India's renaissance: U.S.-style labor pains
India's success in technology has brought some Western-like problems to the labor market.
Million-resume madness in India
Photos: Living the good life at Infosys
U.K. backpackers heed call of India firms
India's quiet revolution
Rediff
Editor: Mike Yamamoto
Associate editor: Karen Said
Copy editor: Leslie Katz
Design: Ellen Ng
Production: Mike Markovich
By Michael Kanellos
Staff Writer, CNET News.com
June 28, 2005 4:00 AM PT
Nevis Networks, a company that Dham's NewPath Ventures had backed, reported one day that a top engineer had gotten engaged and suddenly gave notice of his resignation. His fiancee's father, it seems, had never heard of the young security company and wanted him to work instead for an established entity like Intel or IBM.
Thinking quickly, Dham had a press release drawn up, and a reporter was cajoled into writing a story about Nevis. The father-in-law saw the article and heartily approved of the young man's career choice.
"All of the VC funds want to go to India," said Dham, whose venture capital firm is based in Silicon Valley, "but most don't know how to do it."
Such cultural clashes reflect the rapidly changing nature of India's high-tech world, where an industrial renaissance has created not only an unprecedented economic boom, but also Western-style growing pains in employee recruitment and retention. Turnover in the software services industry runs at about 15 percent a year on average, and can exceed 30 percent at some companies, according to various sources.
Relative to their counterparts in the United States and other developed nations, workers at Indian companies are both plentiful and inexpensive to employ. This cheap labor, however, has led to explosive growth and, in turn, to unprecedented competition for qualified employees. Double-digit raises are the norm.
"What if someone offered you double your salary?" said Rishi Navani, a managing director at WestBridge Capital Partners. "There would be no debate."
Evidence of India's chaotic job market is everywhere. Upon learning of layoffs at U.S. chipmaker PMC-Sierra's lab in this city, for example, Dham and his NewPath partners caught a red-eye flight to India and took all 65 fired employees to dinner; they hired 31 of them.
Large public companies such as Tata Consultancy Services each hire about 10,000 employees a year--the equivalent of a small town--in an effort to keep up annual revenue growth that can reach 50 percent. Although the turnover rates listed in the financial reports of these companies are substantially below the national average, services giant Infosys Technologies alone is absorbing 1,000 employees every month, said Srinath Batni, a company board member.
A fresh engineering graduate at a leading Indian company might receive a starting salary of 15,000 to 28,000 rupees a month, or $4,300 to $8,000 a year, according to various sources and figures from the New Delhi-based National Association of Software and Service Companies (NASSCOM).
A director-level manager might make $30,000 to $51,000 a year, while a division head might make $76,000, depending on experience. Those salaries are less than half that of equivalent positions in the United States.
But the gap is quickly narrowing, thanks to large multinationals that have descended upon the Indian labor market. Companies such as Hewlett-Packard, Intel and Sun Microsystems can (and will) double or even triple the salary offered by Indian counterparts, sources say.
The lure of lucrative salaries has extended beyond the private sector. The labs at the government-run Defence Research and Development Organisation is losing about 60 scientists a year to various industries.
At the Indian Institute of Science, the country's premier research organization and graduate school, automotive and electronics companies from the West have been hiring students on the verge of finishing their Ph.D.s for 30,000 rupees a month. By law, assistant professors earn only 20,000 rupees a month, though recent changes allow them to keep 60 percent of all fees for consulting and patent licenses.
"We have a problem with internal brain drain," said Professor M.L. Munjal, chairman of the mechanical sciences division at IIS. "This is the price we pay for globalization."
Problem or opportunity?
Over the past 20 years, India has transformed its school system to churn out graduates for the information technology industry. In the mid-1980s, around 70 colleges nationwide admitted about 5,000 students into IT and computer science programs, said Professor Deepak Phatak, who heads up the Kanwal Rekhi School of Information Technology at the Indian Institute of Technology at Bombay (in the city now known as Mumbai).
