Quota politics may spoil BPO party

New Delhi: India may be taking big strides in the BPO and overall IT businesses worldwide but tough times lie ahead for firms in getting skilled manpower for the industry.

"IT industry alone needs about two lakh engineers from roughly over three lakh graduates passing out every year. This mismatch in demand supply has triggered high wages and is rocketing attrition," global research firm, Forrester's India Head, Sudin Apte said.

"Only about 10 per cent of students passing out are hireable, which increases competition among vendors," he said.

The offshore product development - a key and fast growing segment of the country's booming BPO sector - would have to face a huge manpower crunch as the competition intensifies among the companies to recruit right talent, Forrester says in an upcoming report.

"With the kind of political and social turbulence gripping India currently with impending caste-based quota policy, the competition for this scarce resource is only going to become worse over the next two-three years," Apte said.

Industry leaders have already expressed their view that a caste-based policy would hamper the quality and shake client confidence, he said.

Echoing similar views, Nasscom President Kiran Karnik had recently said that the IT sector would face a shortage of about five lakh well-trained persons by 2010.

According to the Nasscom figures, over three million graduates pass out of colleges every year, and India produces 4,00,000 engineers annually but "of this only a very small percentage is employable."

Apte said the skill mismatch has increased training gestations and costs with maximum percentage of increased salary being reported at junior level in most firms.

The education system prevailing in India needs to be revamped quickly to counter the shortage of talent, which would also spoil the offshore product development party, Apte

said.

"We need to expand education system very rapidly. Throughput of the system has not grown at the pace at which industry has grown," he said.

He said several industry verticals, including IT, have been performing very well and need people.

"Modernisation, spread and expansion are clear needs of age-old Indian education system," Apte said.