Chief information officers (CIOs) of Indian enterprises can address the high attrition levels of their internal IT teams by sending application development and maintenance projects to locations such as Singapore and Hong Kong, advises research firm Gartner Inc. Indian firms, which are facing IT skills shortage and inadequate services standards from local service providers, should start to look abroad, Gartner says.
Many enterprises are grooming IT managers with required domain expertise for carrying out IT projects. But “we are finding it a challenge to retain and hire such technology talent”, says Arvind Tawde, senior vice-president and CIO of Mahindra & Mahindra Ltd. Tawde manages an IT team of 200 professionals, of which 20 are in corporate IT, with expertise in understanding business requirements. “This year, two of our corporate IT team members have already left the company.”
With software companies such as Tata Consultancy Services Ltd and Infosys Technologies Ltd growing their revenues by around 30% every year by serving global clients, there is a race to grab the best talent. HDFC Bank Ltd is facing an attrition rate of more than 20% in its 280 member-strong IT team, as they seek to work on new technologies elsewhere in the industry. “Attrition is a real problem for us now,” says C.N. Ram, CIO of the bank. “India is witnessing a severe shortage of skilled IT resources at all levels of the IT personnel chain,” says Linda Cohen, V-P and analyst for Gartner’s IT sourcing group. Indian service providers typically allocate the best resources to “their global flagship customers that pay in dollars and yield better margins”.
A Gartner survey conducted among more than 1,400 CIOs worldwide showed that IT budgets in India grew 16.19%, compared with an average of 3.16% in the rest of the world in 2006. High-growth sectors such as banking and retail in India will be “needing at least 100,000 workers in the coming few years, and enterprises are finding it difficult to find trained people”, says Sanjay Sharma, CIO, IDBI Bank Ltd.
Gartner predicts Indian firms will go offshore in their sourcing strategies, which will result in outsourcing deals delivered from other parts of the world. “This global sourcing model will become business-as-usual for Indian organizations,” says Arup Roy, senior research analyst for Gartner’s IT services market group. He adds that Indian companies would source IT skills from Singapore and Hong Kong.
According to consulting firm Frost & Sullivan, Indian enterprises will spend around $1.21 billion on total IT outsourcing this year, against $996 million last year. Firms such as Reliance Industries Ltd and Allahabad Bank plan to outsource their IT needs to focus more on their core banking business.