Against odds, the Information Technology industry has been thriving in many parts of the world, thanks to the doubling of the numbers of people accessing IT-related services in the wake of the changes wrought by the Covid-19 pandemic.
Virtually home bound during the peak of the pandemic, the world has come to realise that technology can be effectively tapped for addressing most problems relating to mobility of labour and portability of services. The value that people place on obtaining information cannot be overstated in today’s world.
Therefore, the who’s who of the technological world would never miss a beat to provide indispensable value-added services to individuals and companies.The tech sector is one field where one needs to constantly upgrade their skills set just to survive, while a lot more is required to succeed in a market that is super competitive amid a high rate of obsolescence in the industry. The Pioneer’s Amartya Smaran looks at the prospects in India, which has been described as a bright spot in a world where many nations are facing the heat of recessionary trends.
The origins of the Indian IT sector date back to the 1970s. The industry witnessed monumental growth in the 1990s, thanks to the thrust given to technology. Companies abroad were in need of competent, smart individuals with knack for solving real-world problems through technological solutions.Hence, the demand for individuals with specific computer language skills grew manifold.
According to a report, the Indian Information Technology Industry was responsible for bringing in revenues amounting to 227 billion dollars in the financial year 2021-22. With 2022 experiencing the highest growth in the Indian IT spectrum, experts have predicted that the overall industry size would reach an astonishing 350 billion dollars in the next few years.
Notwithstanding currency fluctuations in the market, the IT industry’s trajectory has been continually moving upwards. The Indian IT industry provided employment to 51 lakh people as of FY 21-22 — an increase of 20 lakh people over the last 10 years. Between April 2000 and June 2022, the Indian computer software and hardware industry pulled in (Foreign Direct Investment) inflows valued at 88.94 billion dollars.The Union government allocated 88,567.57 crores(US $11.58 billion) for the IT and Telecom sector in its Union Budget for 2022-2023.
As per the National Association of Software and Services Companies (NASSCOM), the sector would require manpower comprising 95 lakh skilled workers to sustain the momentum. The fact that the IT industry is a leading contributor to the Indian economy cannot be overlooked. The demand for courses that enable young students to flourish in the fast-growing IT field is not a coincidence. A report from 2019 stated that only 2 lakh candidates land jobs out of the vast pool of 15 lakh graduates.
In an effort to comprehend the prospects of the industry undergoing tumultuous changes, The Pioneer interviewed experts in various domains. We covered themes ranging from companies exploiting skilled labour to the crisis pertaining to quantity vs quality of graduates in the country to mass layoffs in the sector.
Sridhar Seshadri, Co-founder & CEO of Spotflock, established the company in 2017 in the U.S. Having worked with big companies like Facebook and EA Sports, Sridhar decided it was high time he ventured into the AI market. He shifted his base to India in 2018 and started focusing on e-governance, health care, and sports tech.
When we sought to know why most companies in India do not go up the value chain, but simply recruited people to perform outsourced menial tasks when people in the US have authority to make all product related decisions, Sridhar patiently explained: “I worked in companies where I was heading business units where I had the mandate to decide things.
For a few companies, the mandate was headquartered in the US. If you are establishing business operations, the cost of technology and population could be the factors.
Considering the talent pool, we have got lakhs of students passing out every year. As soon as the technology booms in terms of a paycheck, people are willing to take up those positions for low packages. Another major reason is that the output people expect in the US is on a different level.”
The CEO adds: “Staff augmentation has been an industry norm for 15 years now in India. Staff augmentation is about getting the work done at a cheaper cost and people are more than happy to get the services at a low cost. Some of the folks who are running the business will go out and say, “Hey! I have got a cheaper set of people and I will manage the cost.” For example, you might be charging 120 dollars an hour for a specialist skill set in any area in the US. Whereas in India, you might be charging as low as 18 dollars, and you would still have 30% margin on it.
You can only imagine how low the worker is being paid. Therefore, you are cutting your competition on a cost basis and not on factors of quality or renovation. It also depends on the GDP and the economic value of the dollar vs the rupee. I think the augmentation industry will be shaken up when the rupee gets a little stronger because the bigger margins are coming from the dollar conversion.”
“I feel the industry started moving much faster now.There are things the western companies are struggling with, but we Indians are moving fast on it. UPI is the best example. We are ahead of the global companies.The US is trying to replicate the UPI model. There is chaos, but the younger generation is figuring out things better than ever.
People have to learn the American way of marketing and we have to do a better job at it for the European market to let them recognize our talent. If we can do that, we’ll be leading in a lot of things in the next three or four years,” says Sridhar.
Striking a different note, Srinivas O, a data scientist who primarily works in Boston, says: “I tend to disagree with what was said – the IT industry in India is beyond the CTSes, the TCSes or the Cognizants. Most product-related decisions in Amazon India or Google India are taken within India. BPO companies usually have a different business model (due to cost reasons) and are not representative of Big Tech or overall Tech.”
