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India software industry future: IT career advantages, disadvantages and benefits

BY: Swati | Category: Education | Post Date: 2008-07-02
 



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Recently a lot of people have been debating about the future of Indian software industry, whether it is a good career move for people out of college or not. More and more students in college are asking "Should I go in software or not". In the last few months I have been doing a research on this topic, reading the predictions and projections of various experts on the internet, and even talking of many software professionals about the future of Indian IT industry. In this article I will share my thoughts with you including the pros and cons of software profession. I have divided this analysis into three sections - Positives, Negatives and Final Conclusion.

SECTION 1: POSITIVES OF INDIAN SOFTWARE INDUSTRY


a) Since the salaries and cost of doing software business in western countries like United States and Britain is too high, companies have been looking at cheaper alternatives and India certainly has a greater advantage. Outsourcing has really been the major reason which has caused the boom in the Indian software industry.

b) Additional factors which are causing the I.T. sector to flourish are the visa restrictions, which prevent companies like Microsoft, Oracle and IBM to hire the adequate number of software professionals in their own country. Bill Gates ( founder of Microsoft) and others have repeatedly insisted to United States government that they need to remove the upper limits of working permits/visa's so that they can hire a larger number of Indian software professionals in their USA offices (we know that it is not going to happen). India has a large number of engineers and that too English speaking.

c) Moreover, the number of software engineers being produced in these western countries are not enough so companies have to eventually transfer their work to India. Most Indian software professionals are hardworking and are able to devote more time to work than their western counterparts.

d) Job placements in most engineering colleges is very good with many companies like Wipro, Infosys, Satyam and several multinationals competing to hire good students. Even the starting salaries which are offered to Indian software professionals are usually much more than the highest salary a regular government employee has ever received in his 30 years career.

e) Additionally, software is a white collar job, meaning you are mostly sitting in a nice air-conditioned office/cubicle and unlike many other professions you do not have to run around to get your work done. There are plenty of jobs and you can change companies every two years and your salary increases each time you do so.

f) Multinational companies regularly Indian software engineers overseas to countries like Australia, UK and USA for a few months to many years, during which they get paid even more.

What a relaxed life, future certainly looks bright after reading all this. Now let's see what the critics have to say.

SECTION 2: NEGATIVE's OF INDIAN SOFTWARE INDUSTRY


a) The falling dollar: The value of US Dollar has come down by more than 10% and has been eating away the margins of Indian software industry. In future, the decline will increase and the advantage of doing business in India will be lost because of the high salaries of software engineers.

b) Time difference: Already there are issues with the difference in time zones. There is a lack of real time communication since majority of team on outsourced projects are at different locations. Problems are partially solved by deploying an on-site coordinator which basically does the coordinations of both teams to some level.

c) Quality of Indian Engineers: Many projects which came to India are taken back to US because of difference in Indian and western accents, and sometimes they say that the quality of engineers in their own countries is better than in India ( which I personally do not necessarily agree, may be in some exceptional cases but not all).

d) Salaries have peaked: Unlike the 20% salary hikes which have been happening in past, in future the salary increases will probably be 5-10%.

e) Layoff's (job loss): Recently the layoff news in TCS and IBM made headlines. A small percentage of low performance Engineers were laid off and it is happening in many companies now. This process will likely increase in future and companies will prefer hiring freshers out of college at relatively lower salaries.

f) Very Hectic and Stressful lifestyle in a long term: It is easy to devote long hours when you are young and single. But over time when you have a wife and children it get's tough. Software engineers do not get enough time for their families and they lead a hectic and stressful lifestyle later in life. Workplace politics in software offices is also common. They eventually become more like a money making machine for family than anything else as their personal life get's reduced to nothing. There are more software engineers in Bangalore undergoing stress relief programs than in any other profession. In software hubs like Bangalore and Pune, it is very difficult to get admission of your kid in a good school and traffic overall is a nightmare.

g) International competition increasing: Countries like China, Mexico and Philippines are slowly catching up. Several Indian companies have already opened their offices there. Did you know that China produces more engineers than India but they really lack ability to speak English. The upcoming Chinese generations are much better and will certainly compete with India in future.

SECTION 3: CONCLUSION AND MY OPINION ABOUT THE FUTURE OF SOFTWARE IN INDIA


Regardless of whatever happens to the future of software in India, the people who are outstanding in their profession will continue to be in demand and will keep rising. I personally do not see any other industry in India which can offer better salaries to such a large group of people. Software is here to stay and it is not going anywhere.

