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India no longer attractive to Big IT Corps?

Photo by Brajeshwar

Indian ITGirls with long and exposed legs are needed to attract people to IT & ITES.

In a recent Press Conference in Bangalore, India Intel CTO Justin Rattner said, “India used to be seen as the perfect offshore research and development hub for global firms seeking to tap its low-cost and supposedly vast engineering talent pool to devise products for world markets.”

We all know that Indian IT sector is notoriously becoming costlier and the cost advantage is fading, engineers trained in basic research are harder to find, reducing India’s appeal in the Outsourcing world. Companies such as Microsoft, IBM, Intel, AMD, Google, Motorola, Yahoo!, Cisco and Siemens have opened RnD centers in India, drawn by payroll costs that were once a quarter of those in the US and Europe but it is losing its sheen as an offshore RnD hub.

“If this trend continues, the cost advantage of doing RnD in India compared to the US will go away,” Zinnov chief executive Pari Natarajan said in an interview, predicting a shakeout in the RnD offshoring market. He added that, some companies witnessed a 20 percent rise last year in the cost of running their RnD operations in India. There are about 600 RnD facilities setup by overseas firms that invested roughly a combined $6 billion.

Natarajan added,

India turns out more than half a million engineers every year, but institutions do not train them in basic research, limiting the available talent pool to no more than 100,000 people. It’s going to be very difficult for companies which have very aggressive hiring targets. It’s almost impossible to hire unless you compromise on the quality of talent.

With regards to the availability of Highly-specialized-skilled Technical Engineers, India has been lacking very seriously in that front. We can recollect that a large swathe of Silicon Valley Startups and Midsize companies that do sophisticated tech work are turning away from India as their premier outsourcing destination. While such companies make up just a fraction of India’s outsourcing work, they had been an early catalyst for the growth of India’s Information Technolgy Business and helped the country attract other outsourcing clients.

Companies like Infosys, Wipro and TCS have braced up to do more of the sophisticated RnD works. However, analysts says that most of these companies derived more than 50% to 60% of their revenues from the basic services such as software coding and tech maintenance and support. In a not-so-surprising event, Riya had to interview more than 70 candidates just to hire 6 highly skilled developers for their Bangalore (India) office sometime back. It may be noted that they have shut down their Bangalore RnD Office long back.

Many Indian-American entrepreneur who tried to do startups in India seem to have bad-taste experiences and have decided to stay back in the States than try to understand the plethora of hiccups that plagued them while setting up a remote office in India.

The unpalatable truth that most of us Indian IT Developers live with it that despite the rapid development of India specially in the IT field, research and study have revealed that the Indian Techies lacks way behind than their US counterparts. An American Techie is about 10 times more productive than an Indian Techie. Of course, our argument is that the Americans were way ahead of India in the IT field; India started off IT in a big way recently. There are lot of catching-up to do.

Well, the Indian IT Outsourcing Honeymoon is indeed showing signs of turning sour month by month.

  1. I couldn't agree more, there's definitely something wrong in the way are industry here in India works .. ideally given that people here have had sufficient experience in the IT industry, India should have evolved into a quality destination rather that a price/numbers destination, but that's clearly not the case ... I had expressed similar concerns in a blog post a few months back, you may find it interesting ..

    http://weblog.mrinalwadhwa.com/2007/11/25/is-india-a-software-leader/

  2. I couldn't agree more, there's definitely something wrong in the way are industry here in India works .. ideally given that people here have had sufficient experience in the IT industry, India should have evolved into a quality destination rather that a price/numbers destination, but that's clearly not the case ... I had expressed similar concerns in a blog post a few months back, you may find it interesting ..

    http://weblog.mrinalwadhwa.com/2007/11/25/is-india-a-software-leader/

  3. Well Mrinal,

    I've been having this bad feeling all along and have expressed my humble concerns many a time.

    The number crunching works will deplete as more and more of them are replaced by automated systems. I'm not very good with statistics and forecast but I do know for sure that we cannot keep on enjoying doing the "easy-job-that-just-pays" kinda works.

  4. Well Mrinal,

    I've been having this bad feeling all along and have expressed my humble concerns many a time.

    The number crunching works will deplete as more and more of them are replaced by automated systems. I'm not very good with statistics and forecast but I do know for sure that we cannot keep on enjoying doing the "easy-job-that-just-pays" kinda works.

  5. wel...these are the companies that started making huge payments to lure employees...these offeres from microsoft, google etc. were far higher than what an indian company made...now they complain about the narrowing cost advantages..very funny...why did they raise the bar so steeply and now they find it difficult to handle...

    i do agree about the fall in quality...it has definitely got to do with the increasing numbers...I find many entering engineering and IT just for the sake of making money and i don't see a passion to excel among the younger generation...and

    the elite (from IITs and other institutions) prefer to be managers and join management institution after completing their engineering...these are the people who have the potential to be part of those R&D units and when they prefer the management route, where will india find the best skills for R&D?

  6. wel...these are the companies that started making huge payments to lure employees...these offeres from microsoft, google etc. were far higher than what an indian company made...now they complain about the narrowing cost advantages..very funny...why did they raise the bar so steeply and now they find it difficult to handle...

    i do agree about the fall in quality...it has definitely got to do with the increasing numbers...I find many entering engineering and IT just for the sake of making money and i don't see a passion to excel among the younger generation...and

    the elite (from IITs and other institutions) prefer to be managers and join management institution after completing their engineering...these are the people who have the potential to be part of those R&D units and when they prefer the management route, where will india find the best skills for R&D?

  7. The fall in quality very much concerns me. I've worked with Indian IT companies before and found them to be skillful and cost-competitive. Recently however, it has become very difficult to find good talent while the cost for labor has gone up considerably.

  8. The fall in quality very much concerns me. I've worked with Indian IT companies before and found them to be skillful and cost-competitive. Recently however, it has become very difficult to find good talent while the cost for labor has gone up considerably.

  9. In my opinion India has been an attractive IT destination mainly because of the cost advantage, and not because Indians are more talented than others. Main factor is cost advantage. Now that pay packages are rising, it is a concern for corps to invest here- though India is still a good option, they are indeed looking for cheaper options like China and Latin America.

    I wish more and more Indian companies will move into developing things of their own than just be in services, and related areas.

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