Small firms – shy of hiring engineers


Engineers applying to small and medium businesses or start-ups in Bengaluru could be in for a disappointment as many of these have decided to hire only diploma holders.

These businesses claim engineers often quit when they get an offer from bigger brands. As a result, the attrition rate at these firms shoots up. Also, they have to spend more on hiring and training new recruits.
“Earlier, engineers were our first preference. Now, no more so,” said Jacob Crasta, the founder and chairman of the CME Group.

“They (engineers) join small firms as they do not get jobs anywhere else. They work with us for a year or two and keep looking for a bigger brand name. When they quit, the company has to re-invest on training someone else.”

CM Environmental Systems makes equipment that allows Apple, among other global giants, to test for environmental effects of its iPhone or iPads and Hyundai to simulate cars in real road conditions before it hits the streets.

Based in Bengaluru, this medium-sized firm exports these equipments to over 30 countries, helping global firms to ensure that their products meet stringent environmental standards in Europe and the US.

After engineers quitting in hordes to join large firms, it now hires only diploma holders, whom it trains and retains for longer periods.

The CME Group is not the only one to follow this policy.

Rajamane and Hegde Service Private limited, a small enterprise which makes electric motors for global firms such as Bombardier, also does not hire any engineers.

“You cannot force engineers to stay back. So the best option is if one happens to hire an engineer also keep an ITI diploma holder as a second line for the engineer. This will make sure the work does not get affected,” said R N Hegde, the managing director of the firm.

The factory of the firm is at Whitefield in Bengaluru, home to large firms such as SAP Labs, TCS and General Electric.

Hegde said the phenomenon was not exclusive to any one area.

“Almost, all small scale face this problem. However, the problem gets aggravated in the cases that involve IT components development or core engineering design-related jobs. Be it mechanical or be in electronics, the pattern is just the same. We were employing engineers, training them and losing them.”

Both Hegde and Crasta are senior executives of trade associations in Bengaluru.

While Crasta is the co-chair of the southern council of Assocham and Hegde is the President of Whitefield Area Commerce and Industries Association.

Crasta said there are 8.5 lakh small and medium enterprises in Karnataka, most in Bengaluru. Many of these have a policy of not hiring engineers.

For nearly two decades, technology services firms in the country have hired in thousands of fresh engineering graduates, to train and deploy them on projects to meet requirements of global clients.

There is now a global shift in business environment, with clients cutting down projects, shifting towards cloud to rent software instead of buying licences and building IT infrastructure, and adopting automation to do repeatable jobs.

IT services firms have reduced net hiring by as much as 30 per cent anticipating this shift.  In 2016-17, total hiring by is expected to be either flat or lower than the 200,000 people firms hired last year. In 2014-15, these companies hired 230,000 engineers.

Hiring engineers

Start-ups, backed by venture capital money which hired massively have fizzled out with hundreds of them downsizing their business or shutting them.

“A small-scale company can never match the pay package of a multinational company. But even if we do, the employee does not want to stay back. They value a brand name more. Hence, we need to deal with the situation and make a policy not to hire them,” says G Raj Narayan, managing director, Radel Advanced Technology.

This firm makes equipment used in India’s military aircraft. “We would rather hire an ITI diploma holder, who can be trained very well,” said Narayan.

Engineering colleges, too, have observed this trend.

Bhooshan CBM, the director of placements at the Acharya Institute of Technology, said the trend for engineering students was to work in multinational firms, even if they were just put on bench.

“For engineering students there are two kinds of hiring. One is very specific and high-skilled such as in the aerospace sector. The second is in multi-nationals, which hire them just to put them on bench,” said Bhooshan.

Software group Nasscom said there was also a reversal of trend among engineers who look to join smaller firms than larger groups.

“Today, youngsters look for places where there is an opportunity to explore. Unlike bigger companies, the small companies give the young engineers a lot of flexibility, a flat structure and an opportunity to harness their innovative minds. This pulls youngsters to the smaller firms. The bigger firms have to alter themselves to suit the needs of the youngster and attract them,” said Ashok Pamidi, regional head (Karnataka), Nasscom.

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