Talent shortage a major constraint for start-ups

Most surveys of small and medium enterprises conclude that small companies’ main problem is lack of access to inexpensive capital for funding expansion and modernisation. However, an almost equally intractable problem is availability of talent. This is particularly so for start-ups, and even more so for those in the knowledge space such as information technology.

The National Employability Study 2011 recently conducted by Aspiring Minds Assessment Pvt Ltd, a Gurgaon-based ‘employability solutions’ company, based on the scores of more than 120,000 technical graduates and final-year MCA students in a test it conducted among them, revealed that a mere 3.25 per cent of engineering graduates are software-industry-ready, and ready to be hired without need for further training.

Almost 73 per cent of those who took the test were found to lack English language capabilities, while 95 per cent were found to be short on technical skills.

The study observed that the software industry’s real requirement is to be able to hire industry-ready software engineers. “Whereas large companies make investments in training, small and medium sized enterprises (SMEs) are unable to build training facilities or invest time in it. For them, candidates coming out of colleges should be able to learn on-the-job and start contributing early. However, such candidates, who can be considered software-industry-ready, are just 3.25 per cent [of the total].”

The report goes on to observe, “This is, and in the future shall become, a major impediment to [the] growth of entrepreneurship and IT companies in India.” It adds that this could even affect the growth of the economy, since the key growth drivers in the best economies in the world are not a “small number of large companies”, but rather the “large number of small companies” that characterise most economies.

Himanshu Aggarwal, co-founder and director of Aspiring Minds, says, “Campus hiring is very physical in nature. Start-ups are forced to look for a smaller subset of campuses and students. They also need to offer more money, because they are looking for people with a better knowledge base. But students don’t regard them as ideal employers.”

Jatin Sharma, CEO of Kritikal Solutions Pvt. Ltd., a Noida-based company in the high-end technology space, agrees. “Start-ups have a problem of reaching out to a large number of campuses. Secondly, the students that we hire from colleges have hardly any exposure to industry. So we have to train new hires for at least a month, and after that they are ready to deliver smaller modules within a team. But the training process really goes on for almost a year-and-a-half,” he adds.

According to Varun Khanna, head of the India Development Centre of Silicon Valley-based Location Labs (which recently acquired Gurgaon-based Wirkle Solutions – which is in the mobile applications space – where Khanna earlier worked), it takes the company up to six months to bring an entry-level new hire up to speed.

“The technologies we use are not taught in colleges. Bringing people up to speed is a big challenge. We’ve had to put a training plan in place and it involves a lot of mentoring through senior-level people,” said Khanna.