Software in India - The Manpower Myth

Pankaj Jalote
Associate Professor
Department of Computer Science and Engineering
Indian Institute of Technology
Kanpur - 208016


Software has been targeted as a growth sector in India. Besides the industry's own potential for exports, software also plays the crucial role role in information technology (IT), use of which is fast becoming the key for competitiveness in any industry. Hence, for the growth of IT industry as well as the other industries, a rapid growth of software industry, both in terms of size and quality is absolutely essential.

Though the software industry has been growing very rapidly, with many multinationals coming in India, the industry has already hit a road block in its path to glory. And that road block is the acute shortage of manpower.

The Myth of Abundant Manpower

Almost all major IT players in the world have set up subsidiaries or collaborations in India. The major attraction was an "abundance of technically qualified and cheap software manpower". This may have been the case before the start of the growth phase, but now there is, in fact, an acute shortage of qualified and trained manpower. This is getting reflected in the spiraling salaries (one of the highest average starting salary today), and more importantly, a frequent job-hopping culture. An average software person stays for a year or two in a company before hopping on to the next. Given the fact that a large software project may last many months, this type of loss has strong adverse effects on software quality and productivity of the software organization as a whole. Software being very manpower intensive, loss of a person represents loss of knowledge, often critical, about the projects the person may be working on, and about the general processes of software development. In addition, with the loss of a person, all the investment in training is also lost.

According to a report by an IIM Ahemdabad faculty, approximately 5000 people are needed every year to meet the growth targets of the software industry. However, the total production from education and training institutions is only about a third of this. Undoubtedly, the most acute problem facing the software industry today is the shortage of its most crucial resource - trained manpower.

The numbers of demand and supply do not tell the complete story regarding the manpower shortage. A report done by Tata Consulting Services (TCS), the largest software house

Current Industry Approach

So what do software companies do that want people with a good background in areas like databases, software engineering, object oriented technology, operating systems, etc. Two approaches are being followed by companies that are seriously engaged in the business of software development. The first is to hire the few available people who have the necessary skills at exorbitant salaries. This is the approach taken by most multinationals who have started operations in India. The second approach is to have in-house induction training programs, that will bring up the skills of the available manpower to a minimally acceptable level.

Today, a large organization which wants to recruit people in large numbers actually has no other option but to have in-house training facilities and extensive training programs. These training programs can be quite expensive. In a recent workshop on in-house training held at IIT Madras, it was estimated that a 2-3 month induction training program cost around Rs 50,000 per trainee. In addition, these training programs need to use the experienced manpower for training, which is in short supply and which can be used much more profitably in more "productive" activities like projects and R&D. Perhaps the biggest limitation of in-house training programs is that they cannot provide high quality education, as the qualified faculty is for Computer Science is even more scarce, and software organizations usually do not have such qualified training staff.

Investment Needed

There are two related problems of manpower shortage - one is the low volume, and the other is the low quality coming out from some places. One of the important factors common for both of these is lack of sufficient resources.
One of the reasons for poor quality training imparted at many universities or engineering colleges is institutions is lack of equipment, labs, and materials for faculty upgradation. Many places are so poor in terms of resources that they have nothing but a few PCs to run many programs. And, of course, there is no support for faculty to buy books, subscribe to journals, or attend conferences - all absolutely essential for avoiding technical obsolescence in this fast changing field.
Enhancing the quality of education at these institutions will require about Rs 1-2 lakhs per 4 or 5 student every 4-5 years for purchase of equipment (life of an equipment is at best 4-5 years), and about Rs 10-20K for each faculty every year for their enhancement. In other words, in a department with 15 faculty and a total of 200 students, support of the order of Rs 10-15 lakhs per year is needed.

Similarly, increasing the output of a recognized engineering college or an IIT will require an infusion of funds. For example, to increase the number of computer science graduates from a place like IIT or a good engineering college by about 100 people per year, will require hostel accommodation for 400, and new laboratories and computing equipment. Even if the institution absorbs the cost of additional faculty and staff needed to support this, the funds needed for this expansion will be to the tune of Rs 2 to 3 crore for the building of hostels and labs, and about Rs 20-30 lakhs per year for equipment.

Overall, for increasing the output by about 500 engineers per year will require a capital expense of about Rs 10-15 crore, and recurring expense of about Rs 1-2 crore per year. And raising the quality of 50 universities/engineering colleges, will require a recurring expense expense of about Rs 5 to 7 crore per year. These amounts are quite small, if one compares with the size of the software industry in India - current turnover estimated to be over Rs 1000 crore !

Role of Industry

Given that no recognized engineering college will be allowed to raise the tuition fees to anywhere near the actual education cost, there are only two ways to get the required support - either the government supports it, or the industry picks it up.

As higher education is getting a step motherly treatment in these days of single pointed focus on growth rates and reserves, there is little chance that the government will provide the necessary resources. As the lobby power of academicians is limited, the only way the government will possibly provide this support is if the busness lobby exerts its considerable influence. This, unfortunately, will not happen as the business groups use their lobbying to push for tax cuts, duty cuts, etc., which gives them more immediate returns.

So, the only real alternative is for the industry to provide the support needed for manpower development. And with the recent tax deductions, industry support automatically implies a partial government support. It should also be clear that the industry needs to support this not for any altruistic goals but for its own benefit. After all, it is the industry that will consume the output of this investment. Hence, an organization like NASSCOM, MAIT, or CII should really take this matter up in all earnestness.

Viewing it in another manner, the industry actually will have to foot this bill anyway. Either directly by supporting educational institutions, as has been suggested in this article. Or indirectly by having a more expensive and volatile manpower, and more expensive training needs. The choice of the path for this inevitable investment rests squarely with the industry.

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Pankaj Jalote, Professor and Head, Department of Computer Science and Engineering, IIT Kanpur 208016
Tel: +91-512-597619 (o); Tel: + 91-512-598501 (r); Fax: +91-512-590725/413
Email: jalote [AT] iitk.ac.in; URL: www.cse.iitk.ac.in