Indian skills shortage: With no easy fixes, labor prices jump

That's what happened to David Craig, the lead user in the Times story, who was recruited by Infosys and will train in India but will be working in the company's Phoenix offices. Even stateside, however, most jobs are given to foreigners rather than U.S. citizens (see my earlier blog, Offshoring to America and the second comment that follows). Nonetheless, such jobs are likely to increase over time, and may provide some resume building opportunities for American workers who land them.

A New York Times story appeared this week about the skills shortage in India - and how Tata Consultancy Services and Infosys Technologies have hired Americans to help fill the need (see Skills Gap Hurts Technology Boom in India, and In a Twist Americans Appear in Ranks of Indian Firms). The first article says that India mints 400,000 new engineers annually to meet skyrocketing demand, but many of those graduate from marginal schools and aren't competent. One outsourcing firm predicts that the shortage of engineers will jump to 500,000 by 2010.

Educational institutions aren't going to solve the problem overnight by building capacity, and there are other structural issues with the economy. With only 10% of citizens enrolling in college and an illiteracy rate of nearly 40%, it's unlikely that the labor spigot in India can increase the flow of qualified graduates any time soon. It is likely, however, that prices for engineering talent will continue to rise, narrowing labor cost differentials (ever so slowly) with American labor. Salaries have already risen 10-15% there, according to the story. Expect that trend to continue.

A secondary story mentions that Tata, which claims that one in ten of its workers is a foreigner, wants to add 30,000 people to its payroll of 72,000. To do that it is hiring "a handful" of American workers. Much has been made of this in previous stories about outsourcing. However, until salaries begin to come into balance on both sides of the Atlantic, it's doubtful that companies like Tata or Infosys will be hiring American engineers for rank and file engineering jobs - except for a few positions in their offices in the U.S.

That's what happened to David Craig, the lead user in the Times story, who was recruited by Infosys and will train in India but will be working in the company's Phoenix offices. Even stateside, however, most jobs are given to foreigners rather than U.S. citizens (see my earlier blog, Offshoring to America and the second comment that follows). Nonetheless, such jobs are likely to increase over time, and may provide some resume building opportunities for American workers who land them.

Original story