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F&B industry faces prospects of a severe staff crunch

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The hospitality industry is a major service sector in the Indian economy as it is for many other economies of the world. The industry, under its ambit, covers diverse sectors that include food service, tourism and hotels. The Indian hospitality industry, which accounts for 8-9 per cent of the country’s GDP and around 12.4 per cent of the total employment in the country, has emerged as one of the key industries driving growth of the services sector.

F&B industry faces prospects of a severe staff crunch
The Indian hospitality industry, which accounts for 8-9 per cent of the country’s GDP and around 12.4 per cent of the total employment in the country, has emerged as one of the key industries driving growth of the services sector

According to the data released by the erstwhile Planning Commission, Indian hospitality sector is the second largest employer in the country as it is capable of offering employment opportunities to a wide range of job seekers from professional to unskilled workers. In keeping with its huge potential and prospects, the sector is witnessing several interesting developments. The growth of new teaching and training institutes is among the more pronounced trends to have surfaced in recent times. The rapid growth of the sector has also brought in increased competition and concerns about trained personnel, efficiency and productivity, which is prompting new training institutes and education providers to open their centres in the country.

A research conducted by for on “Staffing Practices in Indian Hotel Industry” has revealed that hotels, even small and independent ones, have achieved high staffing ratios and the annual staff turnover in the four core departments varies between 14-18 per cent annually. Thus, the requirements of manpower are double-fold due to the expansion and growth of industry and because of the annual staff turnover.

Further, a report published by World Bank cites that the demand of skilled courses like Multimedia, Hospitality & Hotel Management, Tourism, Telecommunication and Aviation is emerging at a very high rate in India.

Another study done for the Ministry of Tourism (MOT) has revealed that owing to the growing dimension of the hospitality sector in the country, an additional 36.18 lakh jobs will open up during the 12th Five Year Plan (2012–17) at the projected growth rate of 12 per cent.

Availability of skilled manpower is a major challenge faced by the hospitality sector if it is to sustain its growth momentum. The study done for MOT says that the existing supply of human resources do not cater to even 40 per cent of the sector’s demand.

titled “Survival to Supremacy, Indian Hospitality Story, 2012 & Beyond” underscores the gravity of the situation further: “One of the main causes of concern for India is the lack of adequate manpower given that hospitality is one of the most labour intensive service sectors and depends completely on the experiential and repeat value of the business.

The current supply of skilled/professionally trained manpower is estimated to be a very dismal 8.92 per cent to the total requirement as per the a study commissioned by MOT. The study anticipates a rapidly widening gap towards 2016 (to 2017), taking into account attrition rate and retirement and supply from both government and private programmes.”

If the shortage persists, the industry will face several challenges. Among the more acute ones would be the rising cost of skilled labour and the necessity for hospitality players to enhance the capacity of their in-house training programs. Both outcomes would create extra costs and squeeze margins, say industry experts.

According to industry estimates, employee costs have risen for hotel companies by about 10 per cent to 15 per cent in recent years and could rise by as much as 20 per cent over the next few years.

HR experts in the hospitality industry believe that the dearth of talent is being felt most severely in the departments of food and beverage, housekeeping and the front office. “Most of the shortage would exist in the areas that are labour intensive and where high
skills training is required — thus housekeeping and kitchen are places where one would face maximum shortage,” they say.