Software engineering services is projected to be a $45-50-billion export business in a decade, and this is expected to force Indian companies to import engineers to tap the opportunity, says a Nasscom-Booz Allen study of the sector.
Bringing in overseas people will be necessary because of severe talent shortage, said Ketan Bakshi, CMD of Neilsoft, an engineering services company. Mr Bakshi is also member of the executive committee of Nasscom and co-chair of its engineering forum.
“By 2020, Indian software engineering services companies will need to bring in 25-30% of engineering talent from abroad, since there is a huge shortage of trained people now in India. And, as Indian engineering services companies step up their global presence to meet that $45-billion market opportunity, that shortage will only increase,” Mr Bakshi said.
Mr Bakshi estimates that nearly 1-1.5 million people will be needed by engineering services companies alone, of which about 250,000-plus, will have to come from elsewhere. This is a little less than the combined strengths of TCS and Infosys, in terms of revenues and headcount.
Samir Yajnik, president, global services and chief operating officer, Asia-Pacific, Tata Technologies, supported Mr Bakshi’s view on talent shortage in India. “If we are to meet those $45-billion targets by 2020, then we will definitely face a manpower shortage in the next few years. I wouldn’t want to put a number of exactly how big that gap will be, but yes, given the number of engineering colleges, etc that are slated to come up and those revenue figures, there will be a shortfall,” Mr Yajnik said.
Mr Yajnik illustrated the route adopted by Tata Technologies to handle this situation. “We have begun to proactively bridge this gap by building relationships with other countries. So, we have built an engineering centre in Thailand which does our low-end engineering. Overall costs in low-end engineering services are lower in Thailand and we will have to build more such tier-II relationships. We will take on the full-vehicle programme here in India (because this is a better location than the others) and farm out the lower end to centres like the one we now have in Thailand. In future, we will look at Korea and even China,” Mr Yajnik said.
Increasingly, this will mean that Indian companies in this space will become global, Mr Bakshi said, and solve their issues the way a global company would: by farming out work where costs are lowest and talent available.
“Growth is heady and any time such growth happens, there is a big strain. A fresh graduate needs more than six-12 months of training to become a good engineer. For engineering projects, say, in the infrastructure sector, a good engineer would be the one with 15-20 years of experience. Look at our national infrastructure projects and the pace at which they are being done: part of the reason is that we do not have the manpower to execute so much work,” Mr Bakshi stated.
The other issue which will require the import of people is the lack of bandwidth, Mr Bakshi said. “Indian companies do not have the bandwidth to handle the kind of infrastructure projects that are coming up, so they will have to get expertise from abroad,” he said.
The trick, both agreed, is to manage the scalability of operations and that is something industry is addressing, each in its own way.