India faces offshore IT skills crisis by 2010

A huge IT skills shortage and poor physical infrastructure could threaten India's position as the leading offshore outsourcing location by 2010, according to a new report.

The report by consultant McKinsey and Indian IT body Nasscom warns that labor market pressures could leave India facing a shortfall of 500,000 IT staff equipped with the skills to work in the offshore outsourcing industry.

Jayant Sinha, partner at McKinsey, said that India faces a challenge in maintaining its dominant offshore IT position.

"The skills and quality of the workforce need to be improved, since only 25 percent of technical graduates and 10 to 15 percent of general college graduates are suitable for employment in the offshore IT and BPO industries respectively," he said in the report.

Sinha said the country's urban infrastructure also needs "immediate attention" with better road and air links between India's high-tech hot spots.

"Urban infrastructure needs immediate attention, as offshoring companies' deal with bottlenecks ranging from power to cafeterias. Further growth will have come to from entirely new business districts outside of tier one and tier two cities," he said.

McKinsey predicts global offshore outsourcing spend to hit $110 billion by 2010 and tips India to capture more than 50 percent of the market if it overcomes its challenges.

S. Ramadorai, chairman of Nasscom and CEO of Tata Consultancy Services, said in a statement: "Today the Indian IT and BPO industry is estimated to be $22 billion. The industry is in a strong position to leverage the global software opportunity and establish India as the premier IT destination in the world."

Andy McCue of Silicon.com reported from London.

[Lolo Gecko]

India needs to start out sourcing IT to China ....

:)

[Suhaspr]

India wont be Facing IT Crisis by 2010!!

Offshore IT skills crisis in India?The question arises only when Solutions delivered are not up to the mark.The important thing that everyone should realize that we are dominant in the IT industry but when the operating efficiencies of the Indian professionals fall that would certainly lead to crisis.Several demands related to Infrastructure have been raised to the government and still remain as demands overdue.Yes Infrastructure would be a critical factor for the future Offshoring of IT businesses.
High salaries is one magical lotion that can retain experienced and highly skilled IT professionals within the country which would certainly add to transition of more IT businesses to India.One has to realise that the IT industry in the US is also dominated by Indian professionals.

[pythonhacker]

India is already facing an IT crisis!

My experiences make me think so. It is very difficult to find top-notch candidats with perfectly honed technical skills in Bangalore. As part of the recruitment process in my company, I see this almost every day.

If you are looking for high quality people, you have to employ some novel searching techniques to find them. It is like looking for needls in a haystack. If you are okay with a few strands of hay, you have a lot to choose from.

http://randombytes.blogspot.com/2005/12/recruiting-blues.html

-Anand

[pythonhacker]

India is already facing an IT crisis!

My experiences make me think so. It is very difficult to find top-notch candidats with perfectly honed technical skills in Bangalore. As part of the recruitment process in my company, I see this almost every day.

If you are looking for high quality people, you have to employ some novel searching techniques to find them. It is like looking for needles in a haystack. If you are okay with a few strands of hay, you have a lot to choose from.

http://randombytes.blogspot.com/2005/12/recruiting-blues.html

-Anand

[phylum--2008]

Hubris Check

As an executive who has hired offshore IT and BPO services from Indian firms, I can honestly say that the quality of deliverables from these firms has been excellent.

However, I can also tell you that the critical factor in selecting an offshore vendor versus a domestic vendor was the price -- not capability. To suggest that India is in a competitive advantage to IT or BPO consultants from the U.S., Europe, or other areas of the world due to superior delivery capability is pure, unwarranted hubris.

Regarding the specific problem of a looming IT skills crisis in India, your suggestion of increasing pay would indeed be beneficial in retaining skill -- but it would also decrease margins for offshore-market firms, and would consequently reduce their competitive advantages. India, like any other country that experiences significant and sudden growth in a market sector, will eventually lose its competitive advantage in offshore BPO and IT consulting, because that advantage is based on efficiency, not capability. A similar analogy would be the way that manufacturing jobs left the U.S. in the 1970's; with the possible exception of the auto industry, the U.S. built quality products, but couldn't do so in a manner that was cost-efficient when compared to Japan. Similarly today, Japanese incomes and lifestyles have improved dramatically, but this now requires Japanese firms to often "offshore" manufacturing to Malaysia, Mexico, and even the U.S. because domestic manufacturing is too expensive. Similarly, as India's burgeoning middle class -- the backbone workers of the country's IT/BPO capability - continues to receive significant wage increases and greater access to improved goods and services, India will eventually lose the cost competition to China, and perhaps even eastern European nations such as Russia, Hungary, and Romania.