Today, he said, 250,000 new students at 1,750 colleges enter undergraduate and master's programs in computer science and electrical engineering. Another
Million-resume madness in India
Photos: Living the good life at Infosys
U.K. backpackers heed call of India firms
India's quiet revolution
Rediff
Editor: Mike Yamamoto
Associate editor: Karen Said
Copy editor: Leslie Katz
Design: Ellen Ng
Production: Mike Markovich
100,000 students enroll in mechanical, civil and chemical engineering programs. (Different sources give varying totals for the number of colleges in the system, but the number always exceeds 1,000.)
"The total number of engineering students in all four years of college is over a million at any time," Phatak said. "So you see, this is our problem, and this is our opportunity."
A prolific source of this educational bounty is Karnataka, the state where Bangalore and a large percentage of the IT industry is located. There, 130 colleges produce 30,000 graduates in the field each year, said M.K. Shankaralinge Gowda, the state's secretary of the department of information technology.
That translates to jobs. Since 1997, the number of technology professionals employed in the state has risen more than tenfold, from 25,000 to 285,000, Gowda said. In all of India, the number of software and service workers rose from 522,000 at the end of 2001 to 813,000 last year, according to NASSCOM.
While most students focus on software, chip design is growing. Five years ago, the Indian Institute of Technology set up a chip design program and a semiconductor lab that graduates 20 students a year. The university is replicating it at other institutions, according to Sunil Sherlekar, head of embedded systems at Tata Consultancy Services.
Large U.S. chipmakers have set up design centers in the country. Intel is designing a
"Quality" not just a slogan
For India's services companies, fast hiring and high turnover are significant competitive concerns. To avoid wasting time between projects, service companies must be able to move teams of employees from one project to another rapidly, Batni and others say. "Quality" and "customer satisfaction" are viewed as more than empty slogans; they are measured quantities that affect profitability and growth.
Achieving these goals requires rigorous employee training. At Tata, newly hired college graduates sit through 52 days of training. Among other assignments, they have to read excerpts of novels such as "Gone with the Wind" and then conduct a group discussion in front of a class.
"India is a very competitive world. It is heavy on the 'I,'" said Nagaraj Ijari, the delivery center head of Tata's offices here. "We change it to a 'we.'"
Yet it is a habit that is difficult to shake, especially in a society that stresses individual achievement from an early age. The competitive nature of the technology field is reflected in a contest sponsored by Tata for 13- and 14-year-olds in Karnataka. More than 60,000 teenagers participated in the contest, which awards prizes to those most adept at answering questions about the history or products of different technology companies.
After 10th grade, students must declare their collegiate paths and endure strenuous board examinations. Schools take out full-page ads in newspapers to congratulate students who score in the 90-plus percentiles.
Not surprisingly, the college admissions process is rife with anxiety. The seven campuses of the Indian Institute of Technology receive more than 150,000 applications a year and admit around 3,500 undergraduate and graduate students.
During the five-year curriculum, "you're as good as in a prison," said M.T. Karunakaran, president of Telsima Communications and an IIT alumnus. One week, students might work on engineering theory, he said; the next, they might be asked to learn how to weld.
The Indian Institute of Science is similarly stringent. The graduate school receives more than 100,000 applications and accepts only a few hundred--an acceptance rate of 0.3 percent.
The long odds then continue when it comes time to get a job. Infosys receives a million employment applications annually. The 10,000 hired represent only 1 percent of the applicant pool.
To stand out, job candidates will often fashion resumes five or six pages long. "It might include the elocution contest that they won in grade school or what they did in the Boy Scouts," said Supratim Sarkar, manager of strategic marketing at Wipro Technologies.
Jessie Paul, head of marketing at iGate, a services and consulting firm, said a bank teller once told her that his granddaughter was looking for a job. Later that night, she got a call from him at home. "He got my phone number from a loan application," she said.
But the hard work pays off for those employees who do get hired and eventually establish themselves. Then, they are exposed to a very different kind of competition--one that casts them as the object of pursuit.
"The real issue here is the growth in the salary levels. The salaries in India are still growing at 18 to 20 percent annum," said Sanjay Nayak, CEO of Tejas Networks. "The stickiness of people to companies is very low. A little bit more stabilization is needed." 
