A case for Indian IT industry

As the Indian IT/ITES industry exports crossed $30b mark in 2006-07 and Indian companies grabbing some big outsourcing deals, Industry experts were bound to ask, what next?

Indian IT/ITES industry has registered a CAGR of 25% during the last 10 years and with export CAGR of 35%, the industry increased its contribution in GDP from a mere c.1% to c.5% in 10 years. NASSCOM, Indian interface to software and BPO industry, has projected export revenue of $60b by 2010.

All the growth figres fail to reveal that the level of quality and educated workforce required is far greater than the supply and there is a looming danger of economical quality workforce. Industry experts have already voiced their concerns over increasing attrition and high retention costs of the employees. Big companies can manage to hire from tier-II and tier-III cities and then train the employees but smaller companies cannot expend much on employee training and hiring.

A suggested strategy for hiring

Tie-ups with lesser known colleges in Tier-II and Tier-III cities

Statistical data from National Council for Applied Economic Research (NCAER) reveal that India has over
1. 250 universities, 1500 research institutions and 10000 higher education centers.
2. India produce over 1500 PhDs, 200000 engineers and 21 million graduates every year

As a curriculum requirement, most of the engineering graduates have to undergo summer internship. The present curriculum is such that most of the engineering graduates need 2 months of summer internship which is not easily available because companies cannot get useful returns from interns in 2 months. If Indian IT companies enter in strategic relationships with colleges in tier-II and tier-III cities, and the colleges are willing to make 6 month internship a necessary part of their curriculum then IT companies can provide summer internships to these graduates. The companies will have to incur some cost initially but there are 2 benefits of this investment-

1. Companies can get economical workforce for some time because internship stipends are low
2. Companies will be able to hire some of the interns fresh from the college so their hiring expense will be reduced
3. Graduates from smaller cities are more likely to stay longer. This comes from the fact that the placements and job opportunities in smaller colleges are less and the graduates value their job more than their counterparts in bigger cities.

Proponents of the suggested strategy can take heart from the fact that some well known colleges like National Institute of Technology, Tiruchirapppli and Birla Institute of Management, Pilani have a compulsory internship of 6 months in the last semester of engineering.