If you’ve decided to start business in one of the BRIC countries – Brazil, Russia, China and India, you should be well aware of the risks in managing and holding on to talent there. It helps immeasurably to have a local business partner in these countries to handle the details for you, so you should also be looking at the right business partner opportunities. But just leaving everything to a partner in business in Brazil, Russia, India and China isn’t going to be enough when it comes to manage the HR challenge of attracting and holding on to the best employees in these countries. We present a short guide to help you understand such challenges in Brazil, Russia, India and China better.
Brazil has a problem. A yawning gap between supply and demand when it comes to well trained and highly skilled workers. The shortage gets worse as the complexity of the tasks increase and is particularly serious when it comes to engineers, technicians and managers who speak English. Holding on to quality talent is another huge issue as the attrition rates are really quite high.
Another irritant is the obscurantist labor laws in Brazil, which seriously restrict the number of foreign workers that a company can hire. Getting work permits for foreign workers is real hard work and may take months. Also, the labor laws are over protective of the local workers, allow many freebies, that go against the interests of the businesses operating in Brazil.
While there is a shortage of qualified workers in Brazil, the issue with potential employees in Russia is that, if anything, they are over qualified. In Russia, it is not unusual to see post-graduates and PhDs competing for work that require only basic technical skills.
But the problem here is that there is too much theoretical knowledge and little practical skills. Another issue is the overwhelming migration of the most qualified Russians to the United States and Israel, which takes away the very best talent.
And there are other major disadvantages to doing business in BRIC Russia. The labor laws are extremely employee friendly, and like in Brazil go against the interests of the employer. A Russian employee can quit his or her job only after giving a short notice, for instance. And this applies to foreign employees too. So your business partners in Russia are in a constant battle against employee attrition.
There is no question that there is an abundant supply of highly qualified engineers and other professionals in India. But according to a study, just 10% of Indian graduates possess the skill to work for the top global companies. Most Indian graduates are, quite frankly, unemployable. But there is a caveat to that – the Indian employees who are good, are really quite good.
They are exceptional and highly treasured, and courted by BRIC headhunters, all over the world and in BRIC. They ask for top pay packages and usually get it, ultimately, this is economically unviable for a foreign company. And quite naturally, there is a high attrition of the best workers, while the non-performers stay on for the long term. Another issue is the rising expectations of the Indian workers, especially the youngest generation of Indian employees.
They expect to be paid top dollar (or top rupee) for their services and expect to be given higher positions and responsibilities very early in their careers.
The labor laws in India are a concern, but only if your business is into manufacturing in India. Automobile companies such as Hyundai, Ford and General Motors who have set up manufacturing facilities in India have struggled to cope with the stringent labor laws that makes it virtually impossible to fire an errant employee.
However, there are no such issues if your company is into IT services or outsourcing. Unlike manufacturing, India’s IT / Biotech sector has been freed from the punitive labor laws, and perhaps this is the reason for their relative success.
China has a highly skilled workforce that numbers in the hundreds of millions, but holding on to them is a major problem. This is so because almost every other major company in the world has manufacturing facilities in China, so a skilled Chinese worker is never short of options. A young Chinese employee expects quick promotions and high salaries, and if a company is unable to give him or her that, finding another company that does is quite simple.
Another issue is that while the younger Chinese may be really quite smart, but they have poor English skills, which makes them unsuitable for a lot of work in a multinational company. Also, Chinese companies actually are a lot better at holding on to talent in China than foreign companies, and working for the top Chinese companies is the preferred career options for young and bright Chinese.
Another issue that foreign companies face is that their Chinese managers are not exactly risk takers and always look for the safe and easy way out. So foreign companies looking for more enterprise from their Chinese managers are likely to be disappointed. But if there is a real HR advantage in China, it is that the labor laws in China are highly business friendly, which is why so many multinational companies have set up manufacturing facilities there.
No serious business executive worth his salt can afford not to start business in the BRIC. But navigating the business environment in these countries isn’t exactly easy, so it is critical to look for business partner opportunities in these countries. Getting much needed business funding in BRIC and these countries would be a lot easier than managing talent and holding on to it though.