Without a coherent policy response we’re likely to see a cataclysmic de-growth

Open any newspaper on any weekend, and chances are that you will have a plethora of real estate ads staring you in the face. Most of them, if you look into them a little deeper, have something or the other to do with the IT (information technology) sector. Either they are hawking office spaces aimed at the IT sector, or residences which are pitched as being ideally located and designed to serve the needs of India’s vast — and by relative standards, exceptionally well paid — techie army.

Consumption-driven

It’s not surprising, because this segment forms the core consuming audience for a number of other industries, particularly in the major metros and mini metros. Whether is Delhi or Mumbai, Bengaluru or Chennai, Hyderabad or Pune or even upcoming cities like Kochi or Bhubaneswar, the ‘techie crowd’ forms the core audience for not just builders, but everyone from carmakers to lifestyle holiday merchants to gourmet restaurants. It’s not that there is no money with the rest or that there are no other well-paid jobs. It is just that given their numbers, these high disposable income and lifestyle consumption oriented techies give the critical volumes necessary to sustain such businesses. This is also why such businesses are concentrated in the cities which are home to the largest concentration of IT and IT-related businesses.

All that, however, may soon be a thing of the past. Over the past few weeks, there have been increasingly pessimistic noises made by the IT sector about the key challenge faced by the sector in sustaining the growth momentum of the past — and no, it’s not Donald Trump, though the choleric U.S. head of state is an enormous ‘X factor’ in the equation. The real challenge, they say, is the skill level of their staff — or more precisely, the lack thereof.

Advisory firm McKinsey, which is not usually given to doomsday predictions, said in a report released last month that almost half the IT industry’s four million-strong workforce of technology and software professionals will be “irrelevant” in the next three to four years. French BPO giant (it prefers to call itself a consulting and solutions company) CapGemini went even further — its India CEO said as much as 65 per cent of the IT workforce will not be relevant to the changed needs of the workplace, and will lose their jobs over the coming few years unless they are able to re-skill themselves. Worse, from an economy point of view, these jobs will be lost in the well-paid middle and senior levels – by people in their late thirties to early forties, people who should, in theory, have decades of productive employment left. These people, the CapGemini head says, will become redundant not only because they lack the skills needed by their digitally transforming customers, but because they are unable or unwilling to acquire the needed new skills.

This is the double whammy which our IT industry, our policy makers and the by now largely privatised education and skilling sector have to face. And this challenge is fundamentally different from the one faced 20 years ago, when India’s IT sector hit its exponential growth phase. At that time, given its low-cost employee pool and the currency advantage it enjoyed, the IT sector was able to invest in skilling and training on its own, taking in essentially non-relevantly skilled employees and bashing out the rough edges in vast internal training centres, now called, fairly justifiably, as ‘universities’. Infosys, Wipro, TCS, they all have them.

This was fine for a while, but the trouble with the knowledge industry is the changing definition of knowledge. While customer industries were transforming at light speed, India’s IT Inc itself was relatively slow to change. Worse, over the past decade or so, as they grew into vast, publicly listed and traded enterprises, their focus turned more and more into satisfying their investors’ insatiable appetite for returns, which meant that they progressively invested less and less in skill development as a proportion of their total business. The government, too, dropped the ball, sanguinely assuming that the private education sector would fill the gap.

All about skills

The trouble is, that the private education sector was equally returns focussed. This meant that while quantity was delivered, quality was another issue altogether. At last month’s Nasscom event, CapGemini’s Srinivas Kandula, whose firm employs one lakh IT engineers in India alone, admitted that the intake quality was so bad that most of the candidates could not even say what subjects they were taught in the final semester of college!

This is a frightening situation. The water, as the saying goes, is well and truly above our heads. If we do not put in place a coherent policy response, coordinating effort and investments between the government, industry and the education sector, we are likely to see a cataclysmic de-growth, more spectacular than the boom of this century’s first decade. The IT industry, just as much as our banking sector, is simply too big to fail. The time to act is now.