Academic journal article Harvard International Review

Brain Strain

Academic journal article Harvard International Review

Brain Strain

Article excerpt

India's IT Crisis

Having lost many of its most highly skilled workers to the West in the past half century, India struggles today to fill posts in its own burgeoning information technology (IT) sector.

India, unique among developing countries, has the educational capital to produce a highly skilled labor pool. This is in part the legacy of the six Indian Institutes of Technology (IITs) founded in the 1950s. Modeled on the Massachusetts Institute of Technology, the IITs represented one of the cornerstones of Prime Minister Jawaharlal Nehru's self-sufficiency program. However, with the exodus of many of India's best minds to the West in the following decades, many Indians railed against what they saw as a taxpayer-financed subsidy for Western industry. Though the brain drain rages on, the more pressing problem today is supplying India's own IT industry, one of the most developed in the world. India would do well to invest all it can in its technical-education sector, where an increase in the number of graduates could bolster the tightening high-tech labor market within India.

With the tremendous boom in computer-related industries in the 1980s and 1990s, many of the highly skilled Indians who emigrated in the 1960s and 1970s now find themselves leaders in the global IT sector. The legacy of that migration is profound. Today, approximately one in three Silicon Valley engineers is of Indian ancestry, and Indian CEOs lead seven percent of Silicon Valley high-tech firms. As founders of a wide variety of companies, ranging from Sun Microsystems to Hotmail, Indian emigrants have flourished in the industry, and the services of their successors have commanded a premium. Responding to demand for Indian IT workers, the US Senate increased the quota of HIB visas for skilled workers from 115,000 to 195,000 in 2000. Indians now receive nearly 45 percent of such visas each year. Furthermore, Indian students are increasingly in demand at universities in the United States and Europe. The US Educational Foundation reports that Indian students now rank third in arrivals each year, behind China and Japan. Other countries ranging from Germany to New Zealand have undertaken similar endeavors with the intent of securing for a volatile industry workers that they are unable to supply internally.

In addition to the brain drain, India faces a relatively new problem: a shortfall of IT workers, what one might call a brain strain. The global demand for Indian students is exacerbating a shortage in skilled domestic labor supply within India itself. At the height of the brain drain, India had no skilled sector to speak of. Now India's IT industry holds a 20 percent share of the world market for software development and customized software. If it doubles in size as expected over the next 18 months, its demand for labor will finally exceed domestic supply. A recent study completed by the National Association of Software and Service Companies and the consulting firm McKinsey pegs demand at 140,000 new skilled IT workers in the 2000-2001 fiscal year and a domestic supply of only 73,000 to 85,000 graduates of technical institutes. The outlook appears even less hopeful for the near future: the study predicts that the Indian IT industry will require 2.2 million workers by 2008. Even Tata Consultancy Services, one of India's largest software companies, has felt the effect of such a tight labor market, as it currently has a shortage of over 1,500 personnel despite scoring record profits in the past year. One Tata executive commented, "The present manpower is just adequate for 30 percent of our needs. …

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