How Is Gujarat's Rise as a Business Hub Shaping Your HR Strategy?

After going through several reviews, it appears that Gujarat is becoming the new 'China' to its neighbors due to the following observations:

- A preferred investment destination over neighbors.
- Favorable work environments due to the workforce characteristics.
- Responsive government that is focusing on strategic resonance with corporates.
- Financial gains through tax breaks and other instruments.

Impact on HR Strategy

As HR professionals, how do you think this will affect the HR strategy of your company? I would like to hear concrete answers, please.

Regards

Regardless of the environmental considerations you have brought up, China has emerged as a superpower and is increasingly playing a vital role in most strategic considerations. Industries close to Mumbai have been forced to shut down because they are unable to cope with the pressures from China. Unlike India, China has become a superpower. It has become a hub for both manufacturing and services.

China, being a different political entity, can always be 'controlled' to some extent by using trade barriers, etc. Yet, it is important to note that your need for competitiveness in the global market might force you to ensure that you innovate on your strategy.

Strategic Perspective on Gujarat

As regards Gujarat, you need to view it from a strategic perspective. An economic analysis from an HR perspective on the 'strengths' and 'weaknesses' would be more meaningful to this discussion than a pure environmental analysis, especially from a leading consultant like you.

Labour problems are abundant in Maharashtra, and it is said that reverse immigration is one of the key drivers adding to the blues.

Let's hear what the others have to say. You could have as well dropped me a private mail than distracting the focus :-)

Regards,
Nikhil

Dear Mr. Nikhil S. Gurjar, Ok. Let us keep pollution aside. Even then, you have not given any points that oppose what you have said. SWOT Analysis is one of the important strategic tools. What you have mentioned are only the strengths of Gujarat. Where are the weaknesses? Where are the threats?

Is it economically viable to relocate industry from another state to Gujarat? Outsourcing manufacturing activity by American or European companies to China is one thing, and diverting manufacturing from other Indian states to Gujarat is another. In fact, the Gujarat model and China are completely incomparable.

China's success was because of an artificially depreciated Yuan as well. Secondly, wages are rising in China, and this country is no longer a viable destination for manufacturing. A large number of American and European countries are seeking alternative destinations. Vietnam and the Philippines are the two most desired destinations. In the last month, all the major financial dailies like The Wall Street Journal, Financial Times, The Economist, etc., have published articles on this subject. Ashok Mitra, a prominent economist, always said that the Chinese bubble would burst one day. It appears that the chickens are coming home to roost and will pop this bubble.

What about the chickens of Gujarat? Is it that there are no chickens at all?

Ok...

DVD

This is not a discussion about Gujarat but rather one that asks you if you are incorporating it into your HR strategy, and if yes, how are you doing it. Your company could be anywhere else in the country, but you might have to incorporate this "G" factor just as you need to incorporate the "C" factor. We are not comparing Gujarat with China; only the effects could be similar from a strategic perspective. Hope you are getting the subtle difference.

Regards,
Nikhil

I think you totally misinterpreted my question :-) If you think HR professionals shouldn't think strategically on such issues (as they are EMPLOYEES...), well, I think there is a fundamental dichotomy in what we are saying. I am not shifting to Gujarat. Neither am I from that place. And I am not promoting a community or a state, but let me explain what has been happening during recent discussions with many companies around this area. I will provide you with 2 examples, not more:

1. Many Gujaratis used to work in companies in and around Mumbai. Also, a lot of Biharis and UPites. With the changing trends, most of these workers are going back to their states. This is causing HUGE problems for industries here as they are not able to find a workforce that could replace them. Some have started looking at outsourcing strategies to help fill this gap, while some others are trying to redesign their organizations. These are some of the HR strategies as responses. There might be many others who might be doing nothing, but everyone realizes that it is becoming increasingly difficult to get replacements even at Class IV level. Whether you like it or not, if you turn a blind eye towards this kind of phenomenon, you are really not incorporating the G factor.

2. Tax holidays are still in vogue and if you have studied the Indian industry, it is highly 'cost' sensitive for good reasons. Well, a tax holiday could benefit a company directly by up to 10%, which is a very high figure to gain just by the location. Moreover, most tax holidays in other states are coming to an end (as they began rather early)! This is putting additional pressure on other companies when it comes to keeping their competitive position through cost leadership. Under these circumstances, there are only a few ways in which you can offset the disadvantage. One of the ways is through HR Strategies. Want to know if any of the HR folks on this forum are doing anything actively in this area.

Hope this clarifies to some extent.

Regards,
Nikhil

Interesting insight, Shaik. I'm glad to note the contents. Here is an article along similar lines: Business Line: Columns / C P Chandrasekhar & Jayati Ghosh: Growing differences in state per capita incomes. I am sure you will appreciate the concerns that HR professionals may have. I am still waiting to hear from other HR professionals.