Tiger-hunting in Bangalore

Tiger-hunting in Bangalore

From Economist.com
Our American business editor fears for his job

I RETURN to Bangalore after three years expecting much to have changed. Even so, it is a surprise to find the place has a new name. City leaders want it called “Bengalooru”, a dictate ignored by most locals I meet.

The traffic congestion was bad enough last time. Now it is worse. There is the standard Indian chaos of cars, three-wheeled tuk-tuk taxis, bicycles and nonchalant cows―with the crucial difference this time that no vehicle seems to be moving. Last time I was here the journey to Electronic City, home to many of the city's top information-technology firms, took about half an hour. Now it takes an hour or more. Doubling your expected journey time proves to be good rule of thumb, though one I have learnt only after being late for most of my meetings.

My hotel bill has not (quite) doubled, but it has risen to a sum that would not seem out of place for a similar room in London or New York. The consensus here is that another 3,000 rooms are needed, fast, to bring down prices to an acceptable level. Infosys, one of the “Bangalore tigers” that are shaking up the global tech services industry, has built a hotel of its own in Electronic City equipped, as rumour has it, with a French cordon-bleu chef.

Office buildings and corporate campuses are sprouting everywhere, as are luxury residences, not too far away, for the executives. Last time I visited the campus of SAP, a German software giant, its bucolic address, “White Field”, made some sense. Now there are buildings and cranes as far as the eye can see. Then, SAP had 500 employees here. It has since added 1,000 a year through a recruitment process of daunting scale. In 2005 it had 125,000 applicants for jobs in India, of whom 25,000 were short-listed and 13,000 interviewed. Infosys, which is far bigger here, apparently received 1.25m applications last year.
Reuters I'm glad we avoided the rush hour

Paradoxically, although the best firms are inundated with job applications, the biggest challenge facing every company in Bangalore is how to hang on to workers after hiring them. The firms I speak to mostly claim attrition rates of around 10-15% a year, which they say is well below the industry average. Peter Yorke, an entrepreneur here, says every software engineer has at least three job offers at any moment. Across India, he says, the market will get even tighter, at least in the next few years: “looking at the students now in college, studying the right sorts of things, there will be about 250,000 fewer than needed graduating in 2008”.

To address this shortage, colleges are appearing that aim to teach quickly the skills most wanted by the market. Cherian Philip shows me around Biozeen, his new college-cum-consultancy that trains students to do outsourced drug trials―an industry now starting to boom. Infosys has spent $350m building an in-house university. For Infosys and others training has become a crucial weapon in the war for talent, a way of giving workers a reason to stay.

The trouble is, once someone has been trained, they are even more attractive to a rival employer. A no-poaching agreement struck among local outsourcing firms soon fell apart. Some of the big IT firms have introduced a bonding system: workers pay the company if they leave within six months of being trained. In effect, this “golden handcuff” passes the training cost on to the new employer. And there is talk of a database to identify “no shows”―people who accept many job offers, and don’t bother to let the places they decide not to work at know they are not coming.

Mr Yorke predicts that Indian firms will soon be outsourcing their own least skilled jobs to China. I too am struck by how rapidly the Bangalore firms are moving upmarket. Three years ago call centres were very much at the heart of things. Now real decisions are being taken in Bangalore and higher-value-added work is being done here. SAP’s local boss, Georg Kniese, says his campus is already becoming a powerhouse of software development for the company. I visit Thomson Financial, which is hiring local journalists to provide stories to the world. Reuters has outsourced some journalism here, and Bloomberg is expected to follow suit. How long before my own job is being done, for a fraction of my scarcely adequate salary, by an Indian in Bangalore?