India’s Talent Pool Drying Up

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WSJ writes:

India, despite its reputation as a bottomless well of back-office talent ready to scoop up American jobs, is having an increasingly difficult time finding qualified workers to fuel its booming services sector.

The cross-sector crunch is especially worrisome in the technology industry, where wages are rising 15% a year as call centers and software firms throw money at the increasingly shallow pool of youngsters who can hit the ground running. Consulting firm McKinsey & Co. says India’s information-technology industry could face a deficit of 500,000 workers as soon as 2010, undermining its attractiveness as an investment destination.

Even if companies continue to find the talent they need in the near term, the rising wage bill is a troublesome long-term trend for India’s competitive prospects — and for foreign companies pumping money into the global outsourcing market. The emerging talent deficit is giving rivals such as Russia space to compete with India for high-end outsourced work such as software design and solutions, and allows aspirants such as the Philippines — where English is widely spoken — to better compete for call-center business.

Business Week writes:

If India doesn’t take urgent action to reform education and build modern infrastructure, the nation could fall far short of its potential as an outsourcing haven. That’s the conclusion of a new study to be released Dec. 16 by McKinsey & Co. and Nasscom, India’s influential information technology trade association.

The first inklings of a tightening talent supply are already visible in rising staff turnover and skyrocketing wages. If offshore outsourcing work grows as rapidly as expected, the study predicts, in five years India will have a shortfall of 150,000 IT engineers and 350,000 business-process staff. “The problem we are facing is huge,” says Noshir Kaka, a McKinsey consultant who led the study. “The acute demand is leading to supply-side shortages.”

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2 Responses to “India’s Talent Pool Drying Up”

  1. Rakesh Says:

    We were talking about this very topic in my company a few weeks ago, and another problem that India is having is that we have too many college graduates who have learned English as their foreign language, while neglecting to learn other important languages like German, French, Spanish, Japanese and Chinese. It’s interesting that the article mentions the Philippines, since they’ve been flourishing to a great extent because the people there are diverse in the foreign languages they learn. Many do speak English, but many others are fluent in Japanese or in Chinese (since so many Filipinos work in Japan, Taiwan and China), many other Filipinos know Spanish, as well as French or German from the immigrant communities.

    In Vietnam, same sort of thing– some college grads speak English, but many more are proficient in French, or in Chinese, so in Vietnam the businesses get outsourcing from all over the world. In China itself, millions of people speak good Japanese and Korean, or even European languages like French, Spanish and German, so Chinese companies get business from all over the world.

    In Eastern Europe, many companies get outsourcing business because people there know German, which right now is the fastest-growing outsourcing language. Germany has these strict labor laws in-country that make it ridiculously expensive for companies to hire German workers, so lots of German firms expanding their business base are hiring German-speaking workers abroad.

    India has made a big mistake by focusing foreign-language teaching too much on English– we become too reliant on just the US and UK where the market is getting static, while failing to diversify our language learning like Vietnam, the Philippines, and Eastern Europe where they’re able to get business from all over the world since their graduates specialize in different languages. That is, they have a well-educated pool of talent with different people focusing on and getting fluent in a wider range of languages than in India, so those countries are expanding their outsourcing clientele and the inflows of wealth, while India is dangerously dependent on mainly just one foreign language.

    Indian schools should take strong steps to increase and improve the teaching of foreign languages other than English. One way, would be for Indian return migrants from France, Spain/Latin America, Germany, Japan and China to be paid a high salary and bonus to help set up immersion schools for these languages to work on conversational skills (as well as writing), in addition to integrating such foreign language teaching into the general curriculum in Indian schools. Some educators have also talked about “immersion villages” in the vicinity of big Indian cities, especially where businesses are interested in catering to European or East Asian companies, where the employees spend each day talking in Spanish, or Japanese, or German or whatever other language is essential for conducting business, so that they maximize their communications skills. That way, India will be better able to diversify and maximize access to business from the various countries doing offshoring.

  2. Tag Liner Says:

    Rakesh, thank you for very interesting comment.

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