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Sunday, October 1, 2000

When Deepak Bhatt, a 24-year old software engineer from New Delhi, landed at the Frankfurt airport to take up a job in a nondescript Internet firm, he was given a grand welcome. International media was present in full force at the airport; the German media chased Bhatt for interviews. His claim to fame is simply this: he was among the first Indian IT professionals selected to work in Germany. As many as 18,000 Indian applicants have already registered with the Federal office for Employment in Bonn, and some 3,000 make up Bonn’s first batch. The applicants’ desire to work in Germany is in response to Chancellor Gerhard Schroeder’s scheme to issue 20,000 green cards to computer specialists from non-EU countries. German business and industry estimate a shortage of 75,000 IT experts and reckon that Europe’s largest economy will sorely lag behind other European nations if this vacancy is not filled immediately.

Until now, the most favored destination for aspiring software engineers has been the United States. But the list of countries seeking the services of Indian IT professionals is increasing every day: France, Japan, the UK, Denmark, Canada, New Zealand and others. Software and training major NIIT (based in New Delhi) recently signed an agreement with a Singapore consortium to recruit 1,000 Indian software personnel to work in different firms there. This comes after the visit of the Singapore Prime Minister’s visit to Bangalore earlier this year. Japanese Prime Minister Yoshiro Mori also visited Bangalore during his recent visit to India to get a first-hand feel of the software industry. He even had a swing or two at the Infosys golf course.

The job columns in Indian newspapers these days are filled with advertisements put by companies or placement consultants, seeking Indian software professionals to work in foreign destinations. Most of them are eyeing IIT grads or students from other prestigious institutions like the Indian Institute of Science, Bangalore. Multinational corporations are also setting up centers of excellence or collaborative programs at premier institutions. For example, Sun Microsystems recently launched a collaborative research program with three IITs, by which selected professors and students from IITs will come up with new products for Sun or provide inputs its ongoing product development. In effect, Sun is outsourcing some of its research activity to the IITs. It works out to be cheap because all Sun has to do is provide these institutions with computer power and grant money. Since most students working on such projects join the sponsoring companies at the end of the project, its a good deal for the companies. They get their research done and also get new employees, who are already familiar with their work.

Bodyshopping: Trends

If this trend continues, India may well be on its way to becoming the IT professionals’ “super bazaar of the world,” manufacturing graduates and specialists for multinational corporations of the world, and burning scarce resources that could go into India’s higher education system.

For the Indian software industry, the trend is nothing new. Indian software companies have been exporting software developers and engineers for the past two decades. This phenomenon, known as “body shopping,” basically means that Indian companies send software professionals from India to work at a client’s site in another country. Body shopping was predominant in the eighties and early nineties, mainly because the track record of Indian software companies was not proven and telecom infrastructure was not fully developed. As Indian companies made their mark in executing large, complex projects, and telecom and satellite links improved, the trend of offshore software development began. Today, a large number of Indian companies undertake offshore work – developing software for foreign clients from their offices in India and transmitting the same via high-speed satellite links. This trend has augured well for the industry, boosting its export earnings a great deal.

What is being seen today is in a way a throwback to body shopping. The only difference now is that the invitation is being extended by foreign governments rather than from individual companies. Also, professionals interested in working abroad are able to do so on their own, instead first signing on with an Indian company who will then send them abroad to work. This new form of body shopping is a far more organized fashion. Unfortunately, the newly created Ministry of Information Technology (MIT) does not see anything wrong with this. “We have an open policy,” declared MIT secretary P.V. Jayakrishna recently. “If people want, they can go anywhere in the world. We don’t want to [impose] any restrictions.” True, in a democratic system, all citizens have freedom of movement and freedom of employment. But such an open encouragement to flight of highly skilled manpower by an agency that is supposed to promote IT within the country could bring about some undesirable results.

Power Shortage in the IT Field

From 1996 to 1997, the Indian software industry employed some 160,000 skilled professionals. This number more than doubled in 1999 to 2000 and is projected to rise to around half a million by next year. Do the math: India currently produces about 70,000 to 85,000 software engineers annually along with about 45,000 other IT graduates. Although the government plans to double the intake of IT graduates from the next academic session and treble it the year after that, this may not be sufficient to meet the projected growth of the Indian software industry. According to industry projections, India would need about 2.2 million IT graduates by 2008. Besides increasing the intake over the next two years, there seems to be no tangible plan available in the government. The IITs are also under pressure to increase intake, but have no academic infrastructure available with them to do so.

Although new institutions like IIITs (Indian Institutes of Information Technology) have started churning out graduates, increasing the intake overnight could mean compromising on the quality of education. Also, who will be able to teach the doubling and tripling ranks? IITs are not able to increase intake currently due to a lack of the right people to fill academic vacancies. If the pressure increases, they will be forced to compromise on the quality of the faculty, currently rated at a world-class level. MIT agrees. “We are all now concerned with quality,” says Jayakrishna.

If no remedial measures are taken, India may end with an army of people doing second class, labor-intensive software development work and operations like managing call centers and customer services for foreign companies. There will be a shortage of top-class technology professionals, like the IIT graduates who can work on cutting edge software technologies. Already, Silicon Valley in Bangalore has begun to face the crunch for such professionals. A company looking for 300 professionals in a demanding area like telecom software has ended up with a mere two dozen. Indian giants like Infosys and Wipro may lose their competitive edge if they are not able to recruit and retain top-class talent. There are unconfirmed reports of an American software company based in Delhi recruiting software professionals from a third country to work in India. A few years back, this company could have effortlessly taken advantage of Indian software talent, at that time available in abundance.

The official patronage being extended by the MIT to the flight of IT professionals could prove disastrous for the Indian industry. In effect, it means Indian resources (including huge public subsidies) will be spent to fulfill manpower requirements of foreign companies. And what does India gain as a nation? “They will bring back technology and experience from working in a global environment. Look, so many NRIs are coming back today,” say MIT top brass. Yes, they will bring technology and experience, but at the terms of the multinational companies they work for. So, instead of foreigners heading India operations of Microsofts and Intels, desi sahibs will be doing the job.

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