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HR Challenges in The Indian Oil and Gas Sector

The document discusses HR challenges facing the Indian oil and gas sector. It notes that while the sector is growing rapidly, it faces issues like a shortage of talent as the existing workforce ages. Around 11% of the current workforce is expected to retire in the next 5 years, reducing experienced talent. Attracting new skilled workers is also a challenge given the specialized nature of the work. The trends in the Indian oil and gas sector mirror global trends, emphasizing the importance of overcoming these HR issues to support continued industry growth.

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542 views4 pages

HR Challenges in The Indian Oil and Gas Sector

The document discusses HR challenges facing the Indian oil and gas sector. It notes that while the sector is growing rapidly, it faces issues like a shortage of talent as the existing workforce ages. Around 11% of the current workforce is expected to retire in the next 5 years, reducing experienced talent. Attracting new skilled workers is also a challenge given the specialized nature of the work. The trends in the Indian oil and gas sector mirror global trends, emphasizing the importance of overcoming these HR issues to support continued industry growth.

Uploaded by

aiswarya
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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HR challenges in the Indian oil and

gas sector

 Share

There are major implications for the oil and gas sector in terms of the growth path it has charted.
Some of them are:
 The introduction of the New Exploration and Licensing Policy and the subsequent entry
of MNCs in the exploration and production sector have given impetus to the country’s oil
and gas sector. Unexplored sedimentary area of 50% in 1995–96 reduced to 15% in
2009.
 The refining sector is expected to see large investments for capacity augmentation,
quality upgrades, clearance of bottlenecks and the revamping of various refineries. India
is likely to boost its refining capacity by 45% by 2011–12 as against 2008.
 Demand in the petrochemical sector is expected to touch 10 million tons by 2010,
thereby witnessing annual growth of 9–10%. Existing capacities in this sector are likely to
double in the next five years.
 The government’s emphasis on clean fuel is expected to lead to a marked increase in the
city gas distribution business.
Despite all the rapid development taking place in the sector, there is still some concern.
 The oil and gas industry in India currently faces talent shortage:Our study suggests
the industry is likely to require around 25,000 additional professionals in the next five
years due to business growth and retirement or attrition in the sector.
 Aging workforce is a cause of concern: In line with the global trend, the average age
of workforce in the Indian oil and gas sector is high. Around 50% of employees have
more than 20 years of experience, and the majority is due to retire in the next 5–10
years.
 Employee retirement in the sector is expected to peak over the next five
years: Around 11% of the current workforce is estimated to retire in the next five years.
This is likely to significantly reduce experienced talent in the oil and gas sector. The
sector may also face 34% of employee retirement at the middle-management level.
 Attracting right talent has become a challenge: Another cause for concern around the
loss of industry talent is that skill sets in this industry are highly specialized and difficult to
develop and acquire. Thus, the impact of losing industry professionals with five or more
years of experience is likely to be of high magnitude.
The trend in the Indian oil and gas industry compares with the
global trend. This report analyzes the HR issues the industry is facing and how important it is to
overcome those, in the light of the industry’s growth.

Implications for HR strategy and operating


model in oil and gas

Taken together, the industry disruptions and fundamental


changes to HR across industries described have deep
implications for oil and gas companies’ HR functions. In light
of this, oil and gas companies must consider refreshing their
HR strategy and rethinking their HR operating model.
Would you like to learn more about our Oil & Gas Practice?

HR strategy

At a time of rapid advances in artificial intelligence,


automation, and human-machine interaction, people will
remain core to oil and gas companies (and their HR
functions). In fact, at all levels of the organization, each
employee will need to create ever more business value. Given
this reality, and the wide productivity differences between
average and top performers, HR’s strategic importance is
increasing. In particular, HR will create value by identifying
the right person for each job in a more fact-based manner,
and supporting these people to perform to their full potential.
Thus, HR must shift its focus further toward its strategic
role—with the CHRO emerging as a top adviser to the CEO,
within the “G3” consisting of CEO, CFO, and CHRO. Similarly,
the G3 model should be replicated in business unit and
project leadership teams, with HR leaders taking on more
strategic roles and freeing up business unit leaders from
strategic HR responsibilities.

To get started on this journey, oil and gas companies can


consider prioritizing four strategic actions:

1. Provide more tailored development for key employees to support them in


their role and context.
2. Drive the shift from programmatic change to continuous
improvement, for example, work toward empowering leaders and pilot
alternative operating models.
3. Develop a road map for people analytics with a combination of proven
techniques with a clear link to value creation and more experimental, but
high-value applications.
4. Build out your digital talent strategy to support each business area in
responding to technological advances.

HR operating model

Within each organization, we also observe a number of areas


where a refreshed HR operating approach can unlock
significant value.

Digital skills and capabilities: As in other areas of oil and gas


companies’ business, artificial intelligence, analytics, and
digital tools will also provide value-creation opportunities
within the HR function. Therefore, HR itself must start to build
capabilities in these fields.

Particularly, HR must develop in-house translators. Such a


translator is a person who understands not only data and
analytics but also strategic HR capabilities like business and
industry knowledge. The translator acts as a “product owner”
when the company considers external people analytics and
other digital solutions, ensuring that external teams focus on
solving the problems that will create the most business value.
Similarly, the translator works with internal business leaders
to understand their needs and facilitates changes based on
analytical insight.

Pool-based, “flow-to-the-work” staffing and flatter HR


organization:Artificial intelligence and digital tools also allow
traditional HR service delivery with fewer HR people—even
compared to the already significantly reduced HR workforce
of today. This is true not only for standardized tasks like
payroll, but also for judgment-based tasks like advising
employees on relevant training programs.

In fact, we believe that in-business HR will be reduced to little


more than the HR leader as a close adviser to the business
unit/project leader in a G3 formation together with finance.
Similarly, corporate HR will remain small and strategically
focused, while remaining HR practitioners move to a pool-
based model.

With flow-to-the-work staffing, needs for HR expertise are


reported and people allocated by a dedicated staffer, who has
a dual responsibility for meeting business needs while
providing personalized development for HR people. We know
that several companies are already exploring these types of
models in other areas, and we see companies that are
successfully doing the same in HR (Exhibit 2).

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