The HR Time Bomb

India, despite being one of the five largest economies in the world in terms

of purchasing power parity, is ranked at #128 among 174 countries in the UNDP’s

Human Development Index, 2000. In the same year, the country was placed at #49

in the Global Competitiveness Survey among 60 countries. In the previous two

years, India’s ranks stuttered at #39 and #53. Worse, the general perception

is that India’s efforts in R&D have not been intensive enough to create a

globally competitive economy.

While the recent Human Development Report categorizes India as a ‘dynamic

adopter’, it’s rating on the Technology Achievement Index is far behind the

leader countries–the US scores 0.733 and Finland 0.744, against a dismal 0.201

notched up by India..

LOOMING MANPOWER CRUNCH: While demand for knowledge workers is expected to see a near-three-fold rise, from 416,000 in 2001-02 to 1,176,240 in 2004-05, supply will just about double, from 428,000 to 875,000–a shortage of 301,240 IT professionals

Lest this numbers game gets difficult to keep track of, here’s the simple

lowdown–there’s a manpower crunch lurking in the shadows. And the beast of

burden here would perhaps be the Indian IT training industry…which has just

closed a very tough, very slow year.

The bomb is ticking over



How? Well, club the numbers given above with the debilitating fallout of the

IT-led slowdown–the benchings, sackings, profit warnings, negative growth et

al–on the psyche of all those aspiring for a career in the knowledge industry.

What we have here is a time bomb, potentially life-threatening and ticking over,

waiting for a trigger.

Zee Interactive Learning Systems CEO Dilip Mahapatra believes that the lack

of interest in IT and IT training courses is a "temporary phenomenon"

triggered by "environmental factors", not by a real lack of interest

in IT. Aptech Training chief Pramod Khera insists that what’s happening to the

industry is "not because of any thinning of student interest, but only

because students are far more discerning today".

Tata Infotech’s Rahul Thapan feels things "would be okay, provided

that training companies tailor courses to suit changing industry needs".

Ask market leader NIIT, and it smugly points to a sharp jump in registration

numbers.

No one, however, is willing to talk revenues or where they are headed.

The biggest indicator of this is the single voice in which the annual results

of most IT training companies are talking–every single one has shown a sharp

decline in registrations for long-term courses. Also, the number of students

opting for information technology, computer technology, or electronics in

engineering colleges has been sliding. To make matters worse, almost 20% of the

professionals passing out with degrees in infotech are not joining the IT

industry–a very high wastage factor, considering that there are very few

high-quality institutes and passouts therefrom to begin with.

New KM: Kahan manpower?



Tata Consultancy Services CEO S Ramadorai says, "Looking at this against
the backdrop of Nasscom’s $87-billion target for the IT industry by 2008, we

would need a ten-fold increase in management and leadership talent.

Hypothetically, if an individual is able to earn $40,000 for the industry in

2008-09, we need 25 people for each million dollars, 25,000 for each billion

dollars and close to two-and-a-half million for an $87-billion industry. The

challenge lies in our ability to find, train and meet the aspirations of such a

large set of talented people."

To avoid getting lost in the numerous HR issues and challenges before the

Indian IT industry (read software) we decided to focus on the most basic issue–"Can

India produce the adequate number of knowledge workers to meet the Year 2008

target?" The answer would have to be a vehement NO, even in the mid-term.

According to Dataquest estimates, while the total demand for knowledge workers

is expected to increase almost three-fold, from 416,000 in 2001-02 to 1,176,240

during 2004-05, the supply would only double from 428,000 to 875,000 during the

same period–a shortage of 301,240 IT professionals.

Interestingly, while the country had surplus resources of 12,000

professionals in 2001-02, FY 2002-03 is expected to prove a borderline year,

with a drastic 85% drop in surplus numbers. The simple logic for this behavior

is the sharp drop in registration for long-term IT courses since 2001–the same

time that IT majors like NIIT officially issued profit warnings and the media

started painting dismal pictures of Indian IT’s condition. According to a

Merrill Lynch report on the top IT education companies, "The key takeaway

on Indian education industry, based on the results of both NIIT and SSI, is that

contraction of industry in FY 9/2002 (YE September) will likely be higher than

originally anticipated. While both NIIT and SSI have forecast education industry

contraction of 20% for the period, early signs indicate a significantly higher

number, considering the 51% and 44% declines seen YoY by both companies in the

December quarter."

While NIIT has been announcing a huge growth in enrolments during the quarter–up

by 200% YoY–this cannot be used as an industry-wide yardstick, or a sign of

renewed interest in IT courses. While NIIT has weathered the storm better than

most other players, most of this jump in numbers has come from its low-priced

Swift program and its ‘Million Registrations in a Day’ campaign in December,

2001 to commemorate its 20th anniversary. Notes Merrill Lynch, "The huge

growth in enrolments at NIIT is mainly due to the introduction of the low-priced

(Rs 500) version of its Swift program. It accounted for 130,000 of the 160,000

enrolments for the quarter."

Government push is a must



To find out the reasons that could lead to the shortfall in human capital

for the IT industry, Dataquest checked out how other countries in the region

were handling the HR issue. China proved to be one of the best case studies. The

country is a manufacturing giant and has similar aspirations for the software

sector and already has a huge demand-supply gap. India, on the other hand, is a

big name in software but is striving hard to become a true global leader in the

sector, while also nurturing a hardware dream.