Also, suggesting that "the IT industry in the US is also dominated by Indian professionals" is utterly specious. In point of fact, the IT industry in the US is dominated by Americans -- some are of Indian heritage, but many are of European, Asian, and African-American heritage, as well. You would be hard-pressed to find a preponderance of Indian (either ethnic or citizen) consultants or employees in many sectors, such as the massive IT defense contracting sector. Based on recent statistics from the Department of Labor, H1-B's and Green Card holders represent only a small portion of the overall IT labor market.

Reality check

>The important thing that everyone should realize that we are dominant in the IT industry.

You have an interesting misunderstanding of the word dominant. As a country, India did about $17 billion in business in 2004. (Final 2005 numbers are not in yet) As a company, EDS did over $20 billion in business.

Your "dominant" country is about 13.5% behind a single company that isn't even the leader in the field here.

Forgetting the services industry for a moment, and looking at the package software industry, the last time I checked there were exactly 0 Indian companies in the top 100 software companies.


>Yes Infrastructure would be a critical factor for the future Offshoring of IT businesses.

And so is a shortage of skilled workers. According to McKinsey, only about 25% of Indian engineering graduates are suitable for work in multinational corporations.

Also, as the economy of India continues to grow, you will find that more and more resources get diverted towards internal projects.

No trend lasts forever, and the incredibly high turnover rates in India combined with the rampant wage inflation are both signs that this trend is nearing an end.

>High salaries is one magical lotion that can retain experienced and highly skilled IT professionals within the country which would certainly add to transition of more IT businesses to India.

Not only is your English poor, but your grasp of economics is terrible. If you eliminate the game of wage arbitrage, then there is no reason to move work to India.

>One has to realise that the IT industry in the US is also dominated by Indian professionals.

LOL. You are having problems with all forms of the word "dominate". Looking around me, I see the "dominance" of Indian IT professionals working in America is about as pronounced as Indian dominance in world IT markets.

Since scrapping the License Raj in 1991, your country has enjoyed rapid economic growth. But the fact is that India's GDP is about $690 billion (in real dollars, not adjusted for Purchasing Power Parity). Meanwhile, the US GDP is about $12 trillion. Considering that you have more than 3 times our population, I think it is obvious which country is truly dominant.


Steve Larrison
http://www.surviveoutsourcing.com

Ho Ho Ho

Despite being willing to work for cheap, the
Indians have a variety of cultural problems
which prevent them from fixing their problems.

"Magical thinking" and affirmations pretend to
be facts:
>The important thing that everyone should
>realize that we are dominant in the IT industry
>but . . .

Failure to understand the motivations of others,
for example foreign corporations:
>High salaries is one magical lotion that can
>retain experienced and highly skilled IT
>professionals within the country . . .


Complete, head-in-the-sand lack of contact with
the real world:
>One has to realise that the IT industry in the
>US is also dominated by Indian professionals.


IMHO, the larger cultural problems with India
involve (1) a toleration of government corruption
which makes it very difficult to build modern
capital markets or a reliable system of contract
law, (2) Persistent social unrest between the
upper castes, the lower castes, and others (such
as the large Moslem minority), (3) Political
control of infrastructure, which has led to
persistent under-investment.


Having worked with Indian H1-Bs in California,
I must say that I do not like them. Most of the
H1-B immigrants appear to have lied on their
resume, and it is very difficult to get anyone
from that culture to admit that something is
behind schedule or not working. Combined with
arrogance, a deeply held sense of resentment and
a national inferiority complex, this is not a
pretty picture.

I believe that India has made a national goal of
taking over the software industry, and that
destroying the US software work force is the
first step. They are making excellent progress,
due to the fact that corporations are willing
to hire cheap Indian programmers, without asking
hard questions like "How exactly did you get that
visa?", or "Did you really major in CS?".
As we all know, US college enrollment in fields
like CS are down about 50%, due to the perception
that American corporations do not want to hire
American citizen workers.

There is a backlash growing.
India's are only beginning.

[JShah]

Some good points, but many off base

Clearly, the guy you are bashing needs a reality check.

But your broad accusations, based on nothing more than
personal experience, against an entire class of people, are
inexcusable.

The market for H1-B workers certainly does not agree with your
comments. The H1-B program has been around for years now. If
most H1-B immigrants were a scam, they should have been
thrown out of their jobs. If US employers are not getting their
money's worth, they should be unwilling to hire more H1-B
workers. The last time I checked, US employers were trying very
hard to convince the US government to grant additional visas.

Some of your comments don't even make sense - arrogance and
inferiority complex at the same time? How is a 50% drop in US
college enrollments a backlash against India?

Corruption in India is not a cultural problem. It is a systemic
problem. A problem that is found in many poor countries,
around the globe, regardless of their culture.

[c_teami]

Perfect

As per this article, it seems that, there's not even a single American in the world, where he has ever lied or put up with a fake resume.

I am glad to see such a perfect part of the World.

>>I must say that I do not like them
We don't think so about you, although the rest of the world may not feel the same way we do.