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But even they fear the Democrats are poised to turn the tide. 
http://theaustralian.news.com.au/story/0,20867,21777364-36375,00.html?from=public_rss
India outsourcing looms as US election issue
* The pool of engineers for the manufacturing sector is shrinking, reports Jo Johnson
* May 23, 2007
EXCEPT in times of total war, few organisations have hired as many people in such haste as the flagship companies of the Indian information technology industry.
The top five in the sector are expected to hire about 125,000 young engineers between them this year. It is a telling indication of the pace at which work once done in back offices of investment banks, insurers, retailers, media and telecoms companies around the world is being outsourced to India.
If the protectionist rhetoric emanating from the US Democratic party is a guide, the migration of white-collar jobs to lower-cost offshore locations could resurface as a hot political issue in the run-up to the 2008 presidential election. But while the IT outsourcing phenomenon is creating challenges for some in the West, India's own tight skilled labour market, a shortage of graduates and rising staff turnover are also becoming problems. Over the past financial year, recruitment at Infosys Technologies and Tata Consultancy Services, the two largest Indian IT companies by market value, has been staggering.
In the year to March 31, as sales surged 44 per cent to $US3.1 billion, Bangalore-headquartered Infosys hired no fewer than 31,000 new employees, taking its total workforce to 72,000. Mumbai-based Tata Consultancy Services, whose revenues rose 41 per cent to $US4.3 billion, signed up 32,000 employees, bringing its headcount to more than 89,000.
By comparison, of the five biggest Fortune 500 companies in the US last year, only Wal-Mart created more jobs than either Indian IT company.
The challenge of managing such growth amid worsening shortages of skilled labour has moved human resources to the centre of corporate strategy. Infosys, which has a market value of $US27.5 billion ($33.5 billion), will hire 24,500 people this year in support of projected revenue growth of 28-30 per cent and has moved its finance director, Mohandas Pai, to oversee HR. Such a move would be perceived as a step down in mature Fortune 500 companies, but not in a sector facing a labour market that has tightened faster than expected.
"I don't think anywhere else in the world would the chief financial officer of a company growing as fast as Infosys actively seek out an HR role," Pai says.
Recruitment at Infosys has been largely automated and outsourced. A computer program screened out the great majority of the 1 million or so college leavers who applied online last year and let 160,000 take an entry test.
"We're looking for learnability," says Bikramjit Maitra, head of human resource development. "If someone has a consistently good academic record over 15 to 16 years, they at least have an ability to learn by rote and we'll give them a test of their analytical ability and problem solving."
An external "vendor partner" interviews about 80,000 applicants, of whom one in five then receive an automatically generated email containing a job offer.
"When I got the email I was lost for words," says Himanshu Nahare, a 23-year-old applicant from Mumbai. Like thousands of others on entry-level pay of Rs230,000-Rs270,000 ($6900-
$8100), he will spend up to 18 weeks at the company's IT boot camp at Mysore, southwest of Bangalore.
There, recruits are exposed to more than just world-class tuition. The lush, Club Med-like campus, where romances flourish, boasts swimming pools, snooker tables, bowling alleys, cinemas and hi-tech gyms, not to mention 14 different cuisines served in various "food courts".
Infosys, the best-known name in the Indian IT sector, is always flooded with applicants. It is also a prime target for poachers and far from immune to the pressures of rising staff turnover that afflict the industry. Its attrition rate has doubled in five years to 13.7 per cent in 2006-07. Excluding underperformers, who are asked to leave under a forced ranking system loosely modelled on that of General Electric, the attrition rate is 12.2 per cent. But that is still a level that would befuddle human resources departments in most organisations.
"The labour market in India is intensely competitive and our ability to attract and retain people is central to our strategy," chief executive Nandan Nilekani says.
Raw graduate numbers in India are a misleading guide to employable skills. The pool of available engineering talent, for example, is relatively shallow. Indian engineering schools produce about 400,000 graduates a year. Of these the 125,000 best will be snapped up by the five big IT companies - Infosys, Tata Consultancy Services, Wipro, Satyam and Cognizant.
Smaller players in the software sector recruit a further 100,000. This leaves a shrunken pool for the manufacturing industry and all other sectors. The shortage of engineers is part of a wider problem created by an educational system that produces graduates most companies do not even deem "trainable", let alone qualified. While 3 million students graduate from Indian universities each year, a fraction are considered suitable for employment in the offshore information technology and business process outsourcing industries.
According to a study by India's National Association of Software and Service Companies, about 25 per cent of engineering graduates and 10-15 per cent of general college graduates are suitable.
The lobby group has warned that the Indian IT sector faces a shortfall of 500,000 professionals by 2010, which threatens the country's dominance in offshore IT services.
Pai believes the Government needs to take urgent steps to lift enrolment in higher education from 10 per cent of the college-going age group to 25 per cent.
In the meantime, Pai estimates that Infosys spends twice as much on training - about 4 per cent of sales - as its US competitors. Its investment in the Mysore campus tops $US500 million. On completion of Global Education Centre 2, a building with Greco-Roman features, it will be able to train 40,000 young Infosysians a year.
While Pai is frustrated at the costs that the failure of the state education system impose on the business, he is more worried at the deepening divide it creates between the haves and have-nots in Indian society.
"That's the tragedy of India," he says. "The Government is just not waking up to the fact that the biggest challenge today and for the next 20 years is how to (train) our young people.
