Outsourcing investigate

Indian outsourcing: Why skills shortages persist despite the graduate glut

The boom in India's services has spawned the growth of new engineering colleges. Yet the outsourcing industry thinks too few of their graduates are up to scratch.

India's colleges produce some 800,000 graduates annually but the country's outsourcers say not enough are immediately employable. Photo: Saritha Rai

A double-digit percentage of India's budding IT engineers could not answer this question correctly:

Identify the smallest decimal number from the following:

0.5, 1/0.5, 0.555555, (0.5)²

Nearly a third of the crop of graduating engineers chose 'had' over 'have' in the following question:

Did you ---- cereal for breakfast? (had, have, ate, having)

India's outsourcing boom has triggered an explosion of engineering colleges in the past decade. But only a fraction of the engineers they produce are immediately employable.

The industry's problem is no longer the quantity but the quality, and it's an issue that's jeopardising the growth and profitability of the sector.

For example, in Bangalore's neighbouring Tamil Nadu state, many engineering colleges have mushroomed in the new millennium. Companies selling coffee, sugar, beverages and jewellery - and even a producer of dhoti, the local Indian male garment - are among those organisations that run colleges, as do hordes of politicians. In an education-hungry country, running an engineering college has become something of a status symbol.

And thanks to this proliferation, the entry threshold in engineering colleges is falling and the number of graduating engineers is rising every year. According to estimates, India's current group of 4,000-odd engineering colleges produces some 800,000 engineers annually, a jump from 500,000 in 2007.

Most of these engineers are drawn to the outsourcing industry, India's largest recruiter of engineers.

Meeting outsourcing's manpower requirements

Despite the apparent glut, the industry is struggling to meet its manpower requirements. Companies need numbers, but they also need quality.

"The crux of the problem is that critical thinking, problem solving and the application of concepts are skills in short supply in fresh engineers," says Srikantan Tan Moorthy, head of education and research at leading outsourcer Infosys. They are also weak in technical skills, soft skills and English proficiency, he says.

Currently, outsourcing companies rate only a fraction of these masses of engineers as employable. The top schools produce brighter, better equipped and more global graduates year after year, recruiters say.

But only half the employable engineers graduate from these top schools. The rest are spread far and thin in what Aggarwal calls the long tail - an untapped pool of talent.

The effort that goes into culling a handful of prospective hires each from batches of hundreds of graduating engineers of less-known engineering colleges in small cities such as Sivakasi, Indore, Kakinada and Ghaziabad is immense.

Himanshu Aggarwal's Aspiring Minds has made a business out of assessing the employability of India's engineers. This year, the Delhi-based company tested 200,000 Indian engineering students graduating in 2012. The prognosis: a sizeable chunk of them are unemployable.

"For most Indians who enrol in so-called professional colleges, there is no profession at the end of it," says Aggarwal, co-founder and CEO of the firm, which provides pre-recruitment tools to the industry.

Range of graduate talent

The variations in graduate talent have widened enormously, says Ashok Soota, an outsourcing industry veteran of over two decades who set up the outsourcing arm of Wipro. "The quality at the top of the pyramid is superb but falls at the base," he says.

In the beginning at Wipro, he only hired engineers from the top state-owned schools, called Indian Institute of Technology and Regional Engineering College. Since then, in his two outsourcing start-ups, MindTree and Happiest Minds, Soota's own net has widened to cover the country's top 100 engineering schools.

As customers get more demanding, there is pressure on companies to hire ready-made talent. "As the base of the pyramid broadens, a few finishing school-type places are stepping in to train fresh engineering grads," says Soota, who has recently hired from one such institution for his nine-month old start-up, Happiest Minds.

The start-up is already closing in on its 400th employee, epitomising the hiring trend in the industry in India despite the global economic slowdown.

When outsourcing companies fall short on employable candidates, creative solutions are called for, says Aggarwal of Aspiring Minds. The tests that assess the hirability of engineers can also be tweaked to predict their trainability. This way, companies do not expend valuable inhouse resources on random training.

For those who are not readily employable, the largest IT employers spend millions of dollars running extensive classroom-type training schemes in subjects such as English grammar and programming basics. These sessions typically last several months and make engineers job-ready.

