INDIA

Indian labor market tightens

India's skilled-labor market is tightening putting human resources issues at the centre of the corporate agenda according to a report in the Financial Times.

Over the last financial year, recruitment at the two largest Indian IT companies by market value, Infosys Technologies and Tata Consultancy Services has reached staggering levels. Infosys, based in Bangalore, hired no fewer than 31,000 new employees, taking its total workforce to 72,000.

The company boasts a market value of $27.5bn. This year, its revenue growth is expected to reach 28-30 per cent and it plans to recruit 24,500 people next.

Yet a shortage of graduates and rising staff turnover are becoming a problem. Graduate numbers do not provide an accurate picture of the levels of employable skills in India. According to the Financial Times, the available engineering talent, for example, is relatively low.
Indian engineering schools produce about 400,000 graduates a year. Of these, the best 125,000 will be snapped up by the five big IT companies – Infosys, Tata Consultancy Services, Wipro, Satyam and Cognizant. Smaller software players will recruit a further 100,000. This leaves a dwindling number available to all other sectors of the economy.

The challenge of sourcing such a quantity of people amid worsening shortages of skilled labor has led Infosys to move its finance director, Mohandas Pai, to oversee HR.

Whilst in many mature Fortune 500 companies this might be considered a step down, it is seen as essential in a market that has tightened faster than expected.

The shortage of engineers is seen as the result of an education system that produces graduates of a standard below that required by the offshore information technology and outsourcing industries.

A study by Indian lobby group the National Association of Software and Service Companies, states that around 25 per cent of engineering graduates and 10-15 per cent of general college graduates are up to standard. It warns that the Indian IT sector faces a shortfall of 500,000 professionals by 2010.

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