Jobs in the Indian IT Sector

Published on: Jul 10 2013 by Sachin
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2013 07 05 Jobs in the Indian IT Sector

The Indian IT industry has undergone a big metamorphosis from the early 2000’s to 2013. This is impacting the job creating capability of the industry. The jobs are still being created but they are no longer as lucrative as they used to be. The dynamics are changing. Some of the reasons for this change are:

Pricing Model – Clients of the traditional IT services company are moving away from the T&M (time and material) or the FC (fixed cost) model. In both these models, the IT service company got paid irrespective of the commercial success of the product/ service delivered. The thought-process is changing now. The customers want the service providers to take responsibility and ownership of the work. Clauses are being introduced where clients will pay a percentage of the revenue generated to the service providers. The service providers are becoming stakeholders in the commercial success of the products/ services being delivered. The onus of providing quality service lies now with the IT service industry. It can no longer just think about supplying people. It has to now think about supplying quality people who can deliver the goods that fetch commercial returns.

Innovation – Many Indian IT companies have generally been service oriented. Very few have ventured successfully into products. Due to the strong cash flows in the last few decades, most Indian IT companies are sitting on a cash pile. They cannot afford to do so anymore. The focus of IT companies need a paradigm shift – from a linear model to a non-linear model. In the linear model, company’s revenues are directly proportional to amount of efforts. In the non-linear model, companies will build a product with substantial initial efforts and cost, but later the revenues will grow exponentially in relation to the efforts expensed. For this, the companies will have to invest in R&D or acquire start-ups with product ideas and prototypes. Unless Indian IT companies innovate and move into the product side of the business, they will find it difficult to sustain themselves in the long run.

Globalization – Most Indian IT companies, operationally are heavily focused on Indian geography and Indian staff. Offices in foreign nations are mainly sales offices with limited recruiting of foreign nationals. This is in contrast to the  western IT companies who have set up offices in India. The hiring structure of Indian IT companies will change for sure. With a lot of importance being given to immigration reforms around the major IT markets (especially US, UK and Europe), the structure of staff hired at foreign locations is bound to change. Indian IT companies will have to hire more locally or be ready to move out of the business. This will add to the cost of wages (and all associated costs) and elevate the pressure to maintain profitability.

Impact on the job market – Given all the changes happening or waiting to happen within the Indian IT industry, one must accept and analyze its impact on the job market. Mediocre IT skills will no longer attract recruiters. One will need to work hard and be informed on the upcoming trends and technologies. Mastery is some aspect of IT will become a hiring necessity. Specialization will become a key recruiting criteria.

Impact on fresh engineering graduates (0 to 2 year experience) – The coming batches of engineering students need to keep a few things in mind while seeking IT jobs. IT is no longer the industry where you can get big starting salaries or a chance to go on-site immediately. There has been a manifold increase in the number of engineering colleges from 2000 to 2012. The number of IT jobs in India has increased progressively year-on-year but not at the same pace as the growth in number of engineering students. This has led to a mismatch of demand and supply of engineering graduates. And when the supply is more than the demand, it will be a buyer’s market and the equilibrium price will be lower. This is already happening with the starting salaries of fresh graduates. Levels of 2.5 to 3 lacs per year are considered high for a fresh engineering graduate. These levels are expected to come down even further. Eventually 1.5 to 2 lacs per year will become the norm for fresh engineering graduates. Companies will no longer spend months on training and keeping fresh graduates on bench for upcoming projects. Students have to become job ready either through their formal education or by undergoing vocational courses in addition to their engineering studies.

Final Thoughts – Keeping the changing dynamics of the Indian IT industry in mind, the aspirants (fresh graduates as well as experienced professionals) should look realistically to jobs in the IT sector. It is no longer a supply oriented job market (like 2000). It has heavily tilted in favor of being a demand oriented job market.

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–Sachin

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6 Comments to “Jobs in the Indian IT Sector”

  1. madhu sancheti says:

    hello
    i’m looking for a job in developmnt right now i’m a begnr from 2012 batch and working in hcl infosystem in EMS projct but i want to be a software developr could u help me how can i get
    thnks
    madhu

    • Sachin says:

      Hi Madhu, the IT job market is slowing down in general. But that does not mean opportunities do not exist. CLoud computing and mobility solutions seem to be the areas with the maximum hiring. Try and get a feel of either or both of these areas, through reading, self study and some real research. And if you want to be a developer, your coding skills should be good. You can work on these areas and in a few months time, you could probably start applying in the job market and get yourself a job you wish. I Know through my experience that Aug-Sep and Feb-Mar are critical hiring cycles due to budgeting done by companies. You can target the next cycle with an improvement in your skills and area of interest. If you like, you can send me your resume on sachin@sachinsadare.in and I can give you some specific suggestions. Regards. Sachin

  2. Arun Badri says:

    Nice Blog.. and good analysis .

    Arun Badri

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