[India Market Entry "Wrong Answer" Notes] Why Hiring in India Is So Difficult: The Realities of Local Workforce Management and How to Address Them

Let’s explore the challenges of hiring in India, the realities of local workforce management, and practical solutions.

-Why Businesses Can Struggle Because of People in a Country of More Than 1.4 Billion- “If India has a population of more than 1.4 billion and so many young people, surely there is no need to worry abo ut finding employees.” This is something people often say when they hear that a company is planning to do business in India. It is true that India has an abundance of world-class talent in IT and engineering. Several global companies, including Google, Microsoft, and IBM, have Indian-born or Indian-origin executives at the helm, and millions of university graduates and engineers enter the labor market every year. Yet once you start running a business on the ground, the reality can look quite different. “We just can’t find employees who can actually do the job.” “We finally hire someone, only to see them leave within six months.” “Someone suddenly says they have a family emergency and then becomes unreachable for several days.” These are complaints frequently heard from Korean companies operating in India. The reason is that there can be a considerable gap between what Korean employers consider a “good employee” and how local employees in India choose jobs, develop their careers, and move between employers. Ultimately, India’s challenge is not a shortage of people. Even with a population exceeding 1.4 billion and a vast pool of job seekers, finding someone who can perform the job effectively from day one is an entirely different matter. When this is compounded by employees moving to other companies or unexpectedly taking extended absences, the impact can be particularly severe for smaller organizations. Hiring in India, therefore, is not simply about recruiting people. Companies need to consider four questions together: Whom should we hire? How should we train them? How can we create an environment in which they want to stay? And how can we keep the business running when someone leaves? 1. The Population Trap: There Are Plenty of People, but Few Are Ready to Hit the Ground Running India is now the world’s most populous country, with a population of approximately 1.46 billion. Its median age is around 28, and large numbers of university graduates and engineers enter the labor market every year. On paper, there seems to be little reason to worry about labor shortages. But there is an important catch. Being educated and being ready to perform effectively in a real-world workplace are not the same thing. NITI Aayog, the Indian government’s policy think tank, has highlighted challenges associated with gaps between education and industry requirements, limited practical experience, and mismatches between educational curricula and workplace skills. These issues can be particularly difficult for small and medium-sized enterprises (SMEs). Large corporations can afford to hire fresh graduates and spend several months training them. Smaller companies, where each employee may play a critical role, often have far less room for error. A newly hired accountant who struggles with basic accounting tasks or a production manager who cannot handle problems on the shop floor can force the company to invest considerable additional time and money in training. Another challenge is that it can be difficult to assess actual job performance through interviews alone. Some candidates have impressive academic qualifications and work experience and perform well in interviews, yet fall short once they begin the job. Others may initially appear less experienced but learn quickly and adapt well to the organization, eventually becoming more valuable employees. There is another complication: the more thoroughly an employee has demonstrated their capabilities, the more attractive they may become to other employers. Employees who have accumulated experience and proven their practical skills may be more likely to move to companies offering better terms. For businesses operating in India, therefore, the key question is not simply, “How many people should we hire?” It is, “How can we identify people who can perform effectively in our company and help them become productive members of the organization as quickly as possible?” 2. Understanding the Indian Labor Market and Why Employees Change Jobs So Frequently “Why do our employees leave when we pay better salaries and offer better benefits than local companies?” This is a question frequently asked by Korean businesses operating in India. Underlying it is the assumption that offering good employment conditions will naturally encourage employees to stay. The reality is more complicated. ① Changing jobs is not necessarily an act of disloyalty India’s labor market varies significantly across industries and occupations. In particular, changing employers for better pay, a higher position, more valuable project experience, or international exposure is relatively common in IT, services, and professional occupations. It is difficult to evaluate Indian employees solely through the Korean perspective that long service with a single employer is a defining characteristic of a good employee. ② Changing jobs can lead directly to higher pay In occupations where demand is strong, employees may expect salary increases of around 20% or more when switching jobs. In highly sought-after fields such as AI, machine learning, and cybersecurity, some professionals may secure even larger increases. Consequently, even employees who are reasonably satisfied with their current jobs may consider an offer from another company if the terms are significantly better. From the perspective of a Korean manager, the reaction might be, “After everything we have done for them, why would they leave?” From the employee’s perspective, however, the decision may simply be, “This is an opportunity that reflects my skills and market value.” ③ Talent poaching is more active than many employers expect In industries such as IT and business services, companies may proactively approach employees once their capabilities have been demonstrated. In addition to major corporations and large IT services companies, GCCs (Global Capability Centers) have become important employers in India’s skilled labor market. These centers perform key functions for multinational companies and can offer global projects, competitive compensation, and career development opportunities. For an SME, this can mean losing a talented employee to a larger company after investing considerable time and effort in training them. ④ Competition for AI talent is intensifying The expansion of generative AI and automation has increased demand for talent in software development, data, AI, and machine learning. For employers, recruiting professionals who already possess the necessary technical expertise may be faster than developing that expertise internally. As a result, compensation for employees with specialized skills can rise, intensifying competition among companies seeking to attract and retain them. Ultimately, relying solely on salary increases to retain employees in India has its limits. Companies also need to help employees feel that their careers are progressing. Opportunities for professional growth, meaningful project experience, training, positions with greater responsibility, and performance-based rewards should all be part of the overall employment strategy. 