Moorthy of Infosys says his company spends $6,000 on every fresh engineer's six-month mandatory training at the company's residential school.

As the gap between what the industry requires and the available talent pool widens, the industry's competitive edge inevitably suffers.

About

Saritha Rai is an India-based journalist and commentator who covers technology, business and society from her ringside seat in Bangalore.

30 comments
bsit
bsit

This is actually on topic even if you don't think so. Having read about the ability of prospective employees failing numeric and gramma tests in India I have to point out that as I have read many comments in these Techrepublic pages I have found that many US contributors have poor skills too. I and many others outside the US have been concerned about the low standard of education in the US. For example, too many do not know the difference between "then" and "than" yet they are engaged in the IT tarde. Than is a word for comparison, for example, this is better than that, then is a word for sequencing, for example, if this then that. When English is your first language or your only language you would hope you could get such basics right. I realise it the US government putting the emphasis on personal greed (capitalism) rather 'than' personal skills and knowledge. It is not the fault of the US population apart from voting them in. After all it is far easier to control a poorly educated population 'than' an intelligent and insightful one. This is typical of self-interested and corrupt governments such as under Dubbulya Bush and their belief in a failed ideology of little regulation, and the Indian government is worse. What is needed is a regulated and properly funded education system with correctly focused courses aimed at well thought out outcomes. That applies to the US as well as India and the rest of the world. The ability to express your self clearly and accurately is critical in technological fields such as IT. Money grabbing short cuts by unscrupulous operators can not or will not provide the skills needed, especially when run by corrupt politicians. Well that???s my view on the matter and I see it as a global problem. While our own corporations send services off shore so they can make even bigger profits (capitalism) and politicians support this practice the temptation to deliver poor quality shortcut solutions will not go away.

eiwacat
eiwacat

As a psychologist, I can tell you that culture has everything to do with education. This includes and is not limited to how you present information, how you motivate the students, how you interpret student input/reactions and adjust course accordingly, student expectations, your expectations, etc. As far as a workplace example of culture affecting performance: I was working with a young Indian. I would request certain actions and receive feedback that he understood, but the actions were never performed. After researching, I approached him with what I had learned. He confirmed that he would be insulting me if he said that he did not understand what I was telling him, that he would essentially be telling me that I did a terrible job of explaining. He was allowing me to save face. We talked about the differences between working for someone in his own culture and working in an American environment. He successfully worked on telling me when he did not understand my requests. If we had not bridged that cultural issue, he would have been terminated due to an inability to follow directions.

bcgumbert
bcgumbert

I had to deal with outsource projects to India 10 years ago. One of them was a programming project and the questions I received were great for someone who was taking an entry level class programming in college. I have lost track of the number of time I have called about a technical issue to a help desk and got someone who did not have a clue about what the problem was or what I was talking about. Sometimes the person on the other end of the line passed me on to someone who could help or they just got rude and hung up on me. The American companies who have fallen in love with outsourcing do not care about anything but their bottom line and their bonus checks. The problem has actually escalated over the years with outsourcing companies bring in head hunters from mainly India to find candidates for local positions but are so clueless about technical requirements that they send out a request for you to apply for a job as a java programmer when no where on a post resume is there a line about knowing how to program in Java. Please do not take this the wrong way but I have been to Madras India and it was the filthiest place I ever visited out of the 20 something countries I have been in. I have a bad habit of walking down back alleys in foreign countries just to see what is there. My biggest problem beside total lack of technical ability which is also not much different with a modern American college education. My biggest problem with outsourcing is a human rights issue. Why in the 21st century when you hear about human right violations and how horrible they are can a country like India still have and enforce a caste system that most countries have gotten rid of because they are not viable in the modern world. Like the Japanese samurai system they trashed in the 1800's when they realized what the "modern" western countries were doing in regards to that. I lived in Japan for over 12 years and traveled through out the western pacific while I was in the US Navy so I do have a first hand perspective on what happens in a lot of the countries that support the outsourced world we live in. If you do not like my observation the last time I check in the United States I am entitled to my opinion by the Constitution. But if things keep going like they have been for the last 20 years it will not be long before I am living in a world based on the economics and social structure of the late 1800. Look into what was going on during that time frame in US history. Companies are exploiting other countries for their own profits. Why did Britain conqueror India and china in the 1800 business greed. I should not be surprised really we forgot our history and are just repeating it again weather we like the results or not. We have to live in an imperfect world. Just makes me sad to see much greed and the pursuit of money at any cost has done to the world.

