Devyani Vaishampayan, principal of Global HR Consulting which focuses on emerging economies, is adamant on the benefits of tapping into the fertile talent pools of the emerging markets – some organisations have already reaped the rewards.

It would be hard to escape the coverage emerging economies are holding in the media. But is it just because the developed world is facing a recession – or is there more to it?

There are three primary reasons for the increasing clout enjoyed by the BRIC (Brazil, Russia, India and China) economies.

First, there is the reversing rate of economic growth. During 2008-2009, the US were victim to the biggest drop in GDP growth due to the bursting of the housing bubble and rising high prices. The Japanese slowdown is expected to continue while the stronger euro will contribute to the euro zone decline. Although developing economies are expected to slow, however, they still have a stronger rate of growth – especially in Asia.

The second is the huge market opportunity presented through their growing populations. This does mean that organisations need senior management who have lived and worked in these environments and can respond to
them appropriately.

Finally, due to changing demographics, these countries are the future providers of skills and talent. By the year 2010, of the 400 million new entrants to the labour market, only 19 million are expected to come from the developed nations. A large proportion (271 million) will come from Asia and 50 per cent will come from India and China alone. This, combined with rising levels of education and prosperity, will create an enormous talent pool.

While these numbers seem large, in reality the actual availability of talent could be quite limited, particularly for graduates. This could be due to several factors such as limited knowledge of English, quality of education (which tends to be theoretical) and remoteness from offices/production sites.

So how are most western multinationals capitalising on this opportunity? A large number of multinationals have still failed to understand the competitive advantage of this shifting talent profile and continue to recruit and grow talent in the same way they have over the last 20 years. This is particularly true of European organisations where language skills (eg, French, German, Spanish) can be a barrier.

Many organisations still continue to view this emerging talent pool as a ‘cheap source of labour’. Therefore, while there is a willingness to outsource the lower skilled jobs, there is still a lack of strategic thinking around capitalising the advantage gained from the ‘higher skills’ such as research and development, engineering or management. This is, however, not true of technology organisations such as Accenture or IBM, whose employee base in India now is over 50,000 (the largest) and exceeds its home country – the US.

Many global organisations are now concentrating on developing a pool of graduates/managers from the emerging economies in preparation for the market growth there. This is particularly true of banks such as Standard Chartered, HSBC or the oil and gas industries (BG Group).

Some of the most strategic and innovative thinking, however, is seen in organisations such as Cisco and GE, that are attempting to truly turn this source of talent into a competitive advantage. Cisco has set up its first Global Technical Centre outside the US in India – both because of the strong technical skills available and also because of the proximity to Asia and the Middle East (its growth markets).

Using talent from emerging economies as a competitive advantage needs a big mindset shift. Getting the commitment of the senior management and making this a part of the strategic business plan rather than a ‘development’ activity are essential. Developing talent from emerging economies demands a systemic and lengthy commitment in terms of time and investment. Organisations such as Unilever who were far sighted and have been practising it for the last 25 years are already reaping the benefits – recently, two of the four contenders for the CEO’s role were from the emerging economies. This is a huge advantage as their primary growth markets are Asia and Africa.

The pressures of globalisation are requiring businesses to rewrite the rules of the game and talent is an important part of this change. It provides a huge opportunity for HR professionals to play a key business role – providing they are willing to adapt.