3. White-Collar vs. Blue-Collar Employees in India: Why Their Reasons for Leaving Differ Another common mistake in workforce management in India is trying to manage every employee in the same way. White-collar and blue-collar employees may leave or disengage for very different reasons. ① White-collar employees: Looking beyond salary to their next career move For professionals and office-based employees, factors such as job title, project experience, a track record with multinational companies, and opportunities to learn new technologies can matter as much as salary. In IT and other professional occupations, notice periods of 60 to 90 days are also common in some companies. This means a considerable amount of time may pass between an employee announcing their resignation and their actual departure. During this period, employees may compare offers from prospective employers or negotiate improved terms with their current company. If employers interpret every white-collar resignation simply as “leaving for money,” they may overlook the real reasons behind the decision. ② Blue-collar employees: Everyday working and living conditions matter more directly For production workers and other shop-floor employees, basic wages are only one part of the equation. Daily wages, overtime pay, meals, transportation, commuting time, and accommodation can all influence whether employees stay with a company. If a factory is located far from an urban center, commuting itself can become a major employment consideration. The availability of shuttle buses, meal provision, and timely wage payments can directly affect employee retention. ③ Regional mobility and family responsibilities can also play a role Many workers in India live far from their places of employment. Some workers from states such as Bihar, Uttar Pradesh, Jharkhand, and Odisha move to other regions for work and periodically return home. This pattern is often associated with circular migration. For these workers, returning home may involve much more than taking a vacation. They may need to travel for major festivals such as Diwali, agricultural seasons, weddings, funerals, or family health emergencies. A Korean manager might wonder, “Why does a personal matter take priority over work?” For the employee, however, a family issue may be an urgent responsibility that cannot be postponed. Companies managing a workforce in India should therefore recognize that the reasons for absence and turnover can vary according to occupation, location, socioeconomic circumstances, and living conditions. 4. Different Perspectives on Family: The Misconception Behind a “Family-Like Workplace” Korean companies often use the expression: “Our company is like a family.” For many years, Korean corporate culture has frequently compared the workplace to a family. In some organizations, standing together during difficult times and putting the company’s schedule ahead of personal circumstances have been regarded as virtues. In India, however, family and extended family relationships can play a significant role in personal decision-making. Of course, India cannot be treated as a single, uniform culture. Rapid urbanization has contributed to the growth of nuclear families, and family values vary considerably according to occupation, education, region, and generation. Nevertheless, for some employees, matters involving parents’ health, marriage, funerals, or children may take priority over work. Employees with strong ties to their hometowns and families may occasionally need to leave work unexpectedly for several days. Problems arise when Korean managers interpret these situations exclusively through Korean workplace norms. “They have no sense of responsibility.” “They don’t take the company seriously.” “They can’t be trusted.” Once managers reach these conclusions, it becomes much harder to address the underlying problem. This does not mean that companies must accommodate every personal request without question. The important thing is to create a structure that allows employees to return to work rather than resigning altogether when they face an unexpected personal or family emergency. For example, clearly defined emergency leave and unpaid leave policies, along with a formal return-to-work process, can reduce the likelihood that employees will leave permanently because of personal difficulties. Even more importantly, the company must ensure that an employee’s absence does not bring an entire operation to a standstill. Understanding cultural differences and maintaining sound management principles are not mutually exclusive. Understand the circumstances, but manage them through systems. 5. Practical Workforce Management Strategies for SMEs Entering India The most important principle of workforce management in India is simple. It does not mean that you should distrust people. It means that you should trust people without relying on them alone, and avoid depending on individuals without having systems in place. This is particularly important for SMEs, where the responsibilities of just one or two employees can be critical to daily operations. ▶ What You Should Never Do ① Never assume that employees will stay for the long term An employee leaving after six months does not necessarily mean they have betrayed the company. They may simply be making a decision to improve their career prospects and income. Rather than reacting emotionally, employers should ask a more useful question: “Why did this employee decide to leave our company?” ② Never concentrate all critical responsibilities in one person “We have no one else who can do this job.” If this statement is repeatedly heard within an organization, it is already a warning sign. When a key employee takes leave or resigns, the work may come to a complete halt. Critical responsibilities should therefore be shared so that at least two people can cover each key function. Important documents, customer and supplier contacts, and operating procedures should also be stored in company-controlled systems rather than being kept exclusively on an individual’s computer or personal messaging account. ▶ What You Should Always Do ① Verify practical skills during recruitment Do not rely solely on academic qualifications or employment history. Use practical assessments to evaluate candidates’ actual abilities. For example: Accounting: Give candidates a basic accounting exercise. Procurement: Ask them to compare quotations and make a purchasing decision. Quality control: Present a realistic quality issue and ask how they would respond. Practical assessments can be particularly useful for positions in engineering, production management, accounting, procurement, and quality control, where job-related skills can be evaluated directly. The key is to determine not just what candidates have studied, but what they can actually do. ② Establish SOPs (Standard Operating Procedures) It is more important to build an operation that continues to function without one particular employee than to create a workplace that depends on a single highly capable individual. Develop SOPs, manuals, and checklists for each major task, and document essential workflows. The key question should change from “How many people can do this job?” to “Do at least two people know how to do this job?” ③ Build a structured onboarding process When a new employee joins, simply telling them to learn by asking colleagues is not enough. From the beginning, clearly explain their responsibilities, operating procedures, reporting lines, performance evaluation criteria, and company rules. Initial training is especially important when the working methods used by the Korean headquarters differ from those commonly used by the Indian operation. ④ Consider retention bonuses Instead of continually increasing base salaries, companies can consider additional payments tied to a defined period of service or the achievement of specific performance targets. However, the eligibility criteria and treatment of payments when an employee resigns should be designed in accordance with the employment contract and applicable Indian labor laws. A compensation scheme should not simply mean paying more money. It should clearly communicate the behaviors and outcomes the company wants to encourage. ⑤ Align job titles with actual authority and responsibility In India, a job title or designation can carry considerable significance for employees. Companies should therefore assign titles appropriate to their organizational structure and clearly define the responsibilities associated with each position. Where possible, titles should be accompanied by meaningful decision-making authority. The goal is not simply to offer a more impressive title, but to clarify what the employee is accountable for in that role. ⑥ Create a clear process for emergency leave and returning to work It is difficult to eliminate every instance in which an employee must unexpectedly take time off because of a family emergency. Rather than leaving such situations entirely to individual discretion, companies should establish clear procedures. Well-defined policies covering emergency leave, unpaid leave, and the return-to-work process can reduce the risk of employees resigning altogether because of personal circumstances. ⑦ Build backup arrangements for unexpected absences In practice, an unexpected absence can be even more disruptive than a planned resignation. When an employee gives notice, the company has some time to prepare. When someone suddenly becomes unreachable or fails to report to work for several days, however, operations can be interrupted immediately. Assign backup personnel to every critical function and ensure that essential contact details, documents, and work-related information are accessible to the organization. ⑧ Improve everyday working conditions for blue-collar employees For production workers and shop-floor employees, practical improvements may be more effective than elaborate benefit programs. Good meals, a safe and comfortable working environment, shuttle buses, adequate rest breaks, and timely wage payments can make a meaningful difference. For factories located on the outskirts of cities, shuttle transportation can be a particularly important employee benefit. ⑨ Track resignation reasons as data Whenever possible, conduct exit interviews when employees leave. Rather than recording every departure simply as “personal reasons,” categorize the underlying factors, including compensation, relationships with supervisors, job satisfaction, commuting, family responsibilities, and career development opportunities. One or two resignations may be attributable to individual circumstances. But if employees repeatedly leave for similar reasons, the problem may lie within the organization rather than with the individuals themselves. Ultimately, the goal is not to hold on to every employee at all costs. It is to build an organization that remains stable when someone leaves while creating a working environment in which the people who stay want to continue growing with the company. Closing Thoughts: There Are Still People Who Stay and Grow with You I have been doing business in India for more than ten years. Over that time, I have hired many employees, and many have left. Some moved to competitors after we had invested considerable time and effort in training them. Others unexpectedly became unreachable or took extended periods away from work. At first, I tried to understand these experiences through the lens of Korean workplace culture. “Why do they leave so easily?” “Why do they join another company after we have invested so much in them?” But my perspective gradually changed. Even after more than a decade, there are Indian colleagues who continue to work with us. Some joined as employees but have since become key partners who help us think through important business decisions and make judgments on the ground in India. So when someone asks, “If people in India are always going to leave, is there any point in investing in them?” my answer remains the same: Yes. We should still invest in people. That relationship, however, does not have to be based on the kind of unconditional loyalty to the company traditionally expected in some Korean workplaces. A more realistic approach is to understand each other’s cultures, offer fair compensation, define roles and responsibilities clearly, and build trust over time. Effective workforce management in India does not mean holding on to people at all costs. It means selecting the right people, helping them become productive quickly, building systems that prevent critical responsibilities from becoming concentrated in one individual, and genuinely investing in those who choose to grow with the company. A population of 1.4 billion does not automatically make hiring easy. Systems reduce risk. People create growth. Trust people, but build systems to support them. Build systems, but do not lose sight of the people who make the business work. Perhaps this is one of the most important principles to learn when building a sustainable business in India. It is another lesson I continue to learn through experience—and another entry in my own collection of Lessons Learned the Hard Way in India .