Oil & Gas Industry: The Talent Conundrum
Amit Otwani
Senior Consultant
Aon Hewitt
Seema Arora
Consultant
Aon Hewitt
Oil & Gas (O&G) resources form a major part of our energy consumption mix and influence our
lives in
many ways. Of the few industries that permit 100% FDI, the O&G sector provides an environment suitable for
investment and
participation, fueling growth. This provides immense opportunities for investors to build and grow businesses in
India. The
opportunities are not without their unique set of challenges and one of the most important challenge is human
resources. It
is increasingly relevant to understand the exploration and production industry and its unique talent challenges of
cross-
border mobility of talent, the expanding talent demand and supply gap, diversity implications and the rewards
strategy
adopted by organizations to manage these challenges.Oil & Gas (O&G) resources form a major part of our
energy
consumption mix and influence our lives in many ways. Of the few industries that permit 100% FDI, the O&G
sector provides
an environment suitable for investment and participation, fueling growth. This provides immense opportunities for
investors
to build and grow businesses in India. The opportunities are not without their unique set of challenges and one of
the most
important challenge is human resources. It is increasingly relevant to understand the exploration and production
industry and
its unique talent challenges of cross-border mobility of talent, the expanding talent demand and supply gap,
diversity
implications and the rewards strategy adopted by organizations to manage these challenges.
The India story
India is the world’s fourth-largest energy consumer; oil & gas account for 37.3 percent of
total
energy consumption. The Indian O&G sector is projected to touch USD 139 billion by 2015 from USD 117 billion
in 2012. The
sector is largely dominated by state-owned entities – upstream being dominated by ONGC, whereas midstream and
downstream by
IOCL.The New Exploration Licensing Policy (NELP) of 1997-98 was envisioned to deal with the ever-growing gap
between demand
and supply of gas in India. To meet the demand, the government has adopted several policies, such as allowing 100
per cent
Foreign Direct Investment (FDI) in several segments of the sector, including petroleum products, natural gas,
pipelines and
refineries
Talent Implications
1. Huge gap between demand and supply of talent
O&G sector in India is facing a serious talent crunch especially for technical functions like
drilling,
petroleum engineering, geologists and geophysicists. According to a recent study done by Booz & Company, by
the end of the
decade, the demand for key technical positions is going to exceed supply by 30%. The sector’s workforce is
aging and
the current profiling indicates that an alarming 68% of employees are over the age of 40 and over one-third of
them will
retire by the end of this decade. The mass retirement will lead to erosion of technical capability of any
organization which does not respond in an effective manner.
2. Cross-border mobility of talent
The war for talent in the exploration and production sector has intensified in the last few years
with the
investment of foreign players in the market and cross-border mobility of talent especially to the Middle East
markets.
Employees are not hesitant to take positions in the Middle East due to better career opportunities, attractive
rewards
programs, relaxed taxation schemes and its proximity to India.
3. Diversity of workforce
With the oil & gas talent becoming globally mobile, it leads to other wide-ranging human
resources
implications. Consider this
- 15-20% of employees across organizations are expats
- More than 60% said they expect an increase in female representation among professionals just
entering the
industry and those early in their career The above considerations imply that the human resources team in O&G
companies will
work harder in order to manage the diverse requirements of a globally mobile multi-cultural workforce.
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