In a February 15 article on Rediff.com – Narayana Murthy wows Washington elite – Aziz Haniffa sings praises of India’s international software icon. The Chairman of Infosys Technologies is, without doubt, the face of Indian software. But he has also transcended into a kind of statesman-CEO voicing his views on areas not directly under his domain. The “sage of Bangalore” (as Haniffa calls him) has set new standards in corporate governance, and has raised the bar high enough so that Indians can start competing with global behemoths.
So, if Infy is all that, then why was it downgraded yesterday by JP Morgan? In a point-blank interview to CNBC-TV18, analyst Bhavin Shah of JP Morgan brings to light the fact that “the company is facing a crunch in the middle management layers.” Shah points out that Wipro is also on the brink of such a crunch, but that TCS is a bit safe.
Can this be true? How can such a thing happen to some of India’s most successful, most loved companies? The fact is, and Indian IT majors are waking up to it, there is a serious shortage of skilled manpower that is hitting the industry. And real bad.
Well yes, you read in the papers that “TCS (or Infy or Wipro) added 15000 into it ranks this year. And the numbers are growing.” True, but it pays to find out how many of those joined straight from college. That number would be a staggering 80+ percentage. Given an attrition rate of 10-12%, a company like Infosys would be losing 4000 people every year. Huge as it may seem, one might still be tempted to think “But they added four times that number, right?” The real impact of this can be understood only when we appreciate that these 4000 were people who had served for 3-4 years.
In effect, people with lots of experience leave the company, and they are replenished with freshers. As Indian IT tries to move away from doing the menial tasks to some really challenging work, the people capable to executing such work are no longer there. A year or two ago, the picture wasn’t this bad for two reasons. The people who quit one IT major found their way into one of the others. This way attrition was equitably peaceful for recruiters because if 10 people from company A went to companies B, C and D, a proportional number would come from B, C and D to A. These days, however, with the arrival of big names (like Accenture, for example), the other names have become some kind of uncool. Secondly, IT professionals have realised that B, C and D are really no different from A, so that makes them uncool anyway. Recently, a friend of mine, who is a Project Manager at one of the Big Three, recounted how a Vice President of his company accepted that people are no longer seduced by the company. “Earlier 2000 people used to walk in for a single ad in the papers. Now it is hardly 10% of that number we are able to attract. And they are simply no good.“
The other problem coming to light in the IT industry is that the growth in the past few years is inorganic in nature. Adding 10000+ new folks into your fold every year is akin to buying out another company. Inorganic growth has one advantage – you can learn from the expertise of others. However, in this case, “this other company” has no skill set whatsoever. And the more people you add to the company, the more expectations you add. But big companies can, by nature, only work slow. Thus things get a long time to get implemented. Which only adds to employee frustration. In effect, “Expectation Management” is a function which bigger companies need to work on.
The “sage of Bangalore” and his disciples (as well as their peer-sages in other companies) have issues to address. If you read in the papers that all is fine, don’t believe it completely. Yes, things are good, they are rosy still. But not without problems. Problems whose magnitude we might not realise, and might suddenly rear their ugly heads, when we are most unprepared. After all “the greatest trick the devil ever pulled was convincing the world he didn’t exist.“
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