ST Team
Thursday, November 1, 2007
India, lowest IT paymaster
In the survey ‘IT pay around the world survey 2007’ conducted by Mercer’s, India has been named as one of the lowest paymasters for information technology (IT) managers.

India was ranked fourth from the bottom. The survey noted that Indian IT managers get paid an average salary of $25,000 a year. It further revealed that IT managers in Vietnam, Bulgaria, and the Philippines received the lowest pay at $15,470, $22,240, and $22,280 a year respectively.

The survey compared the total annual cash compensation and total remuneration information for IT staff in 6,545 companies across 35 different countries. The survey revealed that the low wage structure is the key attraction to outsource work to Indian IT companies. This will act as a catalyst for robust growth in the $40 billion Indian IT industry.

“India continues to be among the leading destinations for IT development, given its cost advantage. Salary inflation and talent shortage could emerge as key challenges in maintaining its position as a favorite destination. There is also an increasing evidence of India’s growing stature and presence at the high end of the software value chain, where cost advantages may not be the only driver for future growth,” says Gangapriya Chakraverti, business leader, Information Product Solutions, Mercer (India).

The study also identified the “yawning gap between junior and senior career streams” in developing countries such as India. Indonesia, Brazil, Chile, and Vietnam along with India have been identified to have the highest gap in the pay progression ratios between the lowest and the highest career streams.

“This reflects a lack of hierarchy in Western IT functions. In these countries, companies need to be more creative to attract staff. There is more focus on variable factors to attract staff, such as bonus schemes, while in low-paying countries, the emphasis remains on cash compensation,” says David Conroy, a Principal in Mercer’s London office.

Kerala IT sector hits lowest attrition rate
Kerala’s IT industry has a good reason to feel elated. Compared to the high rates of attrition in the industry across the country, Kerala has the lowest rate at a mere seven percent.

“In other states, the attrition rate is as high as 20 percent. In terms of companies in this sector and in terms of number of employees, Kerala’s IT sector has grown dramatically. Today in Technopark, Thiruvananthapuram, there are 127 big and small companies which employ around 17,000 professionals,” says Sunil Gupta, president of Gtech, an association of IT companies in the Technopark campus here.

Better opportunities, good pay scales, and a preference to stay near their families have contributed to this rate, he said. The other big IT center in the state is Kochi, employing around 10,000 professionals.

“In Gtech, there are 45 big IT firms and we do have an understanding that our members will not take any employee who leaves within three years of joining a firm. This is because companies spend a lot on providing training. This is only for three years. The situation is the same in the IT park,” says Gupta.

M. Vasudevan, a top Technopark official, agreed that this was a healthy condition and, barring Infosys, most major companies follow this rule.

IT sector in Kerala is growing at a tremendous rate, with the software exports touching Rs.10 billion this year. With the proposed Rs.15 billion Smart City project to come up at Kochi, to be built by Dubai Internet City, the sector is expected to register a huge boom. Chief Minister V.S. Achuthanandan has also cleared the Technocity project to come up in a 507-acre campus, near the Technopark.

TiE holds Jalebi Management for its members
The Bangalore chapter of TiE (The Indus Entrepreneurs) recently held an educational meet for its members. Shombit Sengupta, an international business strategy consultant, was invited to address the gathering about his newly released book, Jalebi Management – All stakeholders can enjoy a bite. Using ‘Jalebi’ as a metaphor, Shombit talked about the need for innovation in a billion people country like India. He also explained how innovation could be driven in India and what would be the future if such a transformation is brought about. Browsing through the chapters of his book, Shombit equated the complexity of business management to the fascinating, asymmetrical ‘Jalebi’. He associated the several curls of a ‘Jalebi’ that touch one another to the seamless interconnections that organizational processes and functions must have to make their deliverables appetizing.

How can the jalebi, which represents the sweet desire of a billion plus people of India and such other developing countries, weave global business? When sophisticated developed countries are zeroing in on India and China for markets, manufacturing, and back end support for product and service development, Shombit showed how to handle tomorrow’s overly competitive business world, and how to win markets with inventive power.

