Monday, August 11, 2008

The worm turns

HT reports: IT firms are hiring less and offering less as they pick up talent from campuses. In some cases, companies are even refusing to go through with offers they've already made.

The report goes on to cite stats from specific colleges:
* 15% drop in hiring at Army Institute of Technology (AIT). 194 students picked up compared to 232 last year.

And of course the drop is much worse at less prestigious colleges such as:
* Pune Vidyarthi Griha (PVG) where 131 students were picked up as against 260 last year
* Amity University, where Tech Mahindra offered jobs to just 20 students, as against 111 last year.

What's more, IBM has actually withdrawn offer letters and is not even visiting IIT Chennai, where it had picked up 66 students last year.

Where the report falters is when the writer states,"This is the first time since the outsourcing boom began a decade ago that IT companies are dragging their feer on campus hiring.".

Is our memory really so short? The exact same thing happened in 2001-3 after the dotcom bust.

Those graduating in those years had a tough time getting jobs and Infosys had famously withdrawn offer letters made at IIT Bombay. However it created so much bad press that IIT B alum Nandan Nilekani intervened and made sure no students with offers were left high and dry.

In fact even when I wrote this piece for rediff.com in June 2004, it was relatively tough to get an IT job. But a year later the situation had changed and jobs were raining down.

So in a sense we have come full circle.

Moral of the story? First of all, we have way too many engineering colleges (1600 plus). And students join them, regardless of quality, because they think it will get them an IT job.

On the other side, in boom time IT companies were hiring as if picking out alu and pyaaz in the sabzi mandi - because they had so much work at hand. Now, all of a sudden, they are 'quality conscious'.

I think companies are merely the consumers of talent - the responsibility for quality lies with the colleges. This is the time for colleges and students to introspect. And strive to be more than glorified IT placement agencies. Are they up to the challenge? Or will everyone simply wait it out??

Coz this year and next year's batches may suffer. But ultimately the good times will return and we can go back to a world where people spend 4 years studying civil engineering. Only to become IT jocks.

And we can all forget about quality and offer letters being withdrawn - until the next slowdown.

16 comments:

  1. There is no IIT Chennai in India! Its still called IIT Madras. Will be glad if you can rectify the mistake.

    ReplyDelete
  2. Sapient gave joining in our college for april next year which is worse than reneging an offer

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  3. i had written a similar article few days back regarding layoff in indian IT industry, and why companies are focusing on quality. Only reason is they are not able to sell the same junk work anymore. they are losing the projects coz of no improvement in quality !

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  4. Hey! Im in my 4th yr of comp engg. TCS picked up 120 students from my college, Accenture 100, Tech Mahindra and ATOS picked the rest.
    My college is certainly no IIT. I dont quite think this is as bad as 01=02

    ReplyDelete
  5. Very true...
    I was selected in Birlasoft and Satyam..
    Birlasoft has delayed joining till feb 2009..
    Satyam has lost my email address and phone no. I guess!

    ReplyDelete
  6. But ultimately the good times will return

    I am not so sure. Wage inflation and rupee strength (against dollar) are net positive trends. Low wages (comparatively) and 45-rupees-to-a-dollar have been among the traditional pillars of our IT services industry.

    ReplyDelete
  7. the issue is a bit more fundamental than usual global economic cycles.. the type of services Indian IT industry provides is very exposed to economic swings with low price flexibility for buyers.. these are interchangeable services that any other country can provide.. given the wage infation and cost of living in India, Indian IT companies are no more attractive options.. there are barrage of projects where Indian companies are losing the battle to Chinese and other low cost countries..

    given the resource cost in India, it is becoming as costly to get services from India (total cost, including management overheads, rework etc) as from easier access countries (such as East Europe, Lat Am etc)...

    Indian IT needs to rediscover itself.. Israeli model of high end product development, design services should be the future rather than $10-15 an hr of individual dev, test, support bodies (the bread and butter of all companies you mentioned)..

    check out the ratio of support / maintenance and low end dev / test to product design / core dev work that Indian IT companies do.. anyone with basic English skills and some common sense can provide these services and guess what, other lower cost countries have finally understood the game..

    given the focus on immediate returns and inability to invest (talent, infrastructure, mktg etc)for higher end, sticky services , it looks like the boom time for Indian IT companies is over.. brace for an extended period of slowdown and forget the recruiting in '000s.. china is eating India's lunch and the blame lies squarely on India.. not claiming that Indian IT will be wiped out.. it can survive in toilets for decades.. forget the dizzy feeling of fast moving elevators climbing up though..

    stock markets have already moved on.. so should all interested parties

    ReplyDelete
  8. Hey Rashmi
    well i used to work in an IT organisation and i know for a fact that these IT firms just keep hiring in bulk but they actually dont have the relevant work for the employees. Things then go from bad to worse when selected students dont get offer letters, or people are made to sit on bench for months at end. Worst case, the company will take u, put u on bench and then they may force you into any which project they feel like, without caring a damn bout your inclinations or ur training. Its sucks big time.
    This HAD to happen one day! this mass hiring is one of the most stupid policies of the IT firms. If there are requirements then its fine, but 9/10 times mass hiring is done just to show more headcount so as to up their rankings in the global top IT firms. its just a gimmick, and it wont last long.
    take care
    ciao

    ReplyDelete
  9. This does raise some valid questions about viable options for India's burgeoning working class. I feel kinda old(27 years) when I hear that more than half of India's population is less than 25 years old.

    Services pay better anyday when compared to products primarily becoz, a product is tangible while a service is most likely not.

    India's ever increasing dependancy on oil-imports makes us need Forex badly to pay-off our import bills for which exports and Software dollars come our rescue.

    We do need some moderation in salary hikes which is definitely a pillar of our strength.

    Are there any other viable alternatives to balance aspirations of a billion population and still grow India ? This topic does need a serious debate.

    ReplyDelete
  10. talking about the scenario in my campus (NIT Trichy).. ofcourse there is a reduction in offers from IT firms BUT at the same time the automobile companies and manufacturing ones... i mean core mechanical, electrical or civil companies have certainly increased their input.. Probably bcoz its time the boom is shifting from IT to those industries.. which definitely will stay for some years to come..
    So, the students seeking admission in engineering colleges should keep this in mind while choosing their area of specialization (applicable ofcourse only for those who decide it not bcoz of their interest but bcoz of the placement scenario, in other words applicable for 90% of indian students! :) )

    ReplyDelete
  11. anybody interested in survival tips... waiting for some...what happened to ppl who r laid off....one more thing...ppl who got into IT were not dumb...as the comments inclined to treat them.
    An IT guy

    ReplyDelete
  12. Anonymous11:55 PM

    well not all companies are retracting offers. I think downturn is the time when you separate the good from the average.

    For example, my company - Globallogic - is actually hiring extra freshers over and above our campus hires, from the market by conducting walk-ins.

    more at: http://globallogic.blogspot.com/2008/08/firing-before-hirings-do-companies-even.html

    ReplyDelete
  13. Anonymous12:19 PM

    is a chennai you nice

    regards
    Hrithik Roshan

    ReplyDelete
  14. This comment has been removed by the author.

    ReplyDelete
  15. I had been working with a global MNC giant for two years. From the start of 2007 the impact of recession was clearly visible in the sense that no new projects were in pipeline and there was an ever increasing problem of people on bench.

    To my surprise every Friday on an average 50 people were leaving the company for other jobs.
    This generally implies that yes demand for experienced people is still out there.

    I too joined the bandwagon but consciously I left my company to join a product based company (The leader in the area I work) inspite of having a better offer from other MNC

    ReplyDelete
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