Skills Gap Hurts Technology Boom in India

TIRUCHENGODE, India
As its technology companies soar to the outsourcing skies, India is bumping up against an improbable challenge. In a country once regarded as a bottomless well of low-cost, ready-to-work, English-speaking engineers, a shortage looms.

India still produces plenty of engineers, nearly 400,000 a year at last count. But their competence has become the issue.

A study commissioned by a trade group, the National Association of Software and Service Companies, or Nasscom, found only one in four engineering graduates to be employable. The rest were deficient in the required technical skills, fluency in English or ability to work in a team or deliver basic oral presentations.

The skills gap reflects the narrow availability of high-quality college education in India and the galloping pace of the country’s service-driven economy, which is growing faster than nearly all but China’s. The software and service companies provide technology services to foreign companies, many of them based in the United States. Software exports alone expanded by 33 percent in the last year.

The university systems of few countries would be able to keep up with such demand, and India is certainly having trouble. The best and most selective universities generate too few graduates, and new private colleges are producing graduates of uneven quality.

Many fear that the labor pinch may signal bottlenecks in other parts of the economy. It is already being felt in the information technology sector.

With the number of technology jobs expected to nearly double to 1.7 million in the next four years, companies are scrambling to find fresh engineering talent and to upgrade the schools that produce it.

Some companies are training faculty members themselves, offering courses tailored to industry needs and improving college labs and libraries. They are rushing to get first choice of would-be engineers long before they have completed their course work. And they are fanning out to small, remote colleges that almost no one had heard of before. The country’s most successful technology concerns can no longer afford to hire only from the most prestigious Indian universities. Nor can they expect recent graduates to be ready to hit the shop floor. Most companies require in-house training of anywhere from two to six months.

Demand is beginning to be felt on the bottom line. Entry-level salaries in the software industry have risen by an average of 10 to 15 percent in recent years. And Nasscom, which helps companies wanting to outsource find workers, forecasts a shortage of 500,000 professional employees in the technology sector by 2010.

The labor crunch is starting to pop up across the service economy. ICICI, the country’s largest financial services company, announced plans to hire up to 40,000 workers in the next three years.

The Retailers Association of India said in July that its fast-expanding industry would need nearly 115,000 workers in the next six months. Reuters reported in October that Google was having trouble finding Indian workers proficient in the languages and design technologies used in the latest generation of Web sites.

This year, India’s largest software company, Tata Consultancy Services, plans to add 30,000 people to its current work force of 72,000. So it was that on a recent afternoon a four-man team from the company roamed the halls of a college founded by a local textile magnate in this small south Indian outpost.

The team came to Tiruchengode with the goals of selecting its next generation of software programmers and assessing how, in the short term, the company could help the college churn out more of what it needed. “These are the guys who are going to write my Windows 2010,” as one of the recruiters put it.

“We can’t afford to let talent go” was the verdict of A. K. Pattabiraman, a member of the team.

They grilled professors and administrators: How many faculty members have doctorates? Why did so many students have incompletes by the time they entered their fourth and final year? What software programs do they use for the class in mechatronics — a combination of mechanics, information technology and electronics?