But the fact which many are missing is that software industry (like other industries) is also about supply and demand, the demand of engineers being high as of now and jobs are everywhere. These days almost every student in India after completing his 10th class board exam starts to prepare for engineering entrance exams so that he/she can eventually become a software engineer. Every year hundreds of new engineering colleges are opening up all over India and there are over 5 lakh engineers graduating every year and the number will continue to increase. Even people from Civil and Mechanical engineering are entering software. There are additionally lakhs of MCA, BSC Computer Science and others from NIIT/Aptech etc comming out (not all get good jobs). From where I stand, I DO NOT SEE A BRIGHT FUTURE FOR SOFTWARE ENGINEERS in India, even though the companies themselves will likely do well, they will pick and choose the people they want.

There was a time when the cost advantage in outsourcing industry was 1:6.
(Meaning: 1 engineer in USA = 6 Engineers in India), now that margin has shrinked to 1:3, and with rising salaries and higher inflation in India, this ratio will further decrease. There is a good chance that IT companies will relocate to smaller cities in India where the cost of doing business decreases. But soon enough I forsee that these software companies shift their operations in countries like China, Vietnam and other nations where cost of doing business is even cheaper with time.

I believe the supply will overtake demand in the next 5 years and then there will be a race of survival for people seeking software jobs. Although Indian software companies will continue to grow they will literally pick and choose the people they want. Software is a young blood industry, and as the software "programmers" reach their early 40's and have not risen much higher will risk losing their job to new candidates willing to work longer and for a lower salary. This situation is just like when the stock market goes up, everyone thinks this is the best way to make money, but when it comes down everyone loses.

My opinion is that it is a good option to start your career but not a life long choice. If you have other choices which may pay slightly lower, may be it is a better choice. I think fields like Finance, Commodities, Food, Medicine and even Government jobs will be more desirable than software in the next 5-7 years. Also the life of a software engineer is not all that great as it sounds to most people from outside.

Unfortunately due to our high population, there is competition in almost every field in India. With more and more educated people in India, there will be even more engineers in the future, and software competition will be on a rise.

Last but not least, India is prone to much more political instability - like political parties often take advantages by increasing divide between Hindus and Muslims. Several locations in India are prone to terrorist attacks. Huge divide between various sections of the society, caste reservations etc .. Most of these problems are almost non-existent in developed countries.

I was talking to one of my distant relative who has completed his engineering from a recently opened private college (which happens to be among the better among the lot), he told that he has got offer from a well known company, but the joining date has been deferred by 6+ months, while other students from IIT within the same city did not have this waiting period (Added on .. June 2008). So the pick and choose game by IT companies has already started.

IT firms slow campus hires - Update: 11 Aug 2008
Source: in.news.yahoo.com/32/20080811/1053/tnl-it-firms-slow-campus-hires_1.html
Due to slowdown in USA, IT firms are hiring less and offering less as they pick talent from campuses. In some cases, they are even refusing to go through with offers they've already made. So much so that jobs in the IT sector are fast losing the lure they once had. Now the demand is more for engineers studying in civil, mechanical and electrical branches.

Other side of the coin:
Most CEO's of software companies are actually quite upbeat on the future of the job market. For example an interview is located at specials.rediff.com/money/2008/jul/14sld5.htm which mentions -

Mr Phaneesh Murthy of iGate quoted that Indian IT companies will have to re-adjust models and capacity. He also said that the IT industry currently absorbs 150,000 engineers out of about 420,000 graduating annually. This means that the hiring ratio is 1:3 and it could come down to 1:2 in the future. (which means that the hiring will increase)

As of 29/07/2008:
Tamil Nadu is aiming to provide employment to three million people in the next three years with special tax exemptions to the companies. Do you think that such a sporadic growth is sustainable, I think in a long term it is not possible.

As of Aug 2008:
The year 2008 has seen a strong average salary increase of 14.8 per cent, according to Hewitt Associates study conducted to understand the impact of economic slowdown on compensation and salary trends. Only 20 per cent of the organisation surveyed mentioned a hiring freeze or slowdown. While 25 per cent of the companies surveyed are considering reduction in staff budgets, with cuts largely in the areas of travel and recreation.
in.news.yahoo.com/48/20080820/1238/tbs-corporate-salaries-unaffected-by-eco.html

In an interview with Ganesh Natarajan, Chairman, Nasscom
Source: www.rediff.com/money/2008/aug/21inter1.htm
He was bullish about the future but also mentioned ..
The cost of doing business is increasing in India. Other governments offer more tax incentives which may compel IT firms to move a significant part of their business to other low-cost and friendly countries. Software Technology Parks of India (STPI) benefits will help the industry - not more than 15 per cent of companies have moved part of their businesses to SEZs.


