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NASSCOM exec on India outsourcing issues

31.01.2006
The rapid growth of Indian IT firms and higher demand for skilled workers, particularly project managers, is putting pressure on wages in India. It's also prompting one major software vendor, SAP AG, to begin looking elsewhere for programming talent. Kiran Karnik, president of the National Association of Software and Services Companies (NASSCOM), an IT industry association in India, agrees that wages have gone up, but said the industry is taking short- and long-term steps to broaden the IT talent pool through educational and recruitment efforts.

Karnik spoke with Computerworld about the issue. Excerpts from that interview follow:

Is India getting too expensive? I wouldn't say so. Costs have been going up, but I think the advantages are so huge that cost is only one of the factors that most companies take into account.

How rapid is the IT wage increase? At the entry level it's between 10% and 12% a year. At the middle management level, it's a little higher than that, because clearly that's where the crunch is happening. It's a little more, about 15% to 20% (per year) over the last two years -- particularly when demand has been very strong. But we see that as being a temporary mismatch between demand and supply.

How does that mismatch between demand and supply get fixed? Two things. Market forces are naturally beginning to act and you are getting a lot more people going into areas of high demand like IT [and] computer sciences and so on. On behalf of industry, NASSCOM has taken steps to look at what is the critical problem. It's not so much the absolute numbers [of available graduates], which are large, but the kinds of skill sets that this industry needs. And so we've embarked on a program where we are looking at improving curriculum, teaching and trying to see how we get [to] those who don't get through the selection process [for industry jobs]. How do you raise the quality of education? So it's really a focus on quality in the short-term, rather than numbers ' because numbers by themselves are not the constraint.

But those sound like long-term initiatives and you have an immediate problem, you have wages going up by double-digit rates. What I'm speaking of is the short-term solution. The short-term fix is to do a six-month bridge course or finishing school kind of concept, which really takes those people who are good raw material but don't necessarily have the skill sets. It's not that they don't lack standards, it just that the education that they've gone through doesn't quite meet industry needs. So what they need is six to eight months of additional work on them to get them to where you need them. We see that as being the short-term fix.