Forget all doomsday forecasts, India’s IT employment will double in five years

29 Jan, 2018
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Employers will be increasingly frugal with training budgets, but employees have options that include external certifications, MOOCs, building applications for fun alongside a community to practice, code challenges, and hackathons.

On July 6, 1900, Dadabhai Naoroji gave a speech in England raising his “drain theory” suggesting that the wealth transfer by the British was bleeding India with devastating consequences. US president Donald Trump, who thinks in Twitter, could not have read Dadabhai’s remarkable 1901 book, Poverty and un-British Rule in India, but his rhetoric against India’s IT industry seems borrowed. Trump is wrong—India’s IT industry is not exploiting or draining America but is actively contributing to its innovation ecosystem. And his actions—the latest threat is not renewing H1-B visas—will only amplify and accelerate the competitiveness of India’s IT industry. We make the case that India’s IT employment will rise from 40 lakh to 80 lakh in the next five years, but this will be accompanied by a substantial rejig of its people supply-chain.

The notion that India’s IT industry will employ less people in the future is shallow, ahistorical and impulsive. The relentless march of technology—automation, machine learning, big data, social, mobile phone penetration, cloud, etc—mean that every company is now a technology company. Companies are disproportionately investing in “change the business” over “run the business” and need to deploy code surrounding every person, place or thing. India only has $150 billion of the $1.4 trillion global industry even though over 75% of Fortune 500 companies source from India. India may be reaching the same network effects in IT that China has in manufacturing; we produce more engineers than China and the US combined, more people speak English in India than they do in the US, India has more than 500 captive global development centres, five of the top-10 IT service companies by market capitalisation are Indian, and 75% of employees in the top-10 IT service companies are Indian. But the world of technology is changing, and let’s look at the implications for employers, employees, and policy makers.

Indian IT companies have gracefully transitioned three S-curves—mainframe, client server and internet—but their ability to reinvent themselves over the next 10 years depends on a massive re-imagining of their people supply-chain. Training will need to be shorter and more online. Organisation structures need to morph from cylinders to pyramids on their way to Eiffel Towers. This means sharper performance management that may include a replication of the Colonel Threshold of the Army (if you are not shortlisted for promotion at this stage, you retire early). Committing to campus hires a year ahead with no clarity in demand has led to postponed or unhonoured offers that are bad for brands; fresher hiring will need move to an apprenticeship model that creates learning-by-doing and learning-while-earning, but allows employers to take students for a test-drive. Employers will also need to explore prepare, match and deploy partnerships with universities for just-time supply. And employee costs needing to be more variable than fixed which means that a larger proportion of the workforce will have to be on fixed-term contracts. Finally, delivery models where groups of people from various horizontals worked in an inefficient linear workflow need to be reconfigured into a collection of full stack development with industry expertise.

With the employment in IT shifting from a lifetime contract to a taxicab relationship, employees will have to think about their personal brands, continuously upgrade technical skills, and nurture soft skills. Upskilling is key to the wage premium; a programmer with Java /C #/Python skills can become more relevant in three weeks along with database skills in Mysql/Oracle/MS-SQL. A 8-10% wage premium comes from three weeks of investment in HTML/JS /CSS. A 15% wage premium comes from a four-week investment in server-side programming skills like servlets/JSP/Struts/ Spring/Hibernate with familiarity of frameworks such as EJB that starts the journey into becoming a full stack developer. Another 20% wage premium comes from four months of intense learning of more server-side programming using Groovy/Grails/Django framework and learning niche front-end development skills like Angular JS/React JS. At this point, the programmer should choose an indu8stry vertical and spend another 2 months in becoming MEAN by picking up skills like Mongo DB, Node.js, Express.js. The rest of the year can be spent picking up Python, R, Hadoop, AWS / Azure. Extending interactions with colleagues in Infra will help relate to server management and impact of code on performance of applications. The employee, at the end of three years should hence aim at having a set of keys that open any doors to the web at a premium she commands. Employers will be increasingly frugal with training budgets, but employees have options that include external certifications, MOOCs, building applications for fun alongside a community to practice, code challenges, and hackathons.

There are important upsides and downsides for education policy makers. The downside is that huge wage premium in IT meant that annual engineering capacity expanded from 3 lakh to 15 lakh over the last 15 years, but the demand-side for 3 lakh freshers per year will not change soon. This means excess capacity will need to go off the market or its hardware and software will have to be rejigged for other vocations. But the upside is that engineers will finally be available to other professions; this synchronises with the surge in India’s spending and hiring for domestic consumption and infrastructure. This shift—if supported by regulatory change—could greatly expand vocational universities, apprenticeships and online learning. The notion that India’s IT employment will decline is delusional; the future is bright but is different from the past. But the future does lie in IT companies making their brittle people supply-chains more flexible.

Authored Article by Manish Sabharwal & Santosh Thangavelu

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