India may not be able to meet offshore demand: Forrester

R Ravichandran

Hyderabad, Dec 9: If the US research organisation Forrester Research Inc’s report on labour gap is to be believed then India may fall well short of the skilled IT manpower needed to exploit the growing offshore demand.

When the global demand is expected to outpace the supply of IT professionals in the offshore front, the scarce supply will alter the offshore services landscape, warns Forrester Research Inc in its September 2001 report.

The price of offshore IT services will rise and the quality of the average IT professional will also falter, the research organisation further said.

Forrester pointed out that based on an evaluation of current offshore buying patterns and expectations, India will lag behind with a poor skilled labour pool of 6,00,000, against the global demand of 11,00,000 by 2005.

Despite an expected 50 per cent growth and doubling of budgets in offshore services the worldover on the one side and decreasing competition on the other, India may fail to exploit the chances with a gap of 4,50,000 skilled workers, the report said.

Though India supplies a bulk of offshore labour presently, the labour shortfall in the coming years will be mainly due to:

* Educational institutions’ inability to turn out graduates fast enough,
* Sharp increase in H1-B visas from the US in the next two years and
* Public infrastructure restriction on labour growth in India, the Forrester report pointed out.

Notwithstanding this, having a decade of offshore experience, high levels of English language skills, supportive government policies and quality processes, India will find it difficult to provide such large labour pool in the period due to:

* Ballooning teacher-to-student ratio that approaches 1:52 versus norms of 1:15 set by the All India Council for Technical Education (AICTE),

* The US will increase H1-B visas by 80,000 for each of the next three years due to competitiveness the worldover, which will see 2,70,000 technical workers leaving India during the next five years and

* Indian policy-makers may fail to address limitations of basic infrastructure like roads and air transportation to support more professionals—who commute to and from ODCs and client sites in the developed countries.

As the offshore providers scramble to meet the demand, they will raise salaries to attract recruits and minimise turnover, resulting in higher billing rates and the firms would face a dearth of critical
personnel like project managers in the next few years, the report warned. With costs climbing and quality wavering, the risk rises when offshore engagements won’t pay off. To mitigate the new risks, most firms launching offshore engagements will adopt an indirect approach—going through a pivotal provider for offshore skills, the report said.