mckinnej
mckinnej

I normally do not mention minor English or spelling mistakes in blog posts because I try to read past those to get the intent of the author. However, since English proficiency is one of the topics of this posting, I felt compelled to identify this one. From the article, "The effort that goes into culling a handful of prospective hires each from batches of hundreds of graduating engineers of less-known engineering colleges in small cities such as Sivakasi, Indore, Kakinada and Ghaziabad is immense." The verb "culling" is used incorrectly and actually means exactly the opposite of what I believe the author intended. "Cull", as in "culling the herd", refers to the practice of removing sick, unhealthy, or otherwise undesirable members from the group, thus making the overall group more healthy and desirable. The way it was used in this post infers they are getting rid of the best graduates and keeping the remaining under performing group. If the author wanted to use an animal herding term, the correct word would be "Cut". This is the practice of removing animals with desirable characteristics from the herd, typically for some special purpose such as breeding. So the corrected statement should start like this: ""The effort that goes into cutting a handful of prospective hires [...]." It just goes to show you even a native English speaker can "had" some cereal for breakfast every now and then. :-)

dave
dave

problem several times in dealing with Nortel's technical support. The worst call was regarding a relatively simple technical issue. The girl , at the indian call center, had a fairly good handle of English but could not speak technical. You might as well have placed a pilot and a dentist together and asked the pilot to fill a cavity based on instructions from the dentist. I quickly learned to ask for Level 2 support as I knew those escalations came back to North America. Two years later Nortel ended technical support calls over seas probably due to all the complaints. Our local newspaper uses Dominican Republic for callers to subscribe. Even though they deserve a job like anyone else I think we, as in US and Canada, need to get our people working first. I asked the girl to provide me with a local phone number. I used the local number to subscribe and asked that they add my opinion to the others requesting the end of off shoring. The only way the tide will reverse is if everythime you call a support number and get an accent is to ask where they are located. If they say that they can't tell you then you should ask to be transferred, get a local number or hang up and call the corporate office. With enough people doing this companies may start to realize that customers are getting tired of the lack of proper support.

sridhair1990
sridhair1990

we should understand that the government is in part responsible for opening up of more engineering colleges thereby bringing down the standards. the last decade has witnessed a change in the attitude of the Indian parents who just wanted their wards ending up with a lofty job in these so called IT companies. the government in its part spearheaded this narrow view. its time we change our attitude and start focusing on real engineering.

gevander
gevander

Now I are one! [quote]???The crux of the problem is that [u]critical thinking, problem solving[/u] and the application of concepts are skills in short supply'[/quote] I work in IT and my wife works as an accountant for a Fortune 500. Both of us have to deal with Indian contractors working in our areas of expertise and both of us see this every month. These issues should more accurately be labeled as [b]cultural[/b] problems, not educational. Indian culture "trains" their people to follow rigid rules to accomplish assigned tasks. If the task has a component that calls for creative thought or problem solving, [i]they will skip it[/i]! The "caste system" is alive and well in India. As long as the [i]society[/i] expects a type of behavior that is different than what a [i]post-secondary[/i] school teaches, the societal behavioral training will win.

