An Indian Civilizational Perspective

Rising Indian IT salaries force Myopic IT leaders to lower standards!

This is a very familiar rant from the Indian companies – that the demand for the talented people in IT is so high that (1) they cannot retain them and (2) the cost of delivery is going high. So what do they do? They go and start hiring folks from non-engineering side and freshers by truck loads! Is that smart?

The productivity in the Indian IT sector is abyssmal by International standards! So, first, before they start blaming the rising salaries for the higher cost and begin to lower their hiring standards.. the managements ought to RAISE their OWN standards! They have to increase productivity so the overall costs of the operations despite the rise in salaries remains low!

For example, how many companies – despite the highest CMM certifications – have standards for every process or even to run a particular kind of project? How many even follow the basic PMBOK project management methodology? How many have knowledge sharing mechanism like SIGs(Special Interest Groups), Knowledge Databases and access/subscription to Knowledge sites?

Most of the companies are looking for the easier way out – lower the hiring standards and increase the number of people! What about the quality? That is none of their concerns! THIS is going to be the single most important reason for the decline in the Indian IT industry. And it has nothing to do with talent.. but with myopia and lack of vision and imagination on part of the Indian Corporate Leaders!

The spurt of the IT services sector in India has seen companies plagued by supply woes in getting the required talent. Companies in a bid to keep the lid down on wage inflation during the year are likely to employ freshers by the bus loads, reported Indiatimes today.

This despite the fact that the growth of the sector is not matched by a growing pool of talent. According to Nasscom, the total number of engineering graduates during the FY06 was 4.41 lakh and for FY07 it is likely to touch 5.01 lakh, showing a growth of 13.1 percent. But only around 25 percent of them are employable by the industry and this is unlikely to show any appreciable increase in the near future.

This talent crunch might result in a slight wage pressure for the IT companies as they look at hiring more number of people. During this year, the top 5 Indian IT services companies are expected to hire close to one lakh people.

Gautam Sinha, CEO, TVA Infotech said, �There is unlikely to be any wage hike for the freshers category as most the companies have already effected their increases in salaries.� It could be stated here that the Nasscom McKinsey report has indicated that the Indian industry is targeting $60 billion in exports by FY10 and this will translate into an estimated demand of 8.5 lakh IT professionals and 1.4 million ITeS-BPO by 2010. As per those statistics, there will likely be a shortfall of 0.5 million professionals by 2010.

Analysts believe that wage hikes and HR issues like attrition are no longer solely the headache for the IT industry. �This is a problem which is spread across various segments. It is not a major issue for the technology companies alone,� Gaurang Shah of Geojit Financial Services told Indiatimes.

A relatively recent trend has been that of IT companies looking at non-traditional routes of employing people to meet the demand. Some companies have in fact announced their decision to hire non-engineering graduates to expand the employable pool.

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