According to a Gartner report, while China needs about 350,000 IT

professionals, its annual supply is pegged at just 50,000. Worse, while most IT

professionals, especially university graduates in the country, are comfortable

reading and writing English, they have limitations when it comes to spoken

English. There are a number of private schools in China offering courses in

spoken English.

So what is China doing to pull through this challenge? A recent Nasscom

report suggests that the country has been making quantum leaps in gearing

students with IT and English language skills over the last two-and-a-half years.

In one such initiative, the top ten universities received in excess of $200

million from that country’s ministry of education, and were encouraged to have

R&D alliances with leading international companies and academia. The tieup

between Shanghai University and the University of Michigan is just one example

of such initiatives.

Has India even started to think of such plans? If the obvious answer to that

one is not convincing enough, chew this–all the IITs in India have a total

budgetary outlay of $17 million, against $200 million that China intends to

spend only on English teaching and developmental work.

After IITs, there’s a vacuum

According to Nasscom’s Strategic Review 2002, higher education institutions in

India are losing their ability and credibility in connecting the various

stakeholders in rich and productive partnerships. "Except for some islands

of excellence–IITs, IIMs, and Department of Chemical Technology–not a single

Indian varsity finds a place in the ‘Top Ten Asian Universities’ listing

prepared by AsiaWeek. What’s more, even the ‘islands of excellence’ are

finding it difficult to sustain excellence in teaching and research in a

dynamically changing scenario," the report adds.

Besides, with almost all institutions being stretched to the limit, the

number of quality graduates and post-graduates emerging out of the higher

education system is not significant enough to make a meaningful difference to a

large country like India. For instance, the country produces about 1.6 lakh

engineers per year, but only about 3,000 engineers (passouts from IITs) are of

international quality. This is under 2% of the total engineers graduating every

year. Experts, however, suggest that the country can produce additional 25,000

quality engineers by just improving the infrastructure of 50-60 second-tier

institutions.

R&D, new tech hold the key



TCS’ Ramadorai suggests that the industry and government need to recognize
that ‘one size does not fit all’ and that different levels of skills and

knowledge sets would need to be imparted to meet the manpower challenge. Aptech’s

Khera agrees, adding that India needs to produce three types of IT manpower–experts,

programmers and literate executives, businessmen, government officials…

LOOMING MANPOWER CRUNCH: While demand for knowledge workers is expected to see a near-three-fold rise, from 416,000 in 2001-02 to 1,176,240 in 2004-05, supply will just about double, from 428,000 to 875,000–a shortage of 301,240 IT professionals

"Indian engineering and management institutes have to focus on producing

the first category of experts. Continuous investment by these institutions on

R&D and technologies is mandatory. The quality of these experts will

determine how fast the Indian IT industry moves up the value chain and maintains

it’s lead over the other countries like China, Korea, Taiwan, Japan,

Philippines and Russia. This is the first part of the IT education strategy that

India should adopt," explains Khera.

Others infer that large software companies should move away from using their

trained experts for programming. In the past, MTech’s from IITs and regional

engineering colleges have been recruited as programmers by these organizations–a

job that doesn’t require very high skills. The programming job has been

reduced to writing code for components or modules that form a large library,

which is used by system designers and software engineers to integrate and

develop large applications. "Coding can be taken care of by ordinary

graduates who have been trained to program," says Khera.

The third aspect is to go to the grassroots and create an IT culture from day

one. Here’s where the formal education system has to play its part–schools

and colleges have to incorporate computer education as a part of the curriculum

right from the primary levels. And while the government has to chip in with

funds and grants, the private sector can help by supplying the knowhow and ramp

up the training of teachers.

And its not just manpower for software that is the order of the day–hardware

and its potential seem to have been lost on most, but not on Zensar Technologies

global CEO Ganesh Natarajan. "If you look at the success stories, initially

in Taiwan and Malaysia, and now in China, you will realize that becoming the

chip design and manufacturing center of the world has enormous export potential.

India’s opportunity lies in design, leaving the fabrication to lower-cost

nations like China and Vietnam. For this, formal degree and diploma programs in

microelectronics will have to be made available. This could be a national

initiative led by the government, one in which even Aptech and NIIT could

participate, instead of flogging the software training horse beyond its natural

life," says Natarajan, who was heading Aptech before this assignment.

Our people put us ahead



Says Ramadorai, "Building a thinking professional requires excellence

in the school and varsity curricula. It also mandates that industry takes up the

responsibility for continuous education and leadership development. Industry has

to come forward in a big way to rebuild the capacity to suit the need of the

future. We should join in creating our agenda and work in unison. People are our

most important assets. Their collective minds will be wealth-creating assets. We

need to debate on curricula, research agenda, management of education and the

funding and management of educational and research institutions."

Others feel we need to take stock of the changing business environment–from

being a largely agrarian country to aiming to be the global leader in IT. The

government’s education policy pushed the creation of new universities,

engineering colleges and basic and applied research institutions. The results

can be seen in the country’s space and nuclear programs.

We are at an inflection point. It is in this context that we need to have a

review of our educational system and research establishments, so that we are

able to take our due place in the emerging knowledge economy. A systematic

review of present educational and research investments is necessary, and we need

to evolve an ecosystem for education and research that will become our most

important investment for the future.

Shubhendu Parth, in New Delhi