Shankarl
Shankarl

The problem is real and solution is not available yet. We do train nearly empty minds to become programmers. I think the basic problem is with some of these college out engineers. Can't they spend 1-2 hours and acquire skills by the time they are come out of college. I came across such people as well who got the job like cakewalk. Please look for attitude. You can never ever train a guy with wrong attitude towards "profession"

sanku_sarath
sanku_sarath

Sarita: This is a very important and relevant topic for Indian Engg. students... In fact, along with a long time associate and good fried, I have written a journal paper highlighting this very aspect and proposed some measures to address the issues we had identified. http://ijimt.org/papers/204-M00015.pdf It is not too late to address the curriculum and learning requirements and when we do so, the outcomes will benefit the whole world. With the aging population in China, Japan and even some EU nations, eventually Indian workforce will find itself in the limelight. The onus will be upon India to improve and perhaps even set the highest of standards in education. Thanks for highlighting this very important aspect of our professional lives. Regards, Dr. Sarath Sanku

syedSaif
syedSaif

Lack of skills (Grammar and Maths) has not prevented Indian IT industry to achieve consistent high growth levels for many years now, which shows it is a non- issue??? ???Lack of employability??? is I.T industries pet subject and is good to talk , read and write about ..but most of the companies don???t want to invest in making a difference..All they want is someone who can start laying those golden eggs (dollars) from day one. Going back to the question of ???have/had for breakfast??? ???how many in the developed world where English is the first language would have got it right ? This article in wall street journal is an indicator..http://online.wsj.com/article/SB10001424052702303410404577466662919275448.html And for the decimal question , my guess is the percentage who got it wrong will also be no different ..

patt1
patt1

Saritha, Most Indians are heady with the outsourcing boom and equate that with technological success. So it is indeed a relief to see that someone highlighting the problems. Indian IT companies have given little importance to quality and concentrate on the quantity, hiring mostly at engineering colleges. Yet, no one asks why an engineering degree is needed to do IT work. Almost all of the engineering graduates spend four years struggling to learn civil, mechanical, chemical engineering etc. and give a sizable chunk of their parent's money to the engineering colleges to become a software tester at a company like Infosys. Anyone writing software will tell you that an engineering background is not necessary to develop most software systems. Then, why put people through 4-year engineering course? Is it because a 4-year college degree necessary for H1B visas? This uncontrolled growth of engineering colleges just for the sake of IT employment needs to be regulated. The outsourcing companies have some responsibility to improve the system and help improve the quality by hiring people who have a talent for writing software and not because they have a degree that makes them eligible for visa.

wadesworld
wadesworld

Hopefully one of these days, companies are going to wake up and realize that outsourcing does not save money. In fact, it wastes money. Not only is it tremendously difficult to find decent engineers, you must employ someone to constantly watch over their shoulder to ensure they're producing acceptable work. It has been my experience that outsource engineers largely are tremendously difficult with which to work due to language and timezone barriers and produce substandard work. The costs to find and utilize these engineers makes their cheap hourly rate not worth it. I guess they're still attractive to executives though because of where the headcount appears (or does not appear) on the balance sheet. Yes, I will note there are some exceptions. I've worked with a few excellent outsourced engineers. However, they've been so few and far between, it's not worth it. How many startups have you seen created by the founder going out and hiring a bunch of cheap outsourcers to be his initial employees? None. Why? It wouldn't work. So why do we try to hire them for important projects after our company has gotten "sophisticated?"

mjd420nova
mjd420nova

As long as the government continues to allow visas to educate other than our own citizens and then they take those skills back to their home countries, we will be stuck trying to fill jobs with non-existant workers. More and more jobs go to the countries that can supply english(kind of) speaking workers who can read a script and work for less than ten dollars a day. We can't compete. Field techs and engineers will remain a mainstay because we can't shipp all the broken gear back to where they were built.

jkameleon
jkameleon

... in about a year, give or take a couple of months. Struggling tech companies always bellyache about labor/skill/talent shortage. It's pretty accurate early sign of recession, visible well before it shows in economic indicators. Indian IT recession is pretty much inevitable, not so much because the world economic crisis, but because cheaper places outsourceable jobs can be offshored to- Rwanda, Nigeria, North Korea, etc.

