Product engineering offshoring to India is growing so fast that demand for experienced people outstrips supply. Wage inflation is taking place. Work ethic is disappearing. Mediocrity is stepping in. Entitlement mindset is creeping in. And short-termism is dominating. The problem is acute.
Even the real-estate markets have gone crazy in India. Boston real estate is less expensive than Bangalore and this stings.
The common refrain is that you can’t do anything about all this - only manage it. Some are doing this by moving marginal growth out of Bangalore. Others are tinkering with the W2C2 equation (challenging Work, open Work environment, competitive Compensation and Career development).
But, frankly, the only thing that will correct this is a temporary bust, a slowdown. This is needed to bring sanity back into the system.
Is the bust near? I don’t know. No doubt, a general slowdown in R&D offshoring is in the air. Also, for the first time, Indian startups are going outside (e.g. Monsoon Multimedia has setup a supplementary development center in Russia). Still, there are not many who are predicting a bust though there are a few lone exceptions around (like this one)
A temporary bust is not all bad. It will stabilize things for long-term growth. But a correction will come with pain. Weaker R&D centers will die. Salaries will stall or even come down. Real estate will lose its fizz.
Post-bust, the landscape will change. How? Two things will happen:
- Entrepreneurship will boom like it did in the Boston area after Digital went nearly bust. The good legacy of this boom for India is the boat-loads of talent that’s moved back from the US that otherwise wouldn’t have come.
- Captives that use the job-shop model will transition over to the non-captives like Persistent, Aztec, Wipro, etc. Non-captives will help clean up some of the mess.
What do you think? Should we be rooting for a temporary bust? Or, do you think this bubble will work itself out without pain. Look forward to hearing from you.
I think a ‘bust’ is definitely made essential. Like you have rightly pointed out, salaries are spiralling, and very often the younger’ techies’ no longer feel responsible towards the commercial success of the companies they work for. They are myopic and obsessed with “what’s in it for me”… Once their ambitions or short term goals are fulfilled they leave for greener pastures. While it might be seen as a a generalizing / sweeping statement in my conversations with many, this seems to be the case. And then, to add to it, talent is scarce, good people are hard to come by. How we ensure a steady supply of promising engineers by gearing up our RECs and other local engineering schools — is where the key lies…
As long as the USD is strong against the INR, the party will be on. While good talent will get scarce by the day, there is ample amount of average talent available to fuel the growth. I think an external global event or government’s playing with policy (taxation, SEZs) could spoil the party and lead to a bust. Otherwise the market will have minor corrections along the way. I feel there is a lot of room for the bubble until a bust becomes essential.