Additionally read this:
Indian IT Workers Face Slower Wage Growth

businessweek.com/globalbiz/content/mar2008/gb20080321_128598.htm?chan=search


businessweek.com/globalbiz/content/jul2008/gb2008071_743900.htm


Total number of computer software engineers in India
The total number of IT and ITES professionals employed in India has grown from 284,000 in 1999-2000 to over 1 million in 2004-05, growing by over 200,000 in the last year alone.It is estimated that the total number of IT professionals in India in 2008 to 2.2 million.

Headcount in some big IT companies.

Company Headcount (in 2009)
------- --------
TCS 141,642
Infosys 103,905
Wipro Tech 98,521
HCL Technologies 54,216
IBM India 50,000 (expected in increase substantially in 2010)
Satyam/Mahindra 48,000
Tech Mahindra 25,482
Patni 14,540
Polaris 9,238
MindTree 7,693
SAP India: 4500
Hexaware 5,296
Cisco India: 4850
Mastek 3,759



I am not an expert and this article is my personal opinion, my experience, talking with friends and things I read on everyday on the internet. It is not based on any long term concrete research, therefore I want you to do your own research and decide what is good for your future.

Article Source: http://www.saching.com



About Author / Additional Info: This article has been written to reflect my opinion on on questions being debated by many young computer professionals like "Is software a good choice?" or "What is the future of Indian software industry?" or "Is computer engineering a good long term choice?"

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Comments on this article: (9 comments so far)

* Additional comments are now closed for this article *
Comment Comment By Comment Date
Government salaries likely to overtake S/E
for sure uncertainity continues in this IT industry, supply is increasing but demand is not growing to that extent. 3 years from now (2012) governament salaries will be more than a software engineer. Fresh hiring in IT will continue at the cost job loss of seniors.
Softking 2010-02-10
Not so many engineers
The number of "engineers" produced every year you mention is an exaggeration. Out of the world`s top 200 Universities only 1-IIT-is in India. From there the quality drops like a stone. People coming out of these tier 2 and tier 3 schools, these are worse quality than even the worst US or European engineering school, they would never be allowed the title of Engineer anywhere else. The real number of true engineers produced in India each year is on the order of 5-10000 or so.
Rod 2010-01-27
thanks for putting the situation in words
The growing educated population that too consisting many engineers definitely is a thing to be considered. With high competition there would always be a share of winners and losers. But this would be large in case of engineers as the ratio of the getting jobs is 1:3 which could turn frustrating for many. Moreover the stress involved in doing your job properly and always be in good books cannot be ignored. Thanks...
Nimisha 2009-12-29
India
overall India is becoming the best
Amani 2009-12-25
advantages of software industry
sir,, plz give information about software industry lists, advantages @ disadvantages, economic posotion, characteristics , curennt position
ravi 2009-11-21
Increasing colleges
I think ur article is just so true.Plz can u help me giving ur opinion on the increasing number of colleges in India. Are they beneficial or they are just opening new ways to make money?
Vijaya 2009-11-15
dought
your article is excellent. but pls could you help to clear my following doughts: 1.from now how u see the future indian i.t industry growing????/ 2.i m currently doing se(i.t) engg. so which additional cources should i do to get selected in a good company. 3.after 10yrs will i.t guys continue to get as much salary as they used to get previously, i mean same percentage. kindle mail me ans. thanks n hoping for a quick reply.
fear0 2009-09-18
Answer to fear0
As I mentioned, in my personal opinion, the Indian IT industry will continue to grow in future. But competition among job seekers will grow because every other student these days wants to become a Software Engineer. I am not discouraging you but if you are very good in your field and continue to outpace others, there is no problem for you, best people will always be in demand. If you get some certifications like in dot NET, Java or Oracle Apps, you will increase your chances of selection in my opinion. You will always have to adapt to new technology every few years. IT Salary will always continue to increase, but at a slower pace. If cost of doing business increases too fast in India, companies will take jobs to more cheaper countries. There is no clear answer, you have to watch how things fall into place and prepare yourself accordingly.
Swati 2009-09-18
Thanks...
Hello.... Thank you for your posts. It was very helpful. Do you have any numbers on how many IT grads are produced in India and how many are employed - Year wise?
john 2009-07-18



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