An influx of foreign firms into India’s IT services and outsourcing sector is boosting salaries and could soon exhaust the availability of highly-skilled staff, industry sources say.
The booming sector already accounts for 1.5 million jobs, and turnover this year will reach $48 billion, with companies such as Microsoft, Dell, IBM and Cisco continuing to expand their operations.
Harish Mehta, founding member of lobby group National Association of Software and Service Companies (Nasscom), says employers aiming to hire tens of thousands of workers in the next few years are already finding it hard to fill posts.
“India has become a hub for IT companies in the world,” he said. “Current exports will reach $31 billion in 2006-07 and $60 billion by 2012.”
“The bargaining power is on the employees’ side,” he said. According to Nasscom, IT salaries are increasing 15% a year in India, compared to 3% in the US. If current growth rates continue, India “will lack 2,60,000 engineers in 2012 and there will be a shortage of 5,00,000 suitable candidates,” he said.
European IT services company Capgemini announced last week that it was on the lookout for 9,000 new staff a year over the next three years. The US-based consulting, technology services and outsourcing firm, Accenture, is also hunting for nearly 10,000 new staff this year alone. Its Indian operations range from business process outsourcing to software development.
“The bargaining power is on the students’ side, who can often choose between at least four jobs,” said Krithi Ramamritham, dean of computer science and engineering at the Indian Institute of Technology in Mumbai.
Snapped up within days of graduation, qualified IT engineers can expect 15% annual pay rises and an average salary of Rs5,40,000 ($12,300) a year, according to Nasscom. This compares to an average per capita income of $800 per year.
India has 3,00,000 newly qualified engineers entering the job market each year—more than the US and Europe put together.
“It’s a huge reservoir of grey matter,” said Pierre-Yves Cros, strategic director for Capgemini.
However, annual demand is forecast to far exceed the number of graduates. “Given the growth rates, there will be a shortage of highly-skilled people,” he added, but stressed that for the time being at least, there was no shortage.