Million-resume madness in India
Photos: Living the good life at Infosys
U.K. backpackers heed call of India firms
India's quiet revolution
Rediff
Editor: Mike Yamamoto
Associate editor: Karen Said
Copy editor: Leslie Katz
Design: Ellen Ng
Production: Mike Markovich
By Michael Kanellos
Staff Writer, CNET News.com
June 28, 2005 4:00 AM PT
Nevis Networks, a company that Dham's NewPath Ventures had backed, reported one day that a top engineer had gotten engaged and suddenly gave notice of his resignation. His fiancee's father, it seems, had never heard of the young security company and wanted him to work instead for an established entity like Intel or IBM.
Thinking quickly, Dham had a press release drawn up, and a reporter was cajoled into writing a story about Nevis. The father-in-law saw the article and heartily approved of the young man's career choice.
"All of the VC funds want to go to India," said Dham, whose venture capital firm is based in Silicon Valley, "but most don't know how to do it."
Such cultural clashes reflect the rapidly changing nature of India's high-tech world, where an industrial renaissance has created not only an unprecedented economic boom, but also Western-style growing pains in employee recruitment and retention. Turnover in the software services industry runs at about 15 percent a year on average, and can exceed 30 percent at some companies, according to various sources.
Relative to their counterparts in the United States and other developed nations, workers at Indian companies are both plentiful and inexpensive to employ. This cheap labor, however, has led to explosive growth and, in turn, to unprecedented competition for qualified employees. Double-digit raises are the norm.
"What if someone offered you double your salary?" said Rishi Navani, a managing director at WestBridge Capital Partners. "There would be no debate."
Evidence of India's chaotic job market is everywhere. Upon learning of layoffs at U.S. chipmaker PMC-Sierra's lab in this city, for example, Dham and his NewPath partners caught a red-eye flight to India and took all 65 fired employees to dinner; they hired 31 of them.
Large public companies such as Tata Consultancy Services each hire about 10,000 employees a year--the equivalent of a small town--in an effort to keep up annual revenue growth that can reach 50 percent. Although the turnover rates listed in the financial reports of these companies are substantially below the national average, services giant Infosys Technologies alone is absorbing 1,000 employees every month, said Srinath Batni, a company board member.
A fresh engineering graduate at a leading Indian company might receive a starting salary of 15,000 to 28,000 rupees a month, or $4,300 to $8,000 a year, according to various sources and figures from the New Delhi-based National Association of Software and Service Companies (NASSCOM).
A director-level manager might make $30,000 to $51,000 a year, while a division head might make $76,000, depending on experience. Those salaries are less than half that of equivalent positions in the United States.
But the gap is quickly narrowing, thanks to large multinationals that have descended upon the Indian labor market. Companies such as Hewlett-Packard, Intel and Sun Microsystems can (and will) double or even triple the salary offered by Indian counterparts, sources say.
The lure of lucrative salaries has extended beyond the private sector. The labs at the government-run Defence Research and Development Organisation is losing about 60 scientists a year to various industries.
At the Indian Institute of Science, the country's premier research organization and graduate school, automotive and electronics companies from the West have been hiring students on the verge of finishing their Ph.D.s for 30,000 rupees a month. By law, assistant professors earn only 20,000 rupees a month, though recent changes allow them to keep 60 percent of all fees for consulting and patent licenses.
"We have a problem with internal brain drain," said Professor M.L. Munjal, chairman of the mechanical sciences division at IIS. "This is the price we pay for globalization."
Problem or opportunity?
Over the past 20 years, India has transformed its school system to churn out graduates for the information technology industry. In the mid-1980s, around 70 colleges nationwide admitted about 5,000 students into IT and computer science programs, said Professor Deepak Phatak, who heads up the Kanwal Rekhi School of Information Technology at the Indian Institute of Technology at Bombay (in the city now known as Mumbai).