Former CFO of Infosys, Mohandas Pai has stated that freshers are being exploited by the IT companies. The base salary hasnot moved a notch higher than Rs 3.5 – 3.8 lakh since 2008-2009. With the IT industry pulling in such great figures, what could be the reason for this problem?
Srinivas O chips in: “I agree with what Pai had said. The core inflation of India since 2008 has been on average 5% per year. The inflation adjustment factor since 2008 will be 1.97, meaning the salaries should be at least between 6.9-7.5L even if they were just pegged to inflation. Companies should understand the rising costs in developing countries and periodically adjust fresher salaries (thereby also adjusting salaries of second-year and third-year employees).”
Commenting on the narrative that people who work in the US get paid more when compared to Indian employees, the data scientist says: “Salaries within any country are adjusted for PPP(purchasing power parity). A construction worker in the US with comparable hard skills as a construction worker in India might be paid higher due to higher costs of living. According to the Big Mac Index, the implied conversion rate (not real) of US w.r.t India is 37 units, meaning there should be at least a 37x salary adjustment multiple to afford the same basket of goods in the US as what we afford in India.”
Khaiser Ahmed, Founder and CEO of UTurn- Raeex, observes: “When I was new to the industry, the internship payment was the same. A couple of days back, my nephew was offered an internship at one of the big companies. I was surprised looking at his package because the base salary is somewhat similar to what we would get paid 15 years ago. Around 2003-2004, the availability of the resources was quite limited.”
With over 18 years of experience in the field, Khaiser Ahmed observes that the uneven expansion of the IT landscape could be one of the reasons for companies to not give a hike in packages for freshers. “Even in a city like Bangalore, it is difficult to find resources. Nowadays, the production of these resources is a lot higher. The companies today are in high demand and they are in a position to pick and choose people. If it’s not you, then it’s someone else,” Khaiser points out.
“If you compare the pace and competition between the job seeker and organisations, the latter has extraordinary resource availability. Years ago, the numbers of companies were fewer. So, the landscape has expanded in all dimensions.However, it is not a balanced expansion. It is no longer a challenge for organisations to get good resources. Therefore, due to high demand in the market for jobs, the pay scale hasn’t changed much over the last 15 years,” says the founder of UTurn- Raeex.
The surge in IT layoffs has been particularly difficult for IT workers to digest. Big companies like Amazon, Meta, Netflix, Shopify, and Snap laid off a vast number of employees to cut their head count. Even smaller companies across the globe have been exercising the necessary evil in the business with the threat of an economic downturn.
Jai Eapen, who is the Chief Growth Officer at CertifyMe, says: “Primarily it has more to do with the broader economic outlook. The US has always been the trend setter. Typically, the majority of the economists tend to follow the US economy per se. India also can’t go ahead and say they are completely insulated because we have a reasonable chance of dependency on the US economy. We have come out as a huge outsourcing partner for the world at large. Let it be the IT or KPO(knowledge process outsourcing). Cost arbitrage being our major strength, we hold a huge advantage. We are relatively much better on the language front compared to the East Asian or eastern European nations.”
On the economic downturn and the rather less intense effect of layoffs in the Indian IT sector, Jai Eapenremarks: “People are predicting that the economy will see a downward trend maybe towards the first or latest by the second quarter.
There have been a good amount of macroeconomic indicators pointing to the predicted trends. Majorly, these layoffs have been happening in the US companies and not as much in the Indian organisations. With respect to the Indian market, only the bubble organisations which turned unicorns either in the pre-Covid or Covid times are facing these issues. The valuation through companies like Ola, Oyo, and Flipkart soared through the roof. Their net profits have never come to a healthy state.
The fundamentals of the entire business were from an intangible standpoint. These companies saw the tides turning with respect to the funding scenario. Therefore, even these companies are laying off people along with their American counterparts.”
There is no shortage of engineering institutions in India catering to the demands of lakhs of students. Out of the one million graduates, only a tiny majority of them land jobs in companies.This constant debate between quantity vs quality makes life difficult for recruiters.
Sandeep Sai Kosireddy, an HR manager from the city with nearly two decades of valuable experience, shares his perspective: “A NASSCOM report contains alarming statistics that of the 3 million workers found in IT, only 25% of graduates with engineering backgrounds are employable. Only 3.84% of engineers are employable in software-related jobs at startups. About 3% of engineers have novel skills in areas such as AI, Machine Learning, Data Science, and mobile technologies. Overall, employability in these areas is about 1.5-1.7%.”
