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Software firms seen hit by workforce squeeze

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CIOL Bureau
New Update

Anshuman Daga

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MUMBAI: India's buoyant computer software sector is likely to experience a

severe medium-term shortage of skilled professionals as tech colleges are unable

to cope with soaring demand for trained graduates, a study has said.

"The Indian software industry's main and core advantage has been the

large high quality and low cost human resources. This is now under threat,"

said brokerage Indosuez W I Carr Securities.

"Supply of quality talent cannot be accelerated significantly in the

medium-term given the rigidities in India's educational system, despite recent

government announcements," the firm said in a November report titled

"Talent Chase".

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W I Carr forecast annual demand for Indian software professionals to rise to

228,081 persons in 2003-04 (April-March) from 94,350 in 1999-00, showing a

compounded annual growth rate of 24 per cent.

The supply of professionals is however seen growing much more slowly to

137,496 persons from 90,585 in the same period.

The report written by W I Carr analyst Ajit Chandgude said that software

services firms would experience higher wage inflation, increased turnover of

employees and lower margins.

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"The only way of maintaining margins, growth and profitability in this

environment will be to improve billing rates and simultaneously attract quality

people in larger numbers. This is not easy," it said.

Indian tech professionals, particularly in the computer software area, are

currently being wooed by a dozen developed nations such as the United States,

Germany and Japan to overcome a shortage at home.

Software engineers are in high demand within the country as well, as India's

software services exports grow at an annual 55 per cent to 60 per cent.

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The Indian government has said that it will double the student capacity of

engineering colleges in the country next year to meet surging demand for

professionals.

The software industry's exports are expected to hit $10 billion in 2002 from

the current level of around $6.0 billion, according to India's software

association.

The W I Carr report said a higher number of visas being offered by countries

like the US, Europe and Japan will improve business prospects and result in

higher exports by Indian software companies.

This could however also subsequently lead to professionals hopping over from

Indian firms to foreign companies.

(C) Reuters Limited 2000.

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