October 14, 2005


This week's Outlook

Do get a copy for yourself. There are a bunch of brilliant articles (mostly related to journalism) in this 10th anniversary issue.

If you not old-fashioned like me, who enjoys reading stuff on paper, you can read it online. Beware, this link will be valid only for couple of more days. After that, it will be in archives. In that case, read the issue dated October 17, 2005.

BTW, it needs soul-sucking registration. You can dodge it - use the login/password available here. Bugmenot rocks!

October 13, 2005


Boast factor

As usual, the pink paper goes overboard in its headline - "Desi IT majors outscore global giants". Mr. Nilekani, CEO, Infosys said
“The much superior quality of our service and our global delivery model have created enormous pressure on legacy players,”
The pink paper interprets as "INDIAN software service providers are head-to-head against legacy IT majors such as IBM and Accenture and there is a major transitional change happening at the market place".

OK. Tell me more how they are doing it. The article fails miserably on this count. It just throws the numbers from the press release. Damn to the headline, we are like this only.

Yes, the Indian IT industry has come a long way. Infosys took 24 years to reach US$1 billion in revenues. They will take just 24 months to hit US$ 2 billion mark. It is something which deserves respect and admiration. But, let's take a look at the global IT giant mentioned in the article.

IBM earned US$12.0 billion in the Second Quarter of 2005 from services - the arena where they compete with Infosys, TCS, Wipro. To put it in perspective, revenue of IBM in a single quarter is twice the annual revenue of Infosys, TCS, Wipro put together. Let me also mention that while Indian companies are logging 20-30% jump in the revenues per annum, growth for IBM is in single digit.

Indian IT giants have a long way to go, before we can truly say, "We've arrived."


The Factory

The pink paper tells us - "Infosys demands 30,000 seats in IITs"[1]. The first sentence in the news and I confirm my gut feel that the headline, as usual, is coloured. While the CFO of Infosys used a milder "recommended", pink paper added the usual strong bias and made it "demands". Anyway, that's not the point of this post.

Mr Pai, CFO, Infosys said,
"We have recommended to the government to increase the intake in the IITs to about 30,000 seats from the present 4500-5000 seats so that our industry could absorb high quality graduates coming out of them. For a country of over a billion people, about 5,000 students passing out (from the IITs) every year is grossly inadequate. You can't create quality by choking supply. The government needs to enhance supply to create quality."
Does this mean IITs, the Ivy league schools, should just be rendered as mass supplier of coders to the Indian IT industry, with the bellwethers dictating the quantity? For a moment even if we assume that IITs start churning of huge number of graduates every year, what is the guarantee that IT industry will continue to enjoy the current dream run and recruit in large numbers? Just 4 years back, when chips were down, offers were delayed by 14-18 months. (All offers were honoured, ultimately.)

He reasons,
Though India produces about 400,000 engineering graduates a year, a substantial number of them remain unemployed for want of quality.
Mr Pai identifies the problem with great precision, but he suggests the wrong prescription. It is wrong, rather sub-optimal, for multiple reasons.

One - the cost.

In an article on IT industry, Prof Pankaj Jalote of IIT Kanpur, says [2],
"...for increasing the output by about 5000 engineers per year .... a capital investment of [Rs] 100-150 crores will be required. In addition, a recurring expense of about 10-20 crores per year will be needed."
This was in May, 1996. That is, a decade back! These numbers could easily be in the range of Rs 500 crores today. (I've arrived at these numbers by using a scientific fudge factor which I can't reveal for obvious reasons.) Do the math for the current requirement.

Two - While it will take a few years to increase the intake of IITs, IT industry needs people RIGHT NOW. The easier route would be to improve the quality of current engineering colleges. IT industry should hold AICTE accountable for the quality of engineers. (The IT industry has shown its clout.) If AICTE makes its norms stringent; and companies insist that they will recruit only if the college has highest grade from AICTE, all the colleges will start waking up.

Thirdly, the Ministry of HRD has some ingenious methods to achieve such demands. "So, you want more students from IIT? I'll create for you." And how do you create IITs overnight without genie from a lamp? Simply by branding some of the existing colleges as IITs[3]. Easy, it is.

Finally, as it is common knowledge that large number of engineering graduates from all disciplines join IT industry, one may take a look at where the "quality" engineers are going and why. (Hint - $$$)

Yes, India needs more Institutes like IITs. We still don't have our own GE, Sony, Honda, Cisco, Microsoft, Intel,... and neither do we have a dozen Nobel prizes in sciences, you see.

[1] News story from the pink paper.

[2] Reprogramming to Upgrade and Software in India - The Manpower Myth : Articles by Prof Pankaj Jalote.

[3] Seven more IITs.

[4] More articles on IT industry, IITs and education by Prof Pankaj Jalote.

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