India Struggles to Keep Up With Surging Employment Needs

Higher education is still only available to a tiny slice of India's young, and nearly 40 percent of Indians over the age of 15 are illiterate. India continues to send a large number of foreign students to the United States, and increasingly to other countries, like Australia and Canada. Nandan Nilekani, chief executive of Infosys, said India is facing a crossroads.

As its technology companies soar to the outsourcing skies, India is bumping up against an improbable challenge. In a country once regarded as a bottomless well of low-cost, ready-to-work, English-speaking engineers, a shortage now looms.

India still produces plenty of engineers -- nearly 400,000 a year at last count. However, their competence has become the issue. A study commissioned by the National Association of Software and Service Companies, or Nasscom, found only one in four engineering graduates to be employable. For the rest, it said, either their technical skills are deficient, their English-language abilities are below par, or they have not been taught how to work on a team or deliver a basic oral presentation.

Education Issues

The skills gap reflects the narrow reach of high-quality higher education in India and the galloping pace of its service-driven economy, which is growing faster than just about any other except China's. Software exports alone expanded by 33 percent over the past year.

The university systems of few countries would be able to keep up with such demand, and India is having trouble. The best and most selective universities generate too few graduates, and new private colleges are producing graduates of uneven quality.

Many fear that the labor pinch may well signal bottlenecks in other parts of the economy. It is already being felt in the information technology sector. With the number of technology jobs on track to nearly double to 1.7 million in the next four years, companies are scrambling to find fresh engineering talent and upgrade the schools that produce them.

Some companies offer training themselves, with courses tailored to industry needs, and upgrade college laboratories and libraries. They are rushing to get first choice on would-be engineers long before they are done with course work. They are also fanning out to small, remote colleges no one had heard of before.

India's most successful technology companies can no longer afford to recruit only from the country's most prestigious universities. Nor can they expect graduates to be ready to hit the shop floor. Most companies require internal training of two to six months.

In a handful of instances, as Indian businesses expand their global footprint, companies are looking abroad for talent, mostly to staff their operations in foreign countries. Demand is beginning to be felt on the bottom line. Entry-level salaries in the software industry have shot up by an average 10 percent to 15 percent in recent years. Nasscom forecasts a shortfall of 500,000 professional workers in the technology sector by 2010.

Demand Not Slowing Down

No doubt, the looming labor crunch is a problem of plenty, and it is starting to pop up across the service economy. Icici, the country's largest financial services company, announced plans last month to hire as many as 40,000 workers in the next three years. The Retailers Association of India announced in July that its industry would need nearly 115,000 workers in the next six months.

This year, India's largest software company, Tata Consultancy Services, better known as TCS, plans to add 30,000 people to a current work force of 72,000 -- and so it was that on a recent Wednesday afternoon, a four-man team from TCS roamed the halls of a college founded by a local textile magnate in this small south Indian outpost.

The team had come with the ultimate goal of selecting its next generation of software programmers -- "These are the guys who are going to write my Windows 2010," as one of the recruiters put it -- and to assess how, in the short term, TCS could help the college churn out more of what it needs.

"We can't afford to let talent go," said A.K. Pattabiraman, a member of the TCS team.

They grilled professors and administrators: How many faculty members had doctorate degrees? Why did so many students have incompletes by the time they entered their fourth and final year? What software programs did they use in the Mechatronics class? They tested the students' ability to reason and speak, tossing out debate topics and science quiz questions. They sampled the offerings at the college library and the English-language laboratory.

The exercise was part of an elaborate effort by the company to assess whether this campus, the K.S. Rangasamy College of Technical Education, could be added to the pool of colleges from which to recruit.

In the past, TCS needed only to turn to the top engineering schools in the country: the nine campuses of the Indian Institutes of Technology and a few others, where gaining admission is many times more difficult than getting into the American Ivy League schools.

Today, the list includes 209 institutions; many, like this one, are new private colleges that have emerged to fill the aspirations of a new cadre of young, often first-generation college students.

Rangasamy, the college founder, is a product of Indian economic expansion. His factories produce tablecloths and bedsheets for Kmart and Marriott. He did not get beyond the fourth grade and speaks not a word of English, but the colleges he has built educate nearly 12,000 students. Of those, nearly 3,600 study software engineering, and most, college officials said, are the first in their families to attend college.

College Life

The imprimatur of TCS is clearly a prize for the college, and the campus is festooned with flowers and banners welcoming the company team and the journalists trailing them. To be certified as part of the TCS pool would mean that students would have a shot at getting a job even before graduation, not to mention other perks: faculty training, free course materials, research opportunities for its teachers and students.

The number of technical schools in India, including engineering colleges, has more than tripled in the past 10 years, according to the All India Council for Technical Education. Most are privately run.

In between college and career, a new institution has emerged to offer intensive English-language training and hone technical skills required for the workplace. They are called "finishing schools," and Nasscom is starting its own by early next year.

In the end, the Rangasamy college did not meet the TCS criteria. The team found "gaping holes" in the way basic subjects were taught and deemed the students to be "average," said Thomas Verghese Simon, the head of human resources for southern India.

"They have to traverse some more miles to be considered trainable," he said.

Higher education is still only available to a tiny slice of India's young, and nearly 40 percent of Indians over the age of 15 are illiterate. The industry is lobbying to allow private investment, including from abroad, in Indian higher education. India continues to send a large number of foreign students to the United States, and increasingly to other countries, like Australia and Canada. Nandan Nilekani, chief executive of Infosys, said India is facing a crossroads.

With more than half its population under the age of 25, either India educates its young and creates job opportunities for them, or it is left with a large, potentially restive pool of unskilled, unemployable youth.

"It is a golden opportunity," Nilekani said, "which can be frittered away if we don't do the right thing."

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