12/4/2010

Anti-poaching pacts are back

Publication: The Economic Times Mumbai;Date: Dec 3, 2010;Section: Career & Business;Page: 10

Anti-poaching pacts are back

Writankar Mukherjee & Mahima Puri KOLKATA/NEW DELHI

WHEN 50 pilots from Kingfisher Airlines quit last week to join Jet Airways, India Inc got jolted into action. Airlines have always been vulnerable to poaching of staff by rivals or en masse resignation of employees heading for greener pastures. But the incident has set off a mad scramble among companies across sectors to revive (or even create) anti-poaching agreements. While such agreements may not exist in print, HR experts say almost all the leading companies have some kind of a non-poaching pact with their closest competitors, to avoid a war for talent that would inevitably push up manpower costs. Headhunters say anti-poaching agreements have recently been revived or inked between consumer durables majors Samsung and LG, and Haier and Videocon; cola giants PepsiCo and Coca Cola; telecom biggies Airtel and Vodafone and retail majors Bharti Retail and Reliance Retail. But mums the word, officially. With the job market getting back on its feet, and attrition rates going up, several of the top companies are entering into an informal, gentlemanly understanding about not touching each others employees, says E Balaji, director and president at MaFoi Randstad, the countrys leading headhunting and HR consultancy. The latest trigger for such practices is the mad rush for talent across sectors at a time when the Indian economy is coming out of the slowdown and hiring is at an all-time high. Apart from Jet hiring the 50 Kingfisher pilots, top IT firms like Tata Consultancy Services, Infosys and Wipro have indicated that they plan to recruit nearly 90,000 people this year, a majority from within the industry. Other companies are also scoping the talent pool, though not all of them have made their plans public. Recent studies on recruitment suggest that hiring in India will grow by almost 35-40%, quarter-on-quarter, over the following months a global high. Recent data from the Union labour ministry shows that the number of people working in India increased to 1.62 lakh across sectors between March and June. Anti-poaching agreements are a result of the mismatch between demand and supply of talent, says Balaji. They were put on the backburner in 2008 and 2009, when companies stopped hiring. But now they are getting attention again, as the cost involved in hiring and training is quite high. HR head at LG, Umesh Dhal, confirmed that his company and Samsung have an understanding not to hire from each other across levels. He says since the two companies have the biggest product portfolio in the market, it makes sense to have an agreement in place. Hiring from each other will not take place without a gap of a year, says Dhal. This is to encourage healthy competition. A Haier official confirmed the companys non-poaching agreement with Videocon. As did a senior executive from one of the cola companies about a pact between PepsiCo and Coca-Cola. He added that the agreement goes back to 1997-98, when one of the companies tried to poach a team of 20-25 executives from the other, leading to litigation. The agreement has recently been revived, since the momentum in hiring has gone up. From an employee perspective it is limiting, however, because people want to constantly move for their growth, says the executive. Some companies particularly those with niche functions who are starved of talent, like R&D, broking and investment banking are apparently also drawing up role and functionspecific pacts. Sources say IT industry lobby Nasscom, too, is trying to formulate a non-poaching code for the software and BPO industry, which has been hit hard with 15-20% attrition rates. Nasscom president Som Mittal could not be reached for comment, despite repeated attempts. But some IT companies are skeptical about the success of the code, having seen local IT associations in Bangalore and Hyderabad trying it out four or five years ago, with little success. Poached employees would join a smaller company for a month, en route to the rival, only to dodge the code. It is impossible to stop anyone from joining an organisation. What may be more feasible is to ensure that the poaching is more ethical, with companies insisting on a proper release letter and respecting each others notice period for employees, says Kalyan Kar, MD of the Kolkata-based IT firm, Acclaris, a Nasscom member. Tejinder Pal Singh of the HR firm Transearch International agrees, and feels anti-poaching agreements between corporates often makes it difficult for them to operate freely in the market. If you dont take care of your people, someone else will. Talent being scarce, people who have the ability to transform an organisation and take it to the next level, are always on the acquisition radar of rivals, Singh says. Regardless of the situation, many companies are cagey about revealing theyve entered into a non-poaching agreement. While HR professionals insist there is a pact between FMCG powerhouses Hindustan Unilever and

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12/4/2010

Anti-poaching pacts are back

Procter & Gamble (P&G), the former denies this, while P&G declined to comment, citing internal policy. Vodafone Essars director (strategy) Samresh Parida says the company does not consider nonpoaching to be relevant to growth. Our target for acquiring talent has to be a wider spectrum, and that is what we pursue. We look for talent in FMCG, and not just from the telecom industry alone. (Inputs from Gulveen Aulakh in New Delhi & Maulik Vyas in Mumbai) Justice dept nixes 6 US cos agreements In a settlement with the US Justice Department in September, six top tech companies Google, Apple, Adobe, Intel, Intuit, and Pixar agreed to no longer enter into non-poaching agreements with each other. The Justice Department stated that such agreements reduced competition to recruit highly-skilled employees which, in turn, deprived the employees of job opportunities. The settlement came in the wake of several agreements between the companies: Apple and Adobe entered into a pact in 2005, while Google entered into agreements with Apple in 2006, Intuit in mid-2007 and Intel in September 2007.

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