patt1
patt1

I am really surprised at the frequent mention of caste system as a root of all ills in India. I am not sure how you get that impression. Actually Govt policies overwhelmingly favor the 'backward' castes. The reverse discrimination in India is outrageous compared to the US. Caste system is still very active in many parts of rural India where the 'lower' castes are treated really bad. In urban India the caste system (except in case of marriage) is non-existent. I lived in Mississippi for 3 years in the late 80s and I was taken aback by the racism undercurrents there and did not think that this sort of thing could exist in a place like the US. Most of the problems in India come from rampant corruption which also leads to sheer inefficiency. The filth you saw in Madras was because no one is willing to do their job. The people have gotten used to this and are generally apathetic. For the same reason, no one cares about the quality of graduates India produces as long as they get a diploma. Sadly, quality control does not exist in any field in India.

dave
dave

the definition of CULL is a bit larger than you portray. I assume that 1 and/or 2 below fall within the way it was used in this article. cull (kl) tr.v. culled, cull??ing, culls 1. To pick out from others; select. 2. To gather; collect. 3. To remove rejected members or parts from (a herd, for example).

patt1
patt1

If you bring up the 'caste system', I would say you have little understanding. In urban India, most do not notice castes. The cultural thing is slightly different. Again that should not have anything to do with one's performance at work or education. Culture has nothing to do with education. The Indian education system is broken. It was not so before the outsourcing boom. Today, the educational institutions in India do not invest in teachers, facilities or research. The students are busy earning a degree rather than learning. That is a long term problem for India.

gevander
gevander

See my separate comment, a little later than yours. These kids have 18+ years of being raised by people telling them to "stay in their box" - that creative thinking and problem solving is something other (higher caste) people do. You cannot fix that with curriculum at a post-secondary school. It has to be fixed starting in the lowest grades of education. You start to address it in your paper by noting the lack of questioning. But these are [i]adults[/i] who are not questioning because they learned [i]as children[/i] to "do as they are told" (and ONLY as they are told). Your paper highilghts that [b]you[/b] have the same problem as the Indian colleges. You were told "there is a problem inside this box" (Indian engineering education) and you addressed the problem inside the box without looking outside the box - where the problem originated.

patt1
patt1

Dismissing this as a non issue is a serious problem. I worked in the US for over a decade and later I worked in an Indian company for a couple years. I have seen both sides. Like the article says, in the beginning people in such large numbers were not needed. The IT companies in India could do selective hiring and gave emphasis to quality of work. Later, to meet the growing demand the Indian education system grew 10 fold overnight. As a result the quality of education has been mediocre. At the same time the IT companies have focused solely on profits and not on the quality of work. They have been helped by the fact that American companies have been solely focused on cost savings. I am not sure for how long that is sustainable.

TheBottomLineIsAllThatMatters
TheBottomLineIsAllThatMatters

See my comments above. But right now if you cannot communicate and you are taking in specifications from the developed world then you have a greater percentage to not produce what is required. If I'm expecting testing and it requires validation with mathematical measures and they cannot do the above. Why would I use them? Makes no sense, I'm sorry but real world here supports this article. When i have to kick out 20 to get 4 - that's a waste of time effort and long term support issues.

TheBottomLineIsAllThatMatters
TheBottomLineIsAllThatMatters

We are off shoring some of our ABAP work. The problem is the quality is horrible and we can only send off simple stuff. The quality being sent over is mediocre at best. We had a project and kicked out 20 to get 4 decent outsourced for our team. We spent more time training and discussing or correcting then we did actual work on a short time frame project. Problem is it is driven by short sighted cost views and not paying attention to longer term clean-up, training, or fixing that has to go on.

bobc4012
bobc4012

Maybe one or two comments might appear that way, but the others tend to indicate that it is part of the problem, not the sole problem. I suspect that even in urban areas there are plenty of caste bigots just as there are racial bigots in urban areas of the US. I also understand that there is more prejudice in rural areas in both countries (actually, most countries). This is due more to the isolationism that exists in rural areas, leading to a closer knit social structure than in urban areas. I would define certain rural areas of the South (and the North and the rest of the country) not much different in attitude toward outsiders and various ethnic groups than various areas areas of India. Of course, Indian culture is far more ingrained than in the US. Indian culture has developed over thousands of years, compared to a couple of hundred years in the US. he big advantage the US has is the diversification of the people who immigrated (in a relatively short period of time) and proved themselves as capable as those who immigrated before them.

