Mar 5, 2007

Indian IT labor Pinch

A scarcity of young, college-educated engineers has turned recruitment in India's fast-growing tech sector into a free-for-all

A few years ago, it would have been unheard of for job recruiters to pay a visit to India's Government Engineering College in Ujjain. The college, in the central state of Madhya Pradesh, isn't anywhere near the top of the nation's technical school rankings, and it's not part of the traditional circuit during the job-hunting season. But these days, corporate types are swarming the Government Engineering College campus, and they're starting to pop up in surprising locales at lesser-known schools.

Consider Shreyans Mehta, who joined Tata Consultancy Services (TCS) last August. The 23-year-old GEC grad had his pick from some of the big names in India's technology sector, including Infosys Technologies (INFY) and Wipro (WIT), but decided to go with TCS, India's largest tech company. "It's a dream come true for me," he says, beaming.

Boom Times

It's certainly a good time to be a young, college-educated techie in India. The country now accounts for 28% of information-technology and outsourcing jobs among 28 developing countries, according to a recent Nasscom-McKinsey report. And it's adding new jobs fast as India builds itself into a global technology-outsourcing hub.

The result: Businesses are whipping themselves into a hiring frenzy. India's Big Three—TCS, Infosys and Wipro—are looking to add a combined 100,000 to their workforce globally. Similarly hungry for talent are giant multinationals such as Cisco Systems (CSCO), Accenture (ACN) and IBM (IBM), which have been beefing up their India-based software development and services.

Cisco aims to staff its Globalization Center in Bangalore with 4,000 new hires. IBM has announced plans for 100,000 new jobs by 2010, while consulting firm Accenture will add another 8,000 to its head count of 27,000 in the next six months. Electronic Data Systems (EDS), which acquired Indian company MphasiS BFL in June 2006, is expected to double its staff of 17,000 software engineers and outsourcing jobs in the next two years. "If you have a business growing 40% year-on-year, boosting manpower is only a given," says Alok Shende, vice-president at research firm Frost and Sullivan.

Hiring Hunt

The competition has become fierce as companies fight over the most qualified college grads. "It has been tough to get people," admits Amitabh Ray, IBM India's vice-president for global delivery application services and consulting.

Corporate recruiters say the process used to be a simple matter of flying to the top colleges and meeting with grads who had the best grade-point averages. Not anymore. "Now we travel by train and rickety three-wheelers to way-out destinations to unearth talent," says a human resource manager at an IT company.

You would think that finding talent in the world's second-most populous nation wouldn't be too hard. An estimated 7 million Indians enter the workforce every year. (In China, it's more than double that, at 18 million.) But there are few engineers among them. That's partly because fewer than 8 million of the country's 200 million students make it through high school, and even fewer finish college. At the nation's 1,200 technical colleges, just 400,000 engineers graduate each year, estimates the National Association of Software & Services Companies, an industry trade body. Among those, only a fourth have the skills to immediately start work at a multinational or major Indian IT firm. Contrast that to 35% of engineers in Malaysia and 50% in Poland and Hungary who can perform the offshore IT jobs that are now migrating to countries where labor costs are low.

Outreach Efforts

Some companies are starting their recruiting efforts early, interviewing college students a year or two before they get a degree. Asha Bhat, 23, who attended Bangalore's Ramayya Engineering College, says that while still in her third year, she went to hear the presentations of visitors from Dell (DELL), IBM, EDS, Accenture and i-Flex Solutions before finally choosing IBM.

Other companies are sending managers as guest lecturers or to help educators improve curricula. For instance, Infosys has begun sharing its training manual with some colleges, while TCS sponsors a masters program at IIT Kharagpur in the eastern state of West Bengal. The wealth of new programs has made it an exciting time to be a human resources chief in India. "It's a bit like changing your car wheels when the car is in motion," says Prathik Kumar, executive vice-president of human resources at Wipro Technologies, India's third-largest software exporter.

Even Kumar's boss, Chairman Azim Premji, has been pitching in. Premji says he's been extending his search to more campuses overseas. Premji travels to colleges in the U.S., Japan and Europe, and plans to add Australia to his itinerary soon. "Now it's a huge thing to have the India stint on your resumé," he says.

Application Overload

The downside to such aggressive recruiting is the deluge of job applications. Last year Infosys received 1.3 million, but picked just 26,000, or 2%. "It's a tough task to filter" through all the applications, says Infosys CEO S. Gopalakrishnan.

And even as companies continue to ramp up their recruitment, they will have to find ways to retain talent. "It's a universal management challenge," says Jerry Rao, EDS vice-president. At many companies that will mean training programs, work opportunities overseas and the fast track for the best and brightest. Says TCS Executive Vice-President S. Padmanabhan: "Everyone here has a new role in 10 to 12 months."