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Man power and cost management - perhaps the two most important factors to get right today. How are infrastructure companies resolving these two issues? Niranjan Mudholkar reports

In terms of its infrastructure, India ranked 72 (amongst 134 nations) this year on the Global Competitive Index published by the World Economic Forum. That is 10 places down from  last year’s rankings. The fall clearly indicates that the infrastructure development in the country is not moving at the pace it should be.

Obviously, there are challenges that need to be addressed on a priority basis. “The main challenges we face today are the rising material costs and unavailability of sufficient skilled workers,” says PK Madhav, CEO, Maytas Infra.

 Raw material prices have continued to bother the sector for several years. “Based on the survey we conducted for our latest report ‘India’s Leading Infrastructure Companies 2008’, a majority of the respondents in the construction sector indicated that raw material costs were a big cause for concern,” says Yashika Singh, head, economic analysis, Dun & Bradstreet India.

The current financial scenario may have brought some relief on this front as Singh says: “This concern may have mitigated to some degree in recent months, given the recent cooling in global commodity prices.” But the industry will have to wait to see if there will be any long-term impact.

Rise in cost of raw material for infra companies
Period               On CAGR basis
FY04-FY08       47.3%
Last fiscal        58.6%

Contribution of raw material to total expenses of infra companies
Period                       Percentage
FY04                          23.9%
FY08                          34.0%
Source: Dun & Bradstreet India

The other issue mentioned by Maytas CEO – lack of adequate skilled man power – is a concern that is plaguing almost every industry in the country. True, the last few years have seen brisk mechanisation but the industry also needs people to operate the advanced machines and equipment.

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“The demand for skilled labour required to make efficient use of these technologies far outstrips supply in India. Again, this has a direct impact on turnaround times and costs for a project,” says Singh. Harsh Shrivastava, senior vice president, Feedback Ventures, also agrees that Indian infrastructure companies are facing a manpower crunch.

Despite this, there have also been talks about layoffs and salary cuts due to the financial crisis. We spoke to some people on the ground and found out a different story. A project engineer working for a flyover project on the Western Express Highway in Mumbai told us on conditions of anonymity that there indeed has been a problem finding the right people for many projects. He added that the situation was quite similar in many other parts of the country where he had been involved.

Measures are being taken at various levels to address the man power issue. The National Skill Development Centre (NSDC) has been one of the biggest steps in this direction. NSDC will help finance training for young people looking to join the industry. Most leading industry bodies (including those representing the construction sector) are supporting this initiative.

The National Institute of Construction Management and Research (NICMAR) has also been helping to train and recruit people into the industry. Many leading companies including Subhash Projects & Marketing Ltd (SPML) and Simplex Infrastructure Pvt Ltd source their manpower requirements from NICMAR. Some companies have also tried campus sourcing at various institutes though they haven’t been as successful as IT companies.

“Generally, it is not considered as a very effective method in our industry,” says the recruitment incharge of a Pune-based firm.

Infrastructure companies have also been taking initiatives to tackle the problem at their end and are training present as well as potential employees. For example, L&T, the nation’s leading construction company has established its Construction Skills Training Institutes and is getting good results.

Maytas Infra has tied up with the renowned BITS Pilani to form MBITS. “The primary objective of this collaboration is to build world-class infrastructure technology professionals who would eventually become industry leaders,” says Madhav.

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