American businesses are increasingly moving their research and development (R&D) operations to India. Companies such as General Electric and Cisco now have their second largest research centres in Bangalore. Debates rage in the US about whether this will lead to more prosperity or threaten the country’s global economic leadership. But it’s more productive to ask how India is training a workforce capable of handling such complex work.
The global engineering and entrepreneurship project team at Duke University travelled to India several times between September 2006 and May 2008 to meet the executives of dozens of multinational and domestic Indian companies to review their R&D projects and operations. What we found was astonishing: Despite its low science and engineering graduation rates, India is rapidly becoming a global hub for R&D, with a momentum and scale similar to what it accomplished in information technology services.
But how? Adjusting for different definitions of which degrees count as “engineering” degrees, India graduated roughly 140,000 engineers in 2004, about the same as the US. Additionally, it graduated 17,000 at the master’s level and 900 PhDs — a small fraction of the US numbers and not even enough to meet the growing staff requirements of Indian universities. Nor is the quality of its graduates consistent. The Indian Institutes of Technology (IITs), for instance, are equivalent to the MITs of the world, but many other, smaller institutions aren’t even licensed.
So, if engineering education is so critical to global competitiveness, how is India succeeding? It’s picking up on the best practices know-how it effectively imports from foreign firms outsourcing to India, and perfecting those techniques. This isn’t novel — it’s exactly the path Japan followed in the 1970s and ’80s.
A new report by the Kauffman Foundation, which I co-authored, breaks the Indian innovations down into seven key areas.
The firms we studied are innovative not only in how but also in whom they recruit, and where they look for talent. Most hire for general ability and aptitude, rather than specialized domain and technical skills. They rely on training and development to bridge skill gaps. Technology firms such as HCL and Wipro recruit from second- and third-tier colleges, and also arts and science schools. India’s largest call centre operator, Genpact, has recruiting storefronts in 22 cities, without even requiring a resume. It is also targeting retired bank clerks and housewives.
Firms in India assume new recruits will have to be trained practically from scratch. Most large firms have built dedicated learning centres and some employ hundreds of training staff. The Infosys Global Education Centre at Mysore can train 13,500 people at a time. New recruits attend a 16-week boot camp which strengthens their technical, communications and management skills. For its science recruits, TCS provides seven months of training in computer programming, customer orientation and project management.
Indian firms have to invest in rapidly moving their employees up the skill and management ladder. This increases billing rates and the productivity of employees, and lessens attrition because of the rapid career advancement that employees can achieve. Employees are typically required to participate in a range of education programmes, including not only technical and domain training but also soft skills and management skills encompassing training in quality processes. Career advancement and salary increases are usually tied to the completion of such training.
Shortages in managerial talent have made it necessary to foster talent from within. Managers are typically groomed through fast-track programmes that provide training and mentorship to high-performing employees. The average age of first-line managers in the Indian firms we studied is below 30. Preference is usually given to internal staff to fill management openings.
All the firms we studied have sophisticated performance-management and appraisal systems to create greater transparency and fairness in evaluation and rewards. Managers are evaluated on a variety of non-financial measures, including employee satisfaction, attrition rates and mentoring. Most firms have achieved dramatic reductions in employee turnover by carefully analysing recruitment, performance and attrition data to identify patterns. This has led to constant refinements in recruitment, training and development, performance management and other human resources practices.
Indian firms work closely with private colleges and universities that supply them with talent — in customizing degree programmes; training the educators; creating new curricula and training programmes; and negotiating to hire graduates in bulk — without job interviews.
The result of this workforce productivity is clear to see. In the aerospace industry, India’s firms are designing the interiors of luxury jets, in-flight entertainment systems and collision control and navigation systems for American and European corporations. Its scientists are discovering drugs and performing clinical research for nearly all the largest multinational drug companies. Its engineers are helping to design bodies, dashboards, and power trains for Detroit vehicle manufacturers—and soon may develop entirely outsourced passenger cars.
If workforce training can take the output of an education system as weak as India’s and turn its graduates into world-class engineers and scientists, imagine what could be done with an American worker base that has received among the best education in the world.
The Wall Street Journal
Edited excerpts. Vivek Wadhwa is executive in residence for the Pratt School of Engineering at Duke University, and a Wertheim Fellow at Harvard Law School. This op-ed is adapted from a report, How the Disciple Became the Guru, released by the Ewing Marion Kauffman Foundation. Comments are welcome at email@example.com