The High tide lifts all boats up
One of the key discussions which has emerged post the IT and services boom in India is the so called "Bangalore Bug". The phenomenon goes this way - IT pays big money to fresh engineers, non IT cannot. Consequently non IT industries which need skilled manpower become non competitive due to high labor cost or are starved of high skilled labor. If an engineer can make 20,000 rupees a month in the IT, why would he be willing to work in a manufacturing set up with half the pay, longer working hours and no foreign trips? Also this wage inflation is hurting the IT industry's global competitiveness.
The "Bangalore Bug" is principally due to the pool of skilled labor being finite and subject to laws of demand and supply. My current engagement is with a very old economy manufacturing concern which is struggling to attract and retain talent in face of an onslaught from IT and services boom in India.
In services, the west grew rich before it become uncompetitive. Is India likely to become uncompetitive before it grows rich? Or is there a way out.
The current way out is to dig deeper into the hinterland and attract qualified labor there. There are two problems to this - (a) the IT / BPO firms are probably a little ahead in this, just witness call centers sprouting all over hitherto smaller towns like Vizag and Coimbatore (b) high skilled labor in India is pretty mobile, so if you passed out of university in Delhi, very rarely would you be unwilling to take up a job in say Bangalore or Bombay. So the pool of talent from small towns might already have been drained.
The more permanent way out is to invest heavily into engineering colleges and other such establishments. This will remove the supply side constraints i.e. the pool of labor will become larger, increasing supply and depressing wage growth. But this is beyond the industry's locus of control.
Besides these two, there is a third solution is emerging, at least in my current engagement. As engineers go scarcer, industries are now rationalizing jobs which they were doing. So some of these jobs are now being downgraded and being opened up to non engineering graduates like diploma holders and B.Sc. This solution is attractive due to two reasons - (a) engineers are being put to more productive uses in the old industries (spiking productivity per man-hour) hence greater firm profitability (b) on an overall national basis, the high tide of service growth is actually lifting the smaller boats up.
Finally the IT boom might be helping the non IT brethren.
The "Bangalore Bug" is principally due to the pool of skilled labor being finite and subject to laws of demand and supply. My current engagement is with a very old economy manufacturing concern which is struggling to attract and retain talent in face of an onslaught from IT and services boom in India.
In services, the west grew rich before it become uncompetitive. Is India likely to become uncompetitive before it grows rich? Or is there a way out.
The current way out is to dig deeper into the hinterland and attract qualified labor there. There are two problems to this - (a) the IT / BPO firms are probably a little ahead in this, just witness call centers sprouting all over hitherto smaller towns like Vizag and Coimbatore (b) high skilled labor in India is pretty mobile, so if you passed out of university in Delhi, very rarely would you be unwilling to take up a job in say Bangalore or Bombay. So the pool of talent from small towns might already have been drained.
The more permanent way out is to invest heavily into engineering colleges and other such establishments. This will remove the supply side constraints i.e. the pool of labor will become larger, increasing supply and depressing wage growth. But this is beyond the industry's locus of control.
Besides these two, there is a third solution is emerging, at least in my current engagement. As engineers go scarcer, industries are now rationalizing jobs which they were doing. So some of these jobs are now being downgraded and being opened up to non engineering graduates like diploma holders and B.Sc. This solution is attractive due to two reasons - (a) engineers are being put to more productive uses in the old industries (spiking productivity per man-hour) hence greater firm profitability (b) on an overall national basis, the high tide of service growth is actually lifting the smaller boats up.
Finally the IT boom might be helping the non IT brethren.
posted by Dinkar at 12:10 PM
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