Last week, Infosys whistleblower Jack Palmer was reported as saying that H1-B workers replacing American workers in the US have minimal skills and little or no business knowledge. He was addressing the Senate Judiciary Committee during a Congressional on immigration hearing.
As a journalist who has been tracking the industry for over a decade, I was wondering if this was a case of sour grapes, since Palmer had to leave his job at Infosys (of course, he did get a $34 million visa fraud settlement), or if this was a genuine case.
Those who have been part of the industry for long will likely take Palmer’s allegation with a pinch of salt. While I do not agree with Palmer in totality (nor does the industry), if one goes back a few years and reads up on some of the biggest challenges for the industry, you will get the answer. The fact also remains that he is not all wrong either. Of course, Indian IT industry body Nasscom has rubbished the claims.
Kris Lakshmikanth, CEO of Headhunters India, agrees that what Palmer is saying is not untrue. “When the industry started these things were correct and perhaps then the allegations would stand to be true, but the industry has matured tremendously now,” he said. “However, there still exist body-shopping companies who will hire people who have no major skill and send them to the US purely for cost saving.”
He does add that a lot has changed. Foreign trips or onsite work is given only to engineers who have at least 2 to 5 years of experience as a way to “reward the person working for long in the company or sees potential in the individual”.
Besides protectionist stand by countries have made Indian players hire more onsite or create near-shore centres," Lakshmikanth added.
For some years now, the industry has been crying itself hoarse on the talent and skills of the graduates of Indian engineering colleges. It is also known fact that all the engineers, except those who pass-out from the top 5-6 premier institutes, have to be re-trained.
Each company, irrespective of size, spends almost anywhere between 3-6 months for training of each engineer. Take for instance, Tata Consultancy Services (TCS), India’s largest IT services provider that makes $13.4 billion in revenue. The company is setting up a Rs 1,000 crore training campus in Kerala that can house 10,000 professionals. The company spends almost 2% of its annual revenue just on training.
Infosys, too, has created such a training centre in Mysore. The centre can handle 14,000 employees at a given time. Infosys spent over Rs 2,000 crore to set up the centre, of which Rs 1,700 crore was on education- and training-related infrastructure.
The industry has invested heavily in manpower development, with an average training period of 3-4 months for fresh recruits (involving an expense of up to 40% of a new employee’s salary) and additional training over the entire employee lifecycle.
Here is another statistic which, though a bit dated, still holds true as nothing fundamentally has changed in the Indian education system. Almost 62% of all engineering graduates require education or training to be eligible for any job in the IT and IT-enables services sector, said a 2010 study by Aspiring Minds, an assessment technology provider. The study noted that IT product firms feel that only 4.22% of graduates are fit for employment. Similarly, IT services companies said just 17.84% are employable.
So it is a fact that the engineering quality that India has is questionable. It is only with training from employer that these engineers are being made capable of handling real issues. There can always be a counter claim that firms like Facebook, Intel, Microsoft, Google and many more which are high on innovation hire Indian engineers, too. But then, they hire only from the premier institutes.
The industry may deny it but the fact remains that offshoring is great on costs. The Indian cost structure is so amazing that several MNCs have embraced it 100%. IBM is a case in point, as is HP. Though product firms say that they have invested in creating R&D centres in India, it is only in the last three to four years that actual work has started in these centres. As one senior executive says: “The thinking and design part still happens at headquarters, there are (only a) handful of examples where the India centre has contributed significantly. Even if it has, then those ideas have been used for emerging markets.”
It’s all about cost and volumes. The Indian IT industry is thriving because of cheap labour. HR executives agree that cost difference between an engineer hired in India and someone in the developed world is huge.
The other big reason is culture. Indians can work hard. “We have spoilt our customers. Have you ever imagined a situation where you are telling a local guy in the US or anywhere in the Europe to work late on a Friday or on holidays? It would be ridiculous. But you just have to tell the Indian colleague and they will readily agree,” said a HR consultant.
Here is a live example. A friend’s husband working in a reputed consulting firm in Bangalore was asked to work on a Saturday. Since it was an emergency he agreed. “But he immediately got a call from his co-worker in the US who said if he had any plans for the weekend or anything which he had pre-planned then he should please go ahead. Imagine his Indian boss ever saying that,” she says.
One final thought on Palmer’s allegation that Indian engineers do not have business knowledge. There are only a few engineers who immediately after their graduation are aware of business scenarios. Every professional has honed these skills on the job. Why, I even wonder if Mark Zuckerberg knew of the business opportunity while he was creating Facebook!