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Software: The suitable boys - Views on News from Equitymaster
 
 
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  • Apr 6, 2001

    Software: The suitable boys

    The figures released by ITAA (Information Technology Association of America) have projected a demand for 0.9 m new technology workers in 2001, down approximately by 0.7 m (44%) compared to the figures for 2000. However, the talent gap still looms large. The shortfall of skilled workers is expected to be in the range of 0.4 m workers. The shortfall has dropped almost by 50%. These figures to a certain extent would make the Indian software community a bit happier. A lot of news about Indian engineers being benched has been doing the rounds recently.

    The message is quite clear it is the unskilled workers who have been at the receiving end. The tech slowdown in the US has severely affected those into the body shopping business. Most of these firms do not have strong brand names and therefore, are not able to attract quality talent. It is the lack of quality that is hurting these companies.

    Function Change in
    demand
    Programmer/software developer NA
    Enterprise information systems integrator 62%
    Database administrator/developer -59%
    Interactive digital media specialist -62%
    Web administrator -25%
    Technical writer -73%
    Network systems specialist 13%
    Computer systems support representative -65%
    Source: ITAA  
    Figures for programmers not available  

    Another very interesting point to note is the fact that the number of IT workers employed by non-IT companies is ten times more compared with IT companies. A lot of people leaving for the US are fresh graduates with only IT skill sets. Due to the lack of functional experience it is difficult for them to shift to non-IT companies. Therefore, we could be looking at a demand for people who have both technical and functional knowledge. This is supported by the fact that the demand for enterprise information systems integrators has gone up by 62%.

    According to ITAA, skilled technology workers are still a highly desirable commodity to IT and non-IT companies. What has changed is the hiring practice of these companies as the companies have become very cautious. This pressure has come undoubtedly from the customers, who are today asking a lot of questions. The scene has changed quite a bit from last year when people were willing to pay any price. The primary drivers for this change in attitude are, firstly the expectations from information technology have become more realistic and secondly with time even the clients have now a much better understanding of the industry and therefore the pricing. However, the simple fact that the 2001 numbers suggest is that hiring has by no means halted for IT workers, rather, demand still far exceeds supply in this market.

    The writing on the wall is very clear. Information technology as long as it services other businesses is not an end in itself but a means to an end. To quote Mr. Jerry Rao, Chairman Mphais BFL, “First of all, we are very very committed to understanding our client’s business strategy and we are committed to the revenue side of the clients P&L rather than the costs side. We do not go and position ourselves as someone who can reduce your development cost”. Most of the software companies are yet to realize this. The services business is not about cheap labour and about giving the client value for money. Those companies that have not realized this simple fact are going to face very tough times ahead as they find it difficult to explain their value proposition to the customers.

     

     

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