Wage hike, attrition in IT industry easing: Ramadorai

Sunday, 25 November 2007, 08:00 Hrs
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Bangalore: The software-driven Indian IT industry is breathing easy as a result of demand for wage hike and attrition rate tapering off in the second-half of this fiscal, a top Tata Consulting Services' (TCS) official said.

"Salaries and attrition are flattening out in the software sector signifying maturity and increasing availability of talent pool for hiring. The demand-supply is also getting better," TCS managing director and CEO Subramanim Ramadorai told IANS in an interview.

Referring to the buoyant growth of the Indian IT industry, contributing about four percent to the national GDP (gross domestic product), Ramadorai said Indian software vendors would continue to be competitive in the global market despite a rising rupee and increase in operational costs.

"Indian IT industry wages will continue to be less than a third of its counterparts in the West even if they go up by 10-15 percent till 2010. And with the rate of salary growth easing a bit, we see our competitive advantage staying intact," Ramadorai asserted.

At the same time, he said, building the human capital for long term would remain a challenge until the "status quo" mind set was changed for reforming the education system across the value chain.

Reforms in education system were absolutely necessary to achieve the twin objectives of giving graduating students a choice to pursue an academic career further or taking a job of their liking, he said.

For instance, digitisation of education will not only give wider access to more students to pursue higher studies or specialised courses affordably, but also create a steady pool of talent for the manufacturing and services sectors to absorb every year.

"We need to revamp the education system to build the human capital across the board to move up the value chain in all verticals and sectors. Engineering is not the only discipline the IT industry requires but from other fields as well," Ramadorai pointed out.

To bridge the demand-supply gap and tap potential talent, TCS hires science graduates from degree colleges and puts them through a seven-month transformational programme called 'Ignite' to train them into software professionals.

"The total pool of graduates is about three million every year. By hiring some of them, we are able to release that number of engineers for absorption by other sectors of the economy.

"When the talent pool is increased and trained with required skills, both the education system as well as the industry will mutually benefit," Ramadorai affirmed.

On the impact of sub-prime crisis in the US, Ramadorai said though some of its clients were affected by it, they had not reduced their outsourcing work with the IT bellwether.

"So far no impact. Some of our clients were affected. But they have not reduced their work with us. Moreover, we don't work for a single client out of the US. We have similar clients in Europe, Latin America and Asia-Pacific. Nonetheless, we are watching the situation," he noted.

Similarly, as the US economy was currently going through a budgeting cycle, the impact of such an exercise will be known only in the coming year, he empahsised.

"It is a bit early to comment on what impact the slowdown in the US economy will have on us. Though it is premature to forecast, it is suffice to say even in a downturn, if the cost of reducing IT spend is going to be primary, that will also be good for us as we will get more work in that case," Ramadorai noted.

As part of its de-risking strategy, the $4.3 billion TCS has spread its business across in other countries across geographies. As a result, its revenues from the US market, though largest still, account for about 50 percent of its top-line growth.

The TCS chief was recently in the silicon hub of India to launch a multi-brand consumer electronics and durables superstore, set up by Infiniti Retail Ltd, a subsidiary of the Tata Group.
Source: IANS
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