Responding to the queries of the young entrepreneurs that thronged the hall Shombit said, “Consumers across the world say they don’t understand business jargon. Through Jalebi Management, I hope to describe the different concepts practiced in corporate management in a language that every one of us outside the world of business would readily understand. Reading about business in the consumer’s words may help us, the management professionals.”

TiE was founded in 1992 in Silicon Valley by a group of successful entrepreneurs, corporate executives, and senior professionals with roots in the Indus region. There are currently 12,000 members in 45 chapters across 10 countries. TiE aims to foster entrepreneurship globally through mentoring, networking, and education. Dedicated to the virtuous cycle of wealth creation and giving back to the community, TiE focuses on generating and nurturing the next generation of entrepreneurs.

India becoming top global innovator
India is increasingly becoming a top global innovator for high-tech products and services, says World Bank in its report and recommends new ways to be explored to leverage the entrepreneurs and technologists of its Diaspora.

The report ‘Unleashing India’s Innovation’ reveals that about two percent of Indians who live abroad collectively earn almost two thirds of India’s GDP. It emphasizes how creating and commercializing ‘new to the world knowledge’ as well as diffusing and absorbing existing knowledge capital can help India sustain its faster growth rate.

“The world has acknowledged India’s R&D potential and more than 300 multinational corporations have set up R&D and technical centers in India,” said Isabel Guerrero, World Bank Country Director for India.

Innovation in India must be thought of as improving business practices across the entire economy. While India is emerging as a top global innovator in sectors such as biotechnology and information technology, only a meager three percent of the Indian workforce is in the modern private sector, while roughly 90 percent remains in the informal sector.

“The disparities in productivity levels across firms within the manufacturing sector is wider in India than in China, Mexico, the Russian Federation, and the Republic of Korea,” said Mark Dutz, World Bank senior economist and editor of the report. “The output of the economy could increase five-fold if all enterprises could achieve national best practices based on knowledge already in use in India,” he added.

To achieve this, the report recommends an increase in the fiscal and managerial autonomy of universities and colleges, and the encouragement of greater private participation in higher education.

Encouraging stronger competition among enterprises is particularly important. Since the Indian economy opened up in 1991, the vast majority of private sector investments in R&D were in sectors most open to competition.

The report suggests removing non-essential regulations in product, land, labor, capital, and infrastructure markets. Easing of remaining limits on small industries, restrictions on foreign direct investment, and barriers to import competition are also recommended.

Indian IT growth outpaces global biggies
Today the Indian firms seem to be growing very fast. At least two India-centric service providers are expected to figure among the global top-10 by 2010, according to a study by global research and analysis firm Gartner.

The report states that Indian IT companies are yet to measure up to global IT giants. In 2006, the total market share of the top-10 global firms (which include IBM, EDS, and Accenture) was 26 percent.

In 2006, about 1.9 percent of the total $672 billion IT services market was marked by the top six Indian-centric IT services providers – Satyam, Wipro, Infosys, TCS, Cognizant and HCL Technologies, nicknamed SWITCH. However, in 2001, they accounted for a mere 0.5 percent of the $554 billion IT services market. The average annual growth rate of the SWITCH companies was 42.4 percent in 2006 compared with the 4.3 percent growth of the market leaders during the same period, according to newspaper sources.

According to Partha Iyengar, Vice-President, Analyst and Regional Research Director, Gartner, from being relatively unknown brands a decade ago, leading India-centric providers now offer formidable competition to the global players. Large outsourcers are now re-evaluating their preferred vendor rankings to include Indian companies, especially for multi-vendor engagements.

Despite IBM’s $48 billion IT service revenues, its dollar growth year on year was less than $1 billion. On the other hand, TCS increased its revenues by over $1.2 billion in 2006 and achieved this increase from a revenue base that was 1/18th of IBM’s revenue base.

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