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War for Talent

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DQI Bureau
New Update

Country: India. Population: 1 billion-plus. If that sounds like too many
people, think again. Plug in English-speaking and low labor costs, and suddenly
we can envision $50-billion software exports target by the end of this decade.
Not impossible, if we consider the scarcity of IT manpower across the world.
Take a look at the US, already with a 10- million-strong IT workforce, which
needs to fill 1.6 million new jobs in the next one year or Europe where a
shortage of over 200,000 IT professionals is projected.

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Most of the manpower employed in IT companies consists of qualified engineers.Japan
is no different and estimates close to a million new jobs. Germany is looking
for 20,000 IT specialists and Italy is seeking 15,000 additional manpower. Their
choice destination–India.

Ironically, the country which has been such a popular people resource for the
IT industry the world over, is struggling with numbers to meet its own demand.
To meet the overall software and services (domestic and export) target of $87
billion by 2008, according to the Nasscom-McKinsey report, the country will
require a minimum of 2.2 million knowledge workers for its domestic needs. This
implies that the present strength, which stands at 410,000 (December 2000), has
to increase about five times, not just in quantity but in quality as well.

According to industry estimates, majority of the demand for manpower will be
in the area of IT-enabled services. While Nasscom puts the requirement at
11,00,000, MIT says IT-enabled services and e-business will need 12,70,000
workers by 2007. Experts insist that since this sector does not require very
highly skilled manpower, we can easily meet this demand. "IT-enabled
services is a wonderful opportunity for India and for such services you don’t
need highly skilled professionals. You just need smart graduates who can speak
English, all you need to do is train them. For instance, in a call center, they
need to be trained on accents and customer services," explains Navyug
Mohnot, executive director, QAI.

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Skill scarcity

There is an interesting paradox here. While on one hand, IT-enabled services
is emerging as an opportunity, on the other hand India is also moving up the
value chain in the area of software development. This means there will be an
almost equal demand for skilled professionals. For instance, MNCs such as
Microsoft or Oracle, which were earlier doing only low-end R&D work in
India, have now started doing hardcore product development.

According
to DQ Top 20 estimates, 41% of the skill set in domestic companies constituted
qualified engineers, the proportion was even higher at 62.4% for software
exporters. The HRD Task Force on IT observes: "Though the work in software
industry is relatively non-technical and requires mostly logical and methodical
work and a familiarity with development tools, however, the industry prefers
engineering graduates."

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The handful of IITs and regional engineering colleges in the country are
certainly not equipped to meet this demand. According to estimates based on the
ministry of HRD and Nasscom-McKinsey reports, in order to meet the requirements
of skilled manpower, technical education must at least triple in scale, implying
that the intake has to increase by over 1,00,000 per year. It recommends setting
up of IITs/IIIT/IIISc in every state and industry-led funding for improving the
infrastructure and existing educational facilities.

Although MIT has also proposed to invest Rs 2,710 crore in the next three
years, the issue of skilled manpower seems to be stuck in a vicious circle. A
large number of technical institutes would need a number of skilled people as
faculty. And that’s another growing area of concern for the Indian IT
superpower dream. "Engineering colleges are already facing a shortage of
staff and it is becoming increasingly difficult to get good people for teaching.
If the industry offers them five times the salary, why should they join
us," says MP Gupta, assistant professor (MIS), IIT Delhi. As per the HRD
ministry’s survey done in AICTE-approved institutions, the teacher: student
ratio varies from 1:39 to 1:52 (average being 1:45) for IT courses, against
AICTE norms of 1:15. With such prevailing scarcity and only becoming worse, can
India churn out high quality IT professionals?

Push and pull factors

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The shortage of technically qualified manpower seems to have initiated a
tug-of-war. Although the domestic industry has grown at a fast pace, the lure of
the Silicon Valley continues to attract Indians. So, in addition to the national
demand, an increase in international demand by 20% will add to the pressure,
says MIT. "It is difficult to say whether migration will increase or
decrease, but it will certainly continue to be an issue specially with the IT
industry. It is the dream of any smart engineering graduate to go abroad and why
shouldn’t he go if he gets more opportunities there," says Purva Misra,
HR consultant, Hewitt & Associates.

The China Threat

As the Indian IT professional becomes a
scarce commodity, the industry looks for alternate options. China is fast
emerging as a potential threat
  • Although China’s present
    pool of 30,000 software professionals is much less than India, the
    country is already becoming popular as an outsourcing base

  • India has always had an
    edge because of its English-speaking population. But the Chinese
    government is now taking steps to organize English teaching programs
    to solve the language problem

  • A high-end Chinese
    professional comes at $20,000 while an India costs $12,000 per year.
    But once the resource builds up, manpower there expected to come down
    by 15—20%

  • Chinese software
    professionals have better skills in open source code such as Linux

  • The Chinese government is
    promoting apps developed on such platforms

  • According to a Goldman
    Sachs report, China’s expertise in open source code technology will
    strengthen product development

  • Indian IT bigwigs such as
    TCS, Infosys and Wipro have already started exploring the possibility
    of outsourcing their development work to China.

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Movement within the domestic industry poses yet another challenge. As the IT
professional has more options to choose from, his mobility from one company to
another is also very high. "Demand creates a supply toggle situation and
since IT professionals are operating in the demand market, there is a natural
mobility that’s found there, there is pull and push factor too that adds in to
the dynamism," says Preeti Pandit, HR manager, Alopa Networks. According to
Nasscom, in the year 2000, the software professionals’ attrition rate was
estimated at 16%, slightly higher than 14% seen last year. "An average
knowledge worker spends about 18 months in a job. The present generation is very
ambitious and factors like loyalty are slightly down the scale of reasons to
stay back," says Poornima Shenoy, VP, teams and network, E4E.

If the industry wants to achieve its targets and sustain growth, it needs to
drastically ramp up its approach to manpower planning and become much more
proactive. Whether it is through increased technical institutes or better work
opportunities to satisfy the ambitious Internet generation, you need to do more
to nurture and retain the talent resource. Otherwise, the demand-supply gap
could be a big hurdle in India’s dreams of becoming an IT superpower.

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Shweta Verma in New Delhi with Bureau inputs

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