Today, he said, 250,000 new students at 1,750 colleges enter undergraduate and master's programs in computer science and electrical engineering. Another
Million-resume madness in India
Photos: Living the good life at Infosys
U.K. backpackers heed call of India firms
India's quiet revolution
Rediff
Editor: Mike Yamamoto
Associate editor: Karen Said
Copy editor: Leslie Katz
Design: Ellen Ng
Production: Mike Markovich
100,000 students enroll in mechanical, civil and chemical engineering programs. (Different sources give varying totals for the number of colleges in the system, but the number always exceeds 1,000.)
"The total number of engineering students in all four years of college is over a million at any time," Phatak said. "So you see, this is our problem, and this is our opportunity."
A prolific source of this educational bounty is Karnataka, the state where Bangalore and a large percentage of the IT industry is located. There, 130 colleges produce 30,000 graduates in the field each year, said M.K. Shankaralinge Gowda, the state's secretary of the department of information technology.
That translates to jobs. Since 1997, the number of technology professionals employed in the state has risen more than tenfold, from 25,000 to 285,000, Gowda said. In all of India, the number of software and service workers rose from 522,000 at the end of 2001 to 813,000 last year, according to NASSCOM.
While most students focus on software, chip design is growing. Five years ago, the Indian Institute of Technology set up a chip design program and a semiconductor lab that graduates 20 students a year. The university is replicating it at other institutions, according to Sunil Sherlekar, head of embedded systems at Tata Consultancy Services.
Large U.S. chipmakers have set up design centers in the country. Intel is designing a
"Quality" not just a slogan
For India's services companies, fast hiring and high turnover are significant competitive concerns. To avoid wasting time between projects, service companies must be able to move teams of employees from one project to another rapidly, Batni and others say. "Quality" and "customer satisfaction" are viewed as more than empty slogans; they are measured quantities that affect profitability and growth.
Achieving these goals requires rigorous employee training. At Tata, newly hired college graduates sit through 52 days of training. Among other assignments, they have to read excerpts of novels such as "Gone with the Wind" and then conduct a group discussion in front of a class.
"India is a very competitive world. It is heavy on the 'I,'" said Nagaraj Ijari, the delivery center head of Tata's offices here. "We change it to a 'we.'"
Yet it is a habit that is difficult to shake, especially in a society that stresses individual achievement from an early age. The competitive nature of the technology field is reflected in a contest sponsored by Tata for 13- and 14-year-olds in Karnataka. More than 60,000 teenagers participated in the contest, which awards prizes to those most adept at answering questions about the history or products of different technology companies.
After 10th grade, students must declare their collegiate paths and endure strenuous board examinations. Schools take out full-page ads in newspapers to congratulate students who score in the 90-plus percentiles.
Not surprisingly, the college admissions process is rife with anxiety. The seven campuses of the Indian Institute of Technology receive more than 150,000 applications a year and admit around 3,500 undergraduate and graduate students.
During the five-year curriculum, "you're as good as in a prison," said M.T. Karunakaran, president of Telsima Communications and an IIT alumnus. One week, students might work on engineering theory, he said; the next, they might be asked to learn how to weld.
The Indian Institute of Science is similarly stringent. The graduate school receives more than 100,000 applications and accepts only a few hundred--an acceptance rate of 0.3 percent.
The long odds then continue when it comes time to get a job. Infosys receives a million employment applications annually. The 10,000 hired represent only 1 percent of the applicant pool.
To stand out, job candidates will often fashion resumes five or six pages long. "It might include the elocution contest that they won in grade school or what they did in the Boy Scouts," said Supratim Sarkar, manager of strategic marketing at Wipro Technologies.
Jessie Paul, head of marketing at iGate, a services and consulting firm, said a bank teller once told her that his granddaughter was looking for a job. Later that night, she got a call from him at home. "He got my phone number from a loan application," she said.
But the hard work pays off for those employees who do get hired and eventually establish themselves. Then, they are exposed to a very different kind of competition--one that casts them as the object of pursuit.
"The real issue here is the growth in the salary levels. The salaries in India are still growing at 18 to 20 percent annum," said Sanjay Nayak, CEO of Tejas Networks. "The stickiness of people to companies is very low. A little bit more stabilization is needed."