MUMBAI (Thomson Financial) - India's senior executives' compensation packages are fast approaching global standards in many sectors as a talent crunch looms large over the horizon.

The demand for senior personnel for corporate India far outstrips supply even as the compensation packages move towards parity with international peers.

While the average total packages on a cost to company basis for senior management range from 100,000 usd to upwards of 300,000 usd annually, India reported the highest average salary increase across the Asia Pacific region in 2006 across all levels and this is still growing at over 15 pct, according to a salary increase survey by Hewitt Associates.

This marks the fourth consecutive year that salaries in India grew in double digits.

'The reason is that its not easy to find the top five people who have the kind of global exposure that companies are looking for today,' says partner in charge in India for Heidrick & Struggles, Arun DasMahapatra. 'As a result, the talent pool is available at a premium,' says DasMahapatra, who is finding it difficult at the moment to find a chief financial officer for a large Indian multinational group.

'The boom is across all sectors,' says vice president Sampath Shetty at TeamLease Services, one of India's major staffing companies. 'Many sectors which were not recruiting earlier have woken up. Engineering companies, shipbuilding, metals, power and infrastructure are all growing at a faster pace compared to the last two years and they've suddenly realized that they need people. Financial services like banking and insurance have taken off. Retail, real estate, hospitality and the rest of the services sector are also seeing very healthy growth. The corporate world needs experienced people to lead some of these high-growth verticals.'

Shetty estimates there is a need for about 5000 vice-presidents over the next two years across all sectors.

As the M&A party continues and Indian companies increasingly make foreign acquisitions in the western hemisphere, recruitment consultants concur that there is a demand for dynamic and knowledgeable leadership to establish new verticals and integrate existing businesses.

'But while there are a lot of Indians who want to return to India, very few of them can actually come back to lead businesses at a global level,' DasMahapatra said.

On the other hand, Indian laws for foreign nationals are something of a hurdle. A foreigner cannot work on the same work permit if he switches jobs. The entire process of foreign registrations has to be followed a second time in case of a job switch.

'We need to make policy level changes to make the process hassle-free for foreigners who have worked overseas in a matured market and now want to work with Indian companies in India,' says Shetty.

In the meanwhile, companies have resorted to project based hiring to get their work done. Like Mumbai-based stockbrokers India Infoline who paid out 10 mln usd merely as a joining bonus to four senior officials from the French banking group Credit Lyonnais to help them set up their investment banking division.

Service sectors like aviation, hospitality and retail all have a significant number of foreign nationals already to overcome the shortage of pilots, general managers and other key personnel.

Korn-Ferry International's managing director for India Deepak Gupta says a recent joint survey on leadership in Asia conducted by the company found that developing leaders for the future and succession planning are the top talent management priorities for companies, particularly for their Asian operations.

Executive coaching companies like Dale Carnegie concur with Gupta.

Dale Carnegie India chairman and managing director Pallavi Jha says, 'Companies today are concerned about the shortage of skilled personnel and the availability of future leaders and managers.'

She adds, 'Its probably one of the reasons that the average age of the CEO has reduced. Today, there are CEOs who are about 35 years of age which was unheard of earlier. As a result, we run a lot more executive coaching programs with regard to various aspects of leadership training.'

However, even she is quick to point out that there is no substitute for experience.

Korn-Ferry's Gupta says there are limits to how far companies can keep increasing their manpower costs, given the need to compete and maintain their bottom lines. 'Companies will be required to adapt to the changing environment and look beyond monetary compensation to other ways of attracting and retaining talent,' he says. 'Companies have no choice but to become an employer of choice.'

rouhan.sharma@thomson.com