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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.

Shweta Verma in New Delhi with Bureau inputs

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