Workforce Trilemma: Balancing Cost, Capability & Continuity

Workforce Trilemma: India is at a crossroad in terms of workforce. The issue of developing a more resilient and future-proofed labour ecosystem has never been more pressing than it is now, due to more than 644 million working and 92 percent of them being in the unorganised portion of the workforce. Being a person, who has devoted more than ten years to the creation of scalable ecosystems of skilling, employment, and entrepreneurship, I perceive this as a complicated balancing act, moving around the conflicting forces of cost-effectiveness, employee capacity, and long-term sustainability in the blue and grey collar jobs.

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The most important issue of this complicated dynamic is cost. It is and has been the competitive advantage of India. The cost of talent in this regard is 60-70 percent cheaper than in the developed markets. However, such a benefit tends to be achieved at the cost of long-term commitment to the development of workers. The firms are being pressurized to remain lean and in the process, they find themselves exposed to the danger of forming transactional relationships with their staff. One of the ways to deal with this can be building asset-light compliant models that will enable the businesses to scale without undermining the dignity of the workers. It is aimed not only at making it cheap, but in such a manner that it will sustain the business as well as livelihoods.

The second leg of the trilemma is capability. Although the need to hire skilled labour in areas such as health care, Artificial Intelligence (AI), and logistics has been on the rise, the skills gap is growing in India. Unemployment amongst youths is still high and many workers are not up to date with the changing functions that are present. New practices like AI-proctored tests and digital skills passports are being tested in more and more workforce development programmes, and allow workers to form formal identities and prove proven skill proficiency. These are key milestones towards formal employment and mobility of career. However, capability building should not be limited to training, should also be associated with pay increases, career progression, and business performance. An efficient employee is not only more productive, he or she is more interested in the success of the organisation.

The third dimension is continuity, which is being threatened more by the gigification of work. The increase of the platform employment has flexibility but compromises the long-term engagement. The turnover rate is high and employees do not have access to security and benefits. The response to this aspect of employment can be designing workforce solutions that would fit career pathways, community enablement, and financial inclusion. Continuity does not imply tenure, rather it implies value alignment. Employees have a future with their management and thus they remain, develop and play their part in a meaningful manner.

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This trilemma needs a combined approach to solve. Companies need to change the prevailing staffing pattern of the transactional style to an outcome-based workforce enablement. The policymakers have to invest in digital infrastructures, ecosystems of skills, and formalisation of labour. Employees will have to adopt lifelong learning, financial intelligence and entrepreneurialism. The fact that Global Capability Centres (GCCs) are expected to grow to 2.8 million jobs by 2030 with the majority in Tier II cities also indicates that the situation within the Indian employment sector is changing at an alarming rate. It is time we equip our employees not only with careers, but with jobs, both in the short term and in the long term.

The workforce issues faced by India are no longer operational, but financial directly reflecting on the balance sheet of the business. Excessively high turnover, ineffective staffing patterns, and skill gaps are quietly eating away business profit margins. A frontline employee may need up to 40 percent of the annual salary to replace, and the cost of replacing a manager or leader can be up to 200 percent plus consideration should be made due to recruitment, onboarding, lost productivity and team dynamics disruption. These are some of the hidden costs that are accumulated fast and this is experienced in the sectors where there is high churn which directly affects the profitability and the growth in the long term. The concept is not only to resolve the staffing issues but also to target a balanced workforce structure. India needs to have a better future of work that is inclusive, tech-enable and purpose-driven and beneficial.

The trilemma of workforce does exist but it is not unsolvable. India has every chance to dominate the world in the sphere of workforce innovation with the proper combination of the technology, policy, and empathy. Nevertheless, a combination of cost, capability and continuity only, India will be able to step out of the short-term solutions and enter the realm of the robust ecosystem of labour.

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