India's engineer shortage

China is not the only booming economy with reports of skill shortages. A piece in today's New York Times by Somini Sengupta, Skills Gap Hurts Technology Boom in India, reports a shortage of engineers - and the scarmble to educate more:

As its technology companies soar to the outsourcing skies, India is bumping up against an improbable challenge. In a country once regarded as a bottomless well of low-cost, ready-to-work, English-speaking engineers, a shortage looms.

India still produces plenty of engineers, nearly 400,000 a year at last count. But their competence has become the issue.

A study commissioned by a trade group, the National Association of Software and Service Companies, or Nasscom, found only one in four engineering graduates to be employable. The rest were deficient in the required technical skills, fluency in English or ability to work in a team or deliver basic oral presentations.

The skills gap reflects the narrow availability of high-quality college education in India and the galloping pace of the country’s service-driven economy, which is growing faster than nearly all but China’s. The software and service companies provide technology services to foreign companies, many of them based in the United States. Software exports alone expanded by 33 percent in the last year.

The university systems of few countries would be able to keep up with such demand, and India is certainly having trouble. The best and most selective universities generate too few graduates, and new private colleges are producing graduates of uneven quality.

Many fear that the labor pinch may signal bottlenecks in other parts of the economy. It is already being felt in the information technology sector. With the number of technology jobs expected to nearly double to 1.7 million in the next four years, companies are scrambling to find fresh engineering talent and to upgrade the schools that produce it.

Some companies are training faculty members themselves, offering courses tailored to industry needs and improving college labs and libraries. They are rushing to get first choice of would-be engineers long before they have completed their course work. And they are fanning out to small, remote colleges that almost no one had heard of before.

The country’s most successful technology concerns can no longer afford to hire only from the most prestigious Indian universities. Nor can they expect recent graduates to be ready to hit the shop floor. Most companies require in-house training of anywhere from two to six months.

Demand is beginning to be felt on the bottom line. Entry-level salaries in the software industry have risen by an average of 10 to 15 percent in recent years. And Nasscom, which helps companies wanting to outsource find workers, forecasts a shortage of 500,000 professional employees in the technology sector by 2010.

The labor crunch is starting to pop up across the service economy. ICICI, the country’s largest financial services company, announced plans to hire up to 40,000 workers in the next three years.

...Reuters reported in October that Google was having trouble finding Indian workers proficient in the languages and design technologies used in the latest generation of Web sites.

This year, India’s largest software company, Tata Consultancy Services, plans to add 30,000 people to its current work force of 72,000.

...In the past, Tata Consultancy Services needed only to turn to the top engineering schools in the country: the nine campuses of the Indian Institutes of Technology and a few others gaining admission can be more difficult than getting into the Ivy League.

...The number of technical schools in India, including engineering colleges, has more than tripled in the last 10 years, according to the All India Council of Technical Education. Most are privately run.

A new kind of institution has emerged to offer intensive English language training and instruction in technical skills required for the workplace for those between college and career. They are called finishing schools, and Nasscom is rolling out its own by early next year.

...Higher education is still available only to a tiny slice of India’s young. No more than 10 percent of Indians ages 18 to 25 are enrolled in college, according to official figures. Nearly 40 percent of Indians over the age of 15 are illiterate.

The industry is lobbying hard to allow private investment in Indian higher education. Right now the government allows only nonprofit ventures, and often they are of varying quality or are the brainchildren of politically connected entrepreneurs.

The Commerce Ministry has recently floated the idea of private foreign investment in higher education. Indians account for among the largest groups of foreign students in the United States, and India increasingly sends students to other countries, like Australia and Canada.

Nandan M. Nilekani, the chief executive of Infosys, one of India’s biggest providers of technology and back-office services to Western companies, calls the situation a crossroads for his country.

With more than half of its population under 25, he said, India could educate its young and open job opportunities for them, or be left with a large, potentially restive pool of unskilled, unemployable youth. “It is a golden opportunity,” he said, “which can be frittered away if we don’t do the right thing.”

Comments

[Arthur Eckart]

Investment in human capital is expensive. Budget constraints may be one explanation why most large population countries haven't been able to compete with many countries in the global economy (without lowering prices, dumping, weakening their currencies, etc.). Also, budget constraints may cause greater income inequality in large population countries than in small population countries, since there may be larger trade-offs between population and capital in large population countries.

[harsha]

what is that author wanted to highlight?

1. engineers are scarce? (wage pressure is building up)
2. engineers are sub-standard? (abundant human capital without skills)

It is the prerogative of industry to train it's employees. No engineer anywhere in the world is tailor-made to the industry needs, and in India that pay peanuts but complain of quality of engineers. Industry wants to milk out without putting a penny. Also little wonder why does a software engineer need presentation and oral skills of the kind of marketing folks as expected by industry? All stupid reasonings to spice up article.

This is not the first time I came across the kind of article fuming on some unknown fear. I wanted to ask few questions to the author,

1. How many articles did the author compile till date?
2. How many of them have taken light? (published somewhere)
3. Did she/he start writing articles starting from day one of her/his career in NY Times?

The author might be of less caliber to have not gotten mileage in her/his career and going overboard to state that Indian engineers are sub-standard. well, who told the author that speaking fluent english is one of the skills for a software engineer. It's pity to have ill-researched article spoiling the party in international media, fink you.