Indian IT firms stand to gain from global SAP skills shortage

Indian IT firms stand to gain from global SAP skills shortage

Bangalore: Indian software services companies such as Tata Consultancy Services Ltd (TCS), Infosys Technologies Ltd, Wipro Ltd and Satyam Computer Services Ltd could benefit from a global shortage of consultants who can implement business software made by German company SAP AG.

SAP, the world’s largest business software company says, there will be a shortage of around 40,000 SAP consultants next year. While SAP sells the software, its implementation is done by consultants.

Companies such as TCS, Infosys, Wipro and Satyam, all derive a significant proportion of their revenues by doing this either for SAP or its rival Oracle Corp. In 2006-07, between 15% and 20% of their revenues came from such consultancy work.

According to SAP, a significant but unspecified portion of the shortage relates to India.

Claus E. Heinrich, member of SAP’s executive board, said the shortage of SAP consultants reflects the success of the company’s products. “Our success is our problem. To keep up with the growing demand, we constantly need engineers trained on SAP. In Germany we have 18,000 less (SAP) engineers (than we need) and we might face the same (shortage of SAP consultants) in other countries such as India," he adds.

Although large companies were once the biggest customers for business software, both SAP and Oracle have targeted small and medium enterprises successfully. As a result, demand for consultants who can deploy and maintain the software has increased. SAP says the shortage has not affected customers.

“At this point, we do see the beginning of a skills shortage for SAP/Oracle, butit (skill shortage) has not affected (project) roll-out yet. We do see some price increases of about 25-30% premium on the billable rates, and some slowdown in start dates (of projects)," said Ray Wang, principal analyst for Forrester Research.

Clas Neumann, president, SAP Labs India Pvt. Ltd, said the company is trying to train and certify more consultants here through steps such as vocational training at universities, sponsoring scholarship seats at premier institutes, emphasizing online learning and leveraging SAP’s knowledge-sharing communities.

Cognizant Technology Solutions Corp. says its SAP practice has been growing 100% year-on-year for the past three years. “We get new talent trained in SAP through our in-house training centre, Cognizant Academy, that has a unique tie-up with SAP," said V. Mahesh, senior vice-president, manufacturing, retail and SAP, Cognizant. The company has also set up a dedicated SAP training centre in Coimbatore.

However, Sankha Bhowmick, vice-president, HR, at technology consulting firm Bristlecone Inc., says SAP should be doing more to grow the number of consultants including opening “more training institutes" and “reducing cost of training and certification, which is currently too high for most people". On average, a three-month training and certification programme in SAP can cost up to Rs3 lakh. The Waldorf, Germany-based SAP ended 2006 with revenues of €9.4 billion (Rs54,708 crore).