"If you don't have growth that permeates all the way through to people at the bottom of the pyramid because they are unskilled or semi-skilled, there will be a social reaction. And that will be bad for everyone."
http://theaustralian.news.com.au/story/0,20867,21777364-36375,00.html?from=public_rss
India outsourcing looms as US election issue
* The pool of engineers for the manufacturing sector is shrinking, reports Jo Johnson
* May 23, 2007
EXCEPT in times of total war, few organisations have hired as many people in such haste as the flagship companies of the Indian information technology industry.
The top five in the sector are expected to hire about 125,000 young engineers between them this year. It is a telling indication of the pace at which work once done in back offices of investment banks, insurers, retailers, media and telecoms companies around the world is being outsourced to India.
If the protectionist rhetoric emanating from the US Democratic party is a guide, the migration of white-collar jobs to lower-cost offshore locations could resurface as a hot political issue in the run-up to the 2008 presidential election. But while the IT outsourcing phenomenon is creating challenges for some in the West, India's own tight skilled labour market, a shortage of graduates and rising staff turnover are also becoming problems. Over the past financial year, recruitment at Infosys Technologies and Tata Consultancy Services, the two largest Indian IT companies by market value, has been staggering.
In the year to March 31, as sales surged 44 per cent to $US3.1 billion, Bangalore-headquartered Infosys hired no fewer than 31,000 new employees, taking its total workforce to 72,000. Mumbai-based Tata Consultancy Services, whose revenues rose 41 per cent to $US4.3 billion, signed up 32,000 employees, bringing its headcount to more than 89,000.
By comparison, of the five biggest Fortune 500 companies in the US last year, only Wal-Mart created more jobs than either Indian IT company.
The challenge of managing such growth amid worsening shortages of skilled labour has moved human resources to the centre of corporate strategy. Infosys, which has a market value of $US27.5 billion ($33.5 billion), will hire 24,500 people this year in support of projected revenue growth of 28-30 per cent and has moved its finance director, Mohandas Pai, to oversee HR. Such a move would be perceived as a step down in mature Fortune 500 companies, but not in a sector facing a labour market that has tightened faster than expected.
"I don't think anywhere else in the world would the chief financial officer of a company growing as fast as Infosys actively seek out an HR role," Pai says.
Recruitment at Infosys has been largely automated and outsourced. A computer program screened out the great majority of the 1 million or so college leavers who applied online last year and let 160,000 take an entry test.
"We're looking for learnability," says Bikramjit Maitra, head of human resource development. "If someone has a consistently good academic record over 15 to 16 years, they at least have an ability to learn by rote and we'll give them a test of their analytical ability and problem solving."
An external "vendor partner" interviews about 80,000 applicants, of whom one in five then receive an automatically generated email containing a job offer.
"When I got the email I was lost for words," says Himanshu Nahare, a 23-year-old applicant from Mumbai. Like thousands of others on entry-level pay of Rs230,000-Rs270,000 ($6900-
$8100), he will spend up to 18 weeks at the company's IT boot camp at Mysore, southwest of Bangalore.
There, recruits are exposed to more than just world-class tuition. The lush, Club Med-like campus, where romances flourish, boasts swimming pools, snooker tables, bowling alleys, cinemas and hi-tech gyms, not to mention 14 different cuisines served in various "food courts".
Infosys, the best-known name in the Indian IT sector, is always flooded with applicants. It is also a prime target for poachers and far from immune to the pressures of rising staff turnover that afflict the industry. Its attrition rate has doubled in five years to 13.7 per cent in 2006-07. Excluding underperformers, who are asked to leave under a forced ranking system loosely modelled on that of General Electric, the attrition rate is 12.2 per cent. But that is still a level that would befuddle human resources departments in most organisations.
"The labour market in India is intensely competitive and our ability to attract and retain people is central to our strategy," chief executive Nandan Nilekani says.
Raw graduate numbers in India are a misleading guide to employable skills. The pool of available engineering talent, for example, is relatively shallow. Indian engineering schools produce about 400,000 graduates a year. Of these the 125,000 best will be snapped up by the five big IT companies - Infosys, Tata Consultancy Services, Wipro, Satyam and Cognizant.
Smaller players in the software sector recruit a further 100,000. This leaves a shrunken pool for the manufacturing industry and all other sectors. The shortage of engineers is part of a wider problem created by an educational system that produces graduates most companies do not even deem "trainable", let alone qualified. While 3 million students graduate from Indian universities each year, a fraction are considered suitable for employment in the offshore information technology and business process outsourcing industries.
According to a study by India's National Association of Software and Service Companies, about 25 per cent of engineering graduates and 10-15 per cent of general college graduates are suitable.
The lobby group has warned that the Indian IT sector faces a shortfall of 500,000 professionals by 2010, which threatens the country's dominance in offshore IT services.
Pai believes the Government needs to take urgent steps to lift enrolment in higher education from 10 per cent of the college-going age group to 25 per cent.
In the meantime, Pai estimates that Infosys spends twice as much on training - about 4 per cent of sales - as its US competitors. Its investment in the Mysore campus tops $US500 million. On completion of Global Education Centre 2, a building with Greco-Roman features, it will be able to train 40,000 young Infosysians a year.
While Pai is frustrated at the costs that the failure of the state education system impose on the business, he is more worried at the deepening divide it creates between the haves and have-nots in Indian society.
"That's the tragedy of India," he says. "The Government is just not waking up to the fact that the biggest challenge today and for the next 20 years is how to (train) our young people.
"If you don't have growth that permeates all the way through to people at the bottom of the pyramid because they are unskilled or semi-skilled, there will be a social reaction. And that will be bad for everyone."
