’s fastest-growing economies, the future outlook appears promising.
