The Hindu Business Line : For value-based offshoring

The rapid growth at the bottom of the IT pyramid has one huge consequence — a slide in talent and a rough introduction to the Law of Averages. Creating more specialists is the only way to beat this.

IT IS imperative that the IT industry provides for an advantaged resource pool, either through focussed specialisation or accelerated learning.

The rapidly growing software outsourcing industry in India is on a collision course with the Law of Averages. Indian engineers are on demand to carry out the full spectrum of outsourcing activities — from new product development, extensions of existing code base, implementationof enterprise software, integration of applications, bespoke development, product support, maintenance and technical services.

All this outsourced work from abroad has filled the order books of the major players for the next fiscal, and indeed these are good engineering projects, with the potential for creating significant global value.

In addition, there has been a surge towards setting up captive development and service centres in India by mainstream American and European companies, which have now become quite comfortable with the Indian engineers' work in the software arena.

When demand exceeds supply

This accelerating demand for engineers has translated into a rush for recruitment of engineers to meet the expectations of the customers.

Earlier, one could ask for Indian engineers and get them "off the bench".

No longer, and the talk is usually of the "pipeline" and a delay that is maybe eight to twelve weeks long, and increasingly comparable to hiring lags in the US.

When the demand for engineers exceeds supply in India, the recruitment engine works overtime to extract engineers from a system where every able-minded is already spoken for and employed.

This is currently a zero sum game, where companies get raided for resources and engineers jump ship to get the next increase in their salaries. While this appears good in the short run for individual engineers, prospective clients are looking at cost and talent projections over a five-year horizon and finding India less advantaged than other countries.

On the broader front of increasing the engineer pool size, India has been doing a relatively good job, with a dramatic increase in engineering talent in its public and private universities. This may well cool the salary spikes that exist today. However, this rapid growth at the bottom of the IT pyramid has one huge consequence, — a slide in the average Indian talent and a rough introduction to the Law of Averages.

Intro of law of averages

Assuming that the Indian IT industry has about 500,000 engineers with an average of about four years of experience. If one adds 40 per centevery year for the next five years, the average experience will slide steadily to hit three years by 2010. Thus, paradoxically, in a maturing industry, India will be increasingly "inexperienced" as a consequence of its success! Naturally, this happens as India will be adding significant numbers of people every year at the bottom of the pyramid, thereby lowering the average.

How does India get out of this? One way is to create "specialisation". This is the same principle by which universities are able to churn out so many variations of engineers.

This is by taking the same stock of students and focussing them over a two/three-year period on some specific areas. Thus, an electrical engineer graduates with a "different flavour" from, say, a mechanical engineer. Similarly, IT companies could focus their engineers more strongly, such as "User Interface Specialist" rather than as a "developer".

Need for specialists

By doing so, they will then be able to create the "specialist brand;" a four-year experienced User Interface Specialist would have much more value than a developer with similar experience. Thus, the same talent pool over the same time period can be turned more credible, capable and specialised.

The second approach is for the industry to set up mechanisms to accelerate the rate of experience acquisition. The key question here is: Can an engineer gain more than one year of experience in one year of service? The traditional wisdom is that it is not possible.

However, this need not be the case. All education is based on focussed learning. So, if one needs an engineer to be smarter, then focussed training is a must.

The management industry has mastered this skill of focussed training. Consider the use of case studies in an MBA curriculum. Here, the explicit intent is to provide a compressed capsule of a real-life business situation.

Through a system of discovery and discourse in the classroom a student absorbs the lessons that would have taken years to experience. This way, thestudent becomes more capableof assessing and analysing new situations in his/her subsequent consulting assignments. To some extent, six to ten years of experience is packaged into a two-year MBA curriculum.

Focussed training absent

The need in the offshoring IT industry is quite analogous. There is a need to learn from the hundreds of projects that are being carried out, encapsulate the lessons from these projects and enable the training of new IT recruits. This is woefully absent in the industry today. There are, of course, numerous institutes and courses in programming languages, systems, tools and project management.

These are however sterile, devoid of the real-world customer contexts, people dynamics, constraints due to infrastructure or policy, available choices and actual decisions.

Experience is not just about knowing tools or languages, but the usage of such knowledge effectively in customer situations to enable efficient and successful outcomes.

It would behove the IT industry, as individual companies or through an industry body such as Nasscom, to provide for an advantaged resource pool, either through focussed specialisation or through accelerated learning.

When such talent is made available and marketed, clients will be focussed on getting their needs satisfied, such as seeking the engineer who has specialised on User Interfaces for four years or look for the person who has undergone a one-year training on Implementation Case Studies and so on.

And the offshoring industry can begin to bid goodbye to the Law of Averages and look forward to value-based offshoring.

(The author is a technology executive based in the Silicon Valley. He can be contacted at sri.jagannathan@gmail.com)