An Open Letter to Indian IT Companies

In the last decade or so, Indian IT companies have seen tremendous success in the global arena by providing software solutions at low cost.

I write this letter to you all to voice my concern over what could be a major threat to Indian IT companies – the threat posed by the arrival of high-paying foreign IT companies in India.

In India, every year there are a large number of engineers graduating. However, not all of them are good and of course, some are much better than the other.

At first, let me try to classify the Engineers produced by the Indian Educational system every year:

Superb (Highly creative, Globally aware)
Very Good
Good enough
Sub-Standard

I’s and II’s would typically have more exposure to International business practices, typically will be more quality-minded, have a clear ability to see the big picture and have the ability to go beyond the problem definition and add functionality that was not asked for, that they deem to be useful to the client. There is possibly a higher proportion of I’s and II’s in the IIT’s, BITS and the other top institutions.

Initially, Indian IT Companies had easy access to I’s and II’s and their workforce comprised primarily of them. Now it would appear that with the influx of several high-paying IT companies (such as Accenture, IBM, Oracle, Microsoft to name a few), Indian IT companies are being pushed largely toward the II’s and the III’s. However, even today, Indian IT companies do not have a problem getting quality-employees as there are not enough jobs being created in India every year.

When that point is reached, Indian IT companies at a starting salary of 2 lpa or so, would be under significant pressure from the MNC’s at a starting salary of 6 lpa+. Ultimately, the company with the better workforce will do better. Indian IT companies will observe that they have fewer I’s and II’s willing to stay/join them. Though they might still be able to deliver very good solutions, the lack of creative input and the “big-picture outlook” afforded by the I’s and II’s will negatively impact the amount of innovation in their products as compared to the ones offered by MNC’s. The “Over-Deliver” ability offered by the I’s and the II’s will be lost.

Indian IT companies have always been considered low-cost players – However, they have had the foresight to emphasize the importance of quality as a company goal. However, if companies start perceiving a “lack of spark” in the Indian solutions as compared to the MNC solutions, companies might outsource only their low-criticality, low-tech, low-pay work to Indian companies with the high-criticality, high-tech, high pay work going to the MNC’s.

My suggestion to Indian IT companies is that in order to maintain continued access to I’s and II’s, they need to develop a two-pronged HR strategy where there are two starting level job cadres for which recruitment is done.

There should be one 2.0 lpa cadre and a 6.0 lpa cadre. For the 2.0 lpa, sufficient testing should be ensured so that the recruits are at least of class-III. For the 6.0 lpa jobs, a different kind of interview is required. This would be more oriented around business process knowledge, international business awareness and quality-mindedness. This cadre would attract primarily I’s and II’s.

Then for each project, there should be one 6.0 lpa employee per ten 2.0 lpa employees. The increased cost will be more than compensated by the added benefit. The 6.0 lpa employees will take on more responsibility and will be involved in project management decisions.

Indian IT companies will then no longer be viewed as secondary to the MNC’s on college campuses. Most people have two major criteria when it comes to evaluating jobs – money and job satisfaction. The I’s and the II’s will be happier in the 6.0 lpa jobs not just because of the money, but because they of the increased responsibility and creative freedom involved. They would perceive themselves as being on a career fast-track. Sufficient training is also to be provided to the 2.0 lpa employees to enable them to join the 6.0 lpa ranks, so that they do not have a sense of resentment.

In a people-intensive industry like IT, the company with the better people wins! This suggested combination of 2.0 and 6.0 might prove to be ideal for Indian IT companies as a combination of low cost and creativity.