As hiring picks up in Bangalore, India, the city's software professionals are again acquiring the spoiled-brat image they had in the late 1990s, when the dot-com boom increased staff requirements at Indian outsourcing companies.
Demand is highest for software professionals with two to four years of experience, and many change jobs frequently for a hike in salary of over 40%, according to Bijay Sahoo, vice president for talent engagement and development with Bangalore's Wipro, India's third largest software outsourcing company. Wipro added 3,300 software developers in the third quarter alone.
Software development companies in other Indian cities like Hyderabad, Mumbai and Delhi are also facing a shortage of suitable engineers. Kenexa Technologies Pvt., the Hyderabad subsidiary of Kenexa, a Wayne, Penn., provider of recruiting services and software, recently plowed through 500 applications to fill six positions, according to Raghuveer Sakuru, managing director of the subsidiary.
The quality of applicants was poor and there were a large number of fake resumes, according to Sakuru. Not only must companies like Kenexa offer raises of as much as 70% to new hires over their current salaries, but retaining staff means giving salary increases of at least 10% at each six-month review. "If you give anything less than 10% at a review, they feel insulted," Sakuru said.
Kenexa plans to set up a facility in Bangalore by year-end. "You get better software developers in Bangalore than in Hyderabad," Sakuru said.
Large scale hiring of staff by multinationals such as Accenture and IBM for their Indian software operations created a shortage of experienced engineers, particularly in Bangalore, which has emerged as India's IT hub. The engineer shortage is expected to get worse as local outsourcing companies increase hiring to meet an outsourced services serge.
Software developers are often willing to wait until they get a job with a salary that matches their expectations, said Gautam Sinha, CEO of TVA Infotech Pvt, a Bangalore recruitment firm. "They know that they don't have to wait very long," he added.
Although staff are currently focused on maximizing their monetary benefits, other demands are being honored. "We had a case of a software engineer who insisted he would join a company only if his girlfriend was also accommodated in that company," Sinha said.
The opportunity to travel abroad with a job also attracts employees because they gain from the international exposure, according to Sahoo.
As Bangalore's infrastructure deteriorates under the weight of the growing technology industry, software professionals are also getting choosy about work locations. "If there is more traffic on the roads and it takes them more time to reach the office, you may find some resignations because of that," Sahoo said.
Companies prefer to hire experienced engineers from other top businesses, which contributes to the Indian staff crunch, according to Sinha. "Companies do campus recruitments as well, but they need people who are productive fast, and it takes at least six months for a campus recruit to become productive," he said.
As the demand for staff picks up, the country's educational institutions are not turning out a sufficient supply of IT graduates. To sustain year-on-year growth of 30% in software and services revenues, the Indian software and services industry will require about 110,000 new out-of-college engineers each year, against the current availability of about 80,000 a year, according to Sinha.
After 2000, when hiring slowed for a few years, the number of students signing up for electronics and IT programs fell dramatically, according to Wipro's Sahoo, who added that the demand-supply mismatch is only getting worse.
Staff shortages may affect the ability of outsourcing companies to take on new contracts. "If we had more trained people in the experience range of two to four years, we could have done more billing," Sahoo said.
Despite the staffing cost increases, India remains a cost-effective location to set up operations, according to Kenexa's Sakuru. "Today we are able to get a 60% to 70% cost saving," he said. "If this trend of increasing salaries continues, we will be cutting into these percentages, but there will still be savings."
To attract and retain staff, Indian companies like Wipro are trying new approaches that focus on intangible benefits such as career growth and friendlier work environments.
" We cannot afford large hikes in salaries and stay competitive," Sahoo said. "What we can offer our employees is training, technology exposure and international postings."
Wipro, for example, introduced a program for improving supervisor effectiveness. "We found that often an employee may quit because he doesn't like his supervisor," Sahoo said.
In Hyderabad, Sierra Atlantic Software Services, a software development and services subsidiary of Sierra Atlantic of Fremont, Calif., believes in creating bonds between the company and the employees' families.
"We invite the parents of new recruits for their induction, and we follow that up with frequent interactions with the families," said Sarath Sura, managing director of the Indian subsidiary. Company executives will sometimes attend key ceremonies of their employees, such as a marriage, Sura added.
If companies once recruited only the best engineers from the top schools, they now recognize that avoiding the staff crisis means finding other measures for a candidate's capability. Employers recognize that certain jobs, in application maintenance, for example, do not require such highly qualified engineers.
"We are already seeing some kind of self correction by the market," Sinha said. "Companies are now also looking at those holding Bachelor of Science degrees and diploma holders, and are stepping up in-house training."