The Ringside

Drought forecast for India's technology
reservoir

By KHOZEM MERCHANT
Published: May 4 2006 03:00 Last updated: May 4 2006 03:00

The supply of engineering graduates in Bangalore is struggling to keep up with demand. So much so, it is said, that one influential software company is considering setting up its own university. No prize for guessing which employer, even if the tale is, for now, flattering rumour. Infosys Technologies already runs a "leadership" training centre in Mysore, which is equipped to train 4,500 graduate recruits and 500 additional "future leaders" at any given moment. The issue of the supply of talent hung over this month's announcements of annual results from Infosys, Tata Consultancy Services (TCS) and Wipro, which together account for a third of the revenues of India's booming IT industry.

All revealed another year of scorching growth, adding 30-35 customers each quarter. But when talk turned to sustainability, the words "human capital" loomed.
This trio of IT giants recruited more than 60,000 staff last year, mostly from Indian colleges. TCS says it will add 30,000 this year, and Infosys 25,000.

But where will they find the recruits? India's six distinguished institutes of technologies may be admired worldwide but only a fraction of graduates find leadership roles, the rest becoming foot-soldiers remotely managing the technology infrastructure of, say, a UK utility from Bangalore.

India may produce 2.5m graduates a year, but only 350,000 are in suitable engineering or IT-related jobs. Moreover, a recent report by consultants McKinsey and the IT industry group Nasscom, found that only a quarter of engineering graduates were armed with the appropriate skills demanded by software companies. India was lagging behind rival employment markets such as Malaysia and Hungary.

While India's IT industry employs about 1m people, some 2.3m IT workers will be required by 2010 if the current growth rate continues. Supply shortages could lead to a shortfall of 500,000 - a gap that will threaten India's global lead in the technology service market.

S Padmanabhan, head of human resources at TCS, which last year received 300,000 graduate-level applications for a job at Asia's largest software services company, is in no doubt about the importance of his task: "Human resources is the most strategic issue facing the technology sector," he says.

Similarly, T V Mohandas Pai, who holds the same role at Infosys, says: "The decade ahead will be one of unmatched focus on human resources. The challenge is immense."

So what are the two most important human resource executives in India doing to support their companies' growth?

The TCS chief talks of "widening the pool", which in practice means looking beyond the principal colleges such as the blue-chip Indian Institute of Technologies (IIT), as well as recruiting from second-tier cities such as Indore and Bhopal.

He admits however that "looking wider and deeper" is not without its problems. First there is a large gap in quality between the faculties at the IIT and the more run-of-the-mill engineering colleges. The standard of teaching facilities also varies greatly.

The upshot for TCS is increasing contribution to the less good colleges. The aim is to "make the entry level experience a homogeneous one," says Mr Padmanabhan. TCS not only requires a high standard of applicant, but it needs all of them to be at the same level of attainment. That matters when you are recruiting on the scale of TCS - anything else means more time and money for ironing out problems with accepted applicants.

"The variations are wide," he says. "Within the top 10 per cent the standard is consistent. But the rest requires greater investment, notably in soft skills such as sales and communications." TCS does not confine its recruitment to India either - 6.5 per cent of its staff is non-Indian. It has centres in China, Hungary, Uruguay and North America - about 12 per cent of the 30,000 recruits in the year ahead will be from outside India.

Infosys also employs this strategy. In June, 100 graduates taken from US arts and engineering colleges will arrive at Infosys's Bangalore campus for a year-long training programme, with another 200 from the US joining the programme in the coming months.

The company has already trained 100 Chinese students - mostly to build bilateral ties - and a couple of hundred from Mauritius. It is another bold move for an organisation regarded as having the most sophisticated training infrastructure in India. "They have simply accepted that the only way to [manage attrition and growth] is to train on scale and quality," says an external Infosys director.

Mr Pai's recent appointment as head of human resources is a measure of how seriously Infosys takes the issue of finding talent.

He saw his star rise as finance director when he was the architect of Infosys's listing on Nasdaq, the US exchange - the first by an Indian IT company.

Going abroad will, however, raise the company's recruitment costs. For example, Infosys spends $5,000 to train a graduate recruit over a 14-week programme. Training an overseas recruit has run up bills 3-4 times greater because most enter the company at a higher base level. Infosys trains overseas graduates in India because training in their home territories takes more time and is costlier. It seems it is also easier to impart "Infosys values" in Bangalore, India, rather than in Buffalo, New York.

Two years ago, Infosys had $1bn in sales and 25,000 employees. This year it has already broken through $2bn in sales with 52,700 staff and it is on track for sales of $2.8bn with an expansion of its workforce to 77,000.

So will it set up a university? There's no official word, though here might be a clue: frustration with the lack and expense of hotel rooms in Bangalore have already led it to build a hotel on its campus.