Troubling Signs for Indian Tech Outsourcers

If you are an investor in one of the many U.S.-listed technology outsourcing giants such as Infosys, then I have some bad news for you: they are no longer the cherished destination for the brightest and the smartest in India. Instead, they are being viewed derisively as “code factories.” What gives? Read on…

One of the most amazing things you notice about Indian newspapers recently is the lack of technology headlines. Instead the focus is on telecom and manufacturing and organized retail. This is in sharp contrast from a few years ago, when I encountered newspapers proudly chronicling the tech outsourcing boom while visiting the city of my birth.

A few reports today in the local media, when taken together, seem to be like the proverbial dark cloud hanging over the Indian technology sector that sparked off the local economic boom. The Hindustan Times reports that an increasing number of employees who work for business process outsourcers (BPOs) are leaving their jobs and heading to the business schools. Nearly 10-to-12% of new management students came from the BPO industry. The grueling hours and hard life with few prospects to rise to the managerial ranks are the main reason why many are looking to upgrade their professional lives.

The Times of India today is running a piece called the Myth of The Indian Programmer, which has some pretty startling revelations. Apparently, last year only 10 of the 574 graduates of IIT Powai joined the tech outsourcers, with a majority opting for the likes of Google.

The article argues that a lot of churn at companies like Infosys is a result of dissatisfaction with being just coders and engineers are switching to jobs with bigger challenges. A Tata Consultancy Services (TCS) executive acknowledges that the outlook is gloomy. The question then is that if the top outsourcers cannot attract the best and the brightest, then how are they going to stay competitive?

The third piece, again in the Times of India, points out that the IIT system is facing a resource crunch, which could mean even the brightest minds may not be able to get the resources they need to become world-beaters.

Maybe I am being pessimistic, overcome with the idea of a 22-hour journey and leaving my family, but something tells me that my pessimism may not be completely unfounded. If you are a professional from the “outsourcing” business, please let me know how you feel about your business, and give us your outlook. Comments are open.