HDFC Bank Ltd created a flutter on Friday when it reported, along with its quarterly earnings, that headcount at the bank had dropped by more than 6,000 in the current quarter.
At the end of the January-March quarter, the bank employed 84,325 people compared to 90,421 at the start. For the full year too, headcount at HDFC Bank was down marginally from the 87,555 at the start of the year. The drop was because of ‘natural attrition’, said Paresh Sukthankar, deputy managing director of the bank in a press conference after the earnings release. Sukthankar cited the increase in digital transactions as one reason behind the decision not to expand the employee pool.
This, however, may not necessarily be the case.
Past trends suggest that the correlation between the hiring pattern at HDFC Bank and the overall private sector banking industry is weak. While HDFC Bank, which now accounts for nearly a quarter of private bank employees, naturally has a bearing on the growth in the industry, it does not always foretell a trend.
Data from the Reserve Bank of India’s database shows that hiring among private sector banks has been volatile over the past decade. There is no clear pattern which links it to either growth in the economy or growth in credit demand.
Over the past three financial years, for instance, HDFC Bank grew its employee base in double digits for two consecutive years.
Over these three years, hiring across private banks charted its own course. In two of the three years, growth in HDFC Bank’s employee base was lower than what was seen across the industry. In years when HDFC Bank saw a decline in the number of employees, hiring across the industry still continued to expand.
Growth in employment across all scheduled commercial banks has been less volatile as nationalised banks and the State Bank of India group has maintained steadier hiring trends.
Ajay Shah, head of recruitment services at recruitment firm TeamLease, said that the hiring outlook for the banking sector remains promising. While acknowledging the reduction in HDFC Bank’s headcount, Shah pointed out that other private banks like Axis Bank, IndusInd Bank and Yes Bank are continuing to grow their branch networks and employee base.
However, others like Bank of Baroda and IDBI Bank continue to hire, Shah told BloombergQuint over the phone. He added that some hiring from the same pool have shifted to the non-banking financial services (NBFC) and fintech segments.
Overall, TeamLease is projecting an 11-percent growth in employment in the BFSI (banking, financial services and insurance) sector in the current year, Shah said.
In the annual TeamLease Jobs & Salaries Primer 2017 released on 19 April, the staffing firm wrote that BFSI may be the ‘new IT’ in terms of salary increases being handed out. Average increments in the BFSI sector are expected to be close to 18 percent this year compared to 15 percent for the IT sector, said the report.
Michael Page, a professional recruitment consultancy, shares a similar view. In its outlook for 2017, the firm noted that the banking and financial services sectors continue to show strong growth. The recruitment agency, however, highlighted some shifts within the sector.
It added that senior executives were leaving banks to join non-banking financial companies (NBFCs) as growth in that segment of the market has picked up. “NBFC services are increasingly sought after in India due to constraints in local banks’ lending abilities,” said the report.
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