mckinnej
mckinnej

but "cull" typically portrays a negative connotation whereas the people they are trying to find are the good ones. I still stand by my assessment of it sending the wrong message.

gevander
gevander

[quote]If you bring up the 'caste system', I would say you have little understanding. In urban India, most do not notice castes. The cultural thing is slightly different.[/quote] To separate caste from culture shows the lack of understanding you say I displayed. Caste has been part of their culture for hundreds (if not thousands) of years. "Not noticing" caste is not the same as "there are no castes". The caste dictates behavioral expectations. ALL the engineers (AND Level 1 Service Desk AND accountants AND others participating in the boom) belong to the "worker" caste. My point was that they are expected to "do as they are told" - that includes during their education for a new job. You said in another post that you worked in India. And you never experienced someone saying "Yes... Yes... Yes..." and then NOT doing what you said? That is an example of the caste system in action: You outrank the person you are talking to so they [u]must[/u] agree with you, even if they do not [u]understand[/u] you.

bobc4012
bobc4012

I guess that is why so much of what they write is misunderstood. The average American cannot function at the 8th grade level. And what I see these kids learning now in public schools, they can barely function at the 3rd grade level. As for newspapers writing at the 9th grade level, I seriously doubt it. When I see dangling participles, split infinitives, etc., I wonder how so many of these reporters graduated with a degree in English. A few years back there was an 8th grade test dating to the late 1800s circulating the internet. I honestly believe that most college graduates would fail it miserably today. I remember when I was required to give a presentation to upper management, I would be told to keep it net (basically a bullet list, accompanied by a sentence or two of explanation). It never ceased to amaze me how often the audience would misconstrue solely because they felt their time was too valuable to spend an extra 10 or 15 minutes having key topics fleshed out. BTW, I worked with Indians years ago (80s and 90s) both as a project I/F and later as a co-worker (contracting). Back then all had good command of the English language and great technical skills (and worked for less pay). As CEOs and their underlings found they could "cut costs" by employing cheaper outsourced labor PLUS avoid onerous government regulations by outsourcing, they helped bring about the current situation in India. Of course, they rewarded themselves with sizable pay increases and bonuses. By the time the $#!+ hit the fan, msny of the CEOs moved on (stating everything was great when I was CEO, look how we cut costs and made a profit).

dave
dave

more forward. I don't care about my 60 years or your 50 years. This is why most newspapers write to about the grade 9 level. Maybe less. People have problems with the context and are not willing to reread things to understand. If you can't understand based on the context that the word was used in they should Bing, Google or get a hard copy dictionary out. Learn. Just because you haven't heard a wrod used in a certain manner doesn't mean that its useage or the writer is WRONG. You would rather argue and point fingers at everyone else in your rush to see yourself in print. >> If a word can have multiple and especially conflicting meanings, then choose another word. If that's the case you might as well not use a good portion of the english language.

mckinnej
mckinnej

In my over 50 years of life I have NEVER heard the term "cull" used in a positive manner. The common use of a word should always be the first choice, regardless of where it ranks in the dictionary. Remember the first rule of communication: The message received is the message sent. A corollary is any miscommunication is always the sender's fault. If a word can have multiple and especially conflicting meanings, then choose another word.

dave
dave

Please do your research. You are viewing it from the only definition that you know of. The negative. It has both positive and negative defintions. That meaning is usually based on the context around the word. In this case a positive meaning selecting the best candidates. Definition of CULL 1: to select from a group : choose

patt1
patt1

I have worked in India for about 10 years (Govt., not Govt, IT companies) and about 15 in the US. I have seen large parts of India and a good bit of the US. India is very diverse, in terms caste, culture, language, food habits, life in general. None of that influences people's work habits. I have encountered the situations that you describe and many other. I face many situations outside work. You are frustrated that people do not act the 'expected' way. You have interacted with a small section of India and have come to the conclusion that it is the caste. May be you are simply using the wrong term when you refer to 'caste'. I would even say that the culture has nothing to do with how people act at work. It is more a mindset. There are many reasons for this mindset. I always wish people change their mindset and their attitude. However, seems like you are convinced that 'caste system' makes them act in the manner they do. So I will leave it that.