According to Sandeep Sai Kosireddy, recruiting is a dynamic and multifaceted process that requires coherence, structure and continuous optimization.Consequently, there are several challenges that arise at every stage. These challenges revolve around identifying the right candidate who is fit for the role , getting them excited about working for the company, and retaining them. He lists out the three major challenges that recruiters come face to face with:
1. There is a talent shortage.
There is no denying that Covid-19 has created unprecedented demand for IT professionals. However, the demand-supply gap is unavoidable. Better solutions are required because the Indian IT market has been suffering from a chronic lack of talent prior to the pandemic outbreak. The scarcity of skilled talent in the IT industry is fueling a talent war within the industry, resulting in record-high attrition rates.
2. Longer notice period
Although HR policies are beginning to change due to the paradigm shift in work models and hiring practices, longer notice periods continue to be a barrier to hiring new employees. A notice period of 30 to 90 days poses a difficult challenge for recruiters as the system disrupts the work of the entire workforce.Employers today require a 15-30-day notice period rather than 90 days as in the NA market and employees should be given the option to buy out their notice period. Many organisations are opposed to this because they do not want to lose their employees to competitors, despite the fact that these employees are motivating others in their notice period duration to leave.
3. No shows on joining day
The recruiter must start the process all over again every time the candidate drops out of the process, whether that happens before or after the interview or even on the day of hiring.
“In this era, technologies are changing drastically though the syllabi of colleges remain the same and also the methodology of teaching; so, most of the engineers donot get the knowledge of new technologies and end up taking the training from different institutes.
Finding the right candidate for the job may appear to be a simple process. In reality, it is not as simple as it appears. To be honest, hiring a candidate is not an easy task. It is not limited to a resume, and a person’s skills and characteristics cannot be determined solely through an interview. As a result, a thorough plan for what questions to ask candidates is required to identify the best fit candidate for the organisation,” opines Sandeep.
Employees have differing viewpoints about various aspects relating to the industry.
“The most frustrating thing about being an IT employee is that one can access the office from anywhere. So, you are expected to show up at any point in time to work for the company. We are asked to work whenever and wherever possible if there is a requirement.
Personally, I have been lucky to land a job that doesnot require me to spend long hours. As per my salary, I am really happy. This is not the scenario with everyone, people work for 55-60 hours a week. The issue with the IT industry is the never ending cycle of pay disparity. If a fresher gets paid more compared to someone with slightly higher experience, then he/she starts looking for a new opportunity. My interest towards IT and the money keeps me going,” shares Mohammed Saif Allaudin.
Nani P, another software employee from the city, says: “Being an IT employee, the most frustrating aspect is how the deadlines and work schedules work. In my case, my work schedule is like 3:30 pm in the afternoon till 12 am. This is not the usual scenario in any company right now. And the deadlines are way more different. Because we start with one, requirements get changed (which increases the time to work) but still expect the same deadlines. However, I am happy with what I am being paid and the hours that I spend on the job, i.e. 40h/week, it is a good amount.”
On what needs to be addressed in the industry, Nani comment: “Skill set requirement. I have personally faced the issue. Because I have worked on Salesforce (which is a CRM – Customer Relationship Management software), which is basically a full-stack development. But the full-stack development jobs are not considered for me (as per recruiters). If you clearly need a developer, try to check the skill sets which are closely related to your requirement.”
On work-life balance vis-à-vis the need to constantly update one’s skill set, software engineer BoddulaSrish muses: “In general, achieving work-life balance should be prioritised. You may experience stress, burnout, and general unhappiness if you put in too much work and donot have enough free time for your family, friends, and for other activities. The IT industry is constantly growing and one must stay on top of the latest tech trends to have better career options in future. If you want to grow in your career as an IT professional, then you must know what certifications and skills matter most in today’s workplace.”
ViswanthChadalawada, principal software engineer at Predict Springs, observes: “As much as we like the ability to work remotely, I feel thisalso makes the managers entitled to call you up at odd hours and check status. Also, the employees need to respectfully set boundaries and not be yes-men.” While Viswanth points out the drawbacks of working remotely, he says that the pay and ability to work remotely without compromising on the deliverables makes him stay in the field.
“In the IT sector, like in any other sector of the economy, there are a lot of problems to be solved, but in my case specifically, I would like people to be more accepting and refrain from making snap judgments about others based solely on how they look or show themselves. For instance, people often only notice how I dress and judge me for my talents up to my dressing, so I don’t take my job seriously or be surprised if I come up with an impressive idea. I enjoy dressing up and feel empowered when I dress well.
Hopefully, this will change in the future,” remarks Shruthi, who works at a top IT firm in Hyderabad.All told, it would be interesting to see if companies and employees find common ground with regard to long-standing issues. By 2025, the Indian IT industry is expected to contribute 10% to India’s GDP. According to experts, 2023 is going to be a strong year for the industry in terms of business.
At the end of the day, organisations will inevitably resort to decisions that might upset employees. From an organisation’s point of view, the dog-eat-dog policy in the market forces them to take stringent measures to stay viable in the market. When it comes to employees, they must be well-versed with the fact that just like elsewhere in the world, only the fittest can survive.
