Thursday, February 23, 2006

Namma Karnataka: Still No. 1?

Namma Karnataka: Still No. 1?
The State's IT Numbers Are Still Strong. But Will A Talent Crunch Scupper This Growth? While Some Say That Fewer Engineering Graduates May Prove To Be A Deterrent, Others Are Rather Dismissive.

The Economic Times

WILL it retain the numero uno position? A raging debate which for once has nothing do with Bangalore’s infrastructure woes but all to do with the talent crunch it is facing. The fear being that Karnataka that has remained by far the most preferred IT destination in the country for long might not retain this slot if stats coming out of its educational institutions are studied. Worry is being expressed at the lower number of engineering colleges in the state compared to its southern neighbours, a fact that would seriously restrict the future supply of manpower. Well, the numbers too reveal a picture that may not be very encouraging.

According to figures available with All India Council for Technical Education, it transpires that Karnataka churns out approximately 46,000 engineering graduates per year from 118 institutions while the figure is 83,000 from 236 colleges in Andhra Pradesh, 80,000 students from 250 odd colleges in Tamil Nadu and 48,000 graduates from 155 institutions in Maharashtra.

Despite this, Karnataka has maintained a huge lead in IT exports over Tamil Nadu and Andhra Pradesh. The state registered IT exports of Rs 27,000 crore for fiscal 2004-05 while the same stood at Rs 11,000 crore for Tamil Nadu and Rs 8,270 crore for Andhra Pradesh. However, things may not remain the same in the years to come. TV Mohandas Pai, Infosys CFO, says that the big gap in the number of engineering graduates from Karnataka is certainly going to threaten the position of the Karnataka as a prime destination. Agreeing that the number of engineering graduates being generated every year in the state is notenough to sustain future growth, state IT secretary MK Shankaralinge Gowda says the industry will require 80,000 engineering graduates.

The flip side of the argument is that ability to attract talent is as important as generating it. Karnataka with Bangalore in particular has so far proved to be absolute magnate for IT people. A point of view endorsed by Gautam Sinha, CEO, TVA Infotech who says that the presence of a large number of engineering colleges in a particular place has got nothing do with the industry flourishing as it is the brand of a place that matters. “People from all over the country still flock to Bangalore city as they see immense opportunity here,” he says.

But it never pays to let things rest. The continued dominance of Karnataka might have made it complacent and Pai says the need of the hour is drastic action like hiking the intake of students in existing colleges. He argues that to ensure adequate quality among the graduates, existing engineering colleges — which have good track-record — should be allowed to double their intake. Gowda says engineering colleges are well distributed within the state even as they need to make them viable and improve their infrastructure.

The Nasscom-McKinsey 2005 report has projected that IT exports from the country to reach $60 billion by 2010. However, it also said India faces potential shortage of skilled workers in the next decade. Currently, only 25% of the technical graduates are suitable for employment in the offshore IT industry.

Behind this whole issue of lesser number of engineering graduates lies the quality issue. Visvesvaraya Technical University (VTU) Vice Chancellor Balveer Reddy says Karnataka needs more technical institutes but quality is the issue. VTU would not like to grant permission to anybody who is willing to set up a technical institute, he says. “We have controlled the unbridled growth of institutes...unless there are good infrastructure facilities, we will not give permission,” he adds. Pai says there are certain artificial restrictions which have hampered existing colleges from hiking the student capacity.

Jobs for ‘locals’ is a strong driving point with the establishment. Gowda says there should be more job opportunities for students graduating from the state than those from outside. Pai says that while Infosys is keen on employing locals he rues that the requisite numbers are not there. Employing people from within the state also helps in stabilising the operations of a company as they tend to stick around helping reduce “attrition.”

Some believe the “talent shortage” card has been overplayed. Sinha says that Bangalore’s liberal culture of welcoming people from outside is one of the reasons for the industry to flourish in the state. Bangalore alone has around 35% of the software service professionals in the country. But the fact is as the neighbouring state’s aggressively ramp their own IT industry and provide more jobs locally, the supply to Karnataka might start tapering unless the state itself pulls up its socks pretty fast.

States like Tamil Nadu and Andhra Pradesh and even Kerala have upped the ante in terms of attracting the new IT investments. Pai says while Karnataka’s annual growth rate in IT exports is around 30-32%, the neighbouring states have been recording faster growth rate. Still Karnataka has targeted $20 billion in IT exports by 2010, a third of Nasscom’s projection of $60 billion by 2010 for India. As Sinha says, as things stand now, there are no visible signs of Karnataka losing its edge.


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