Feature

Candidates’ market

Today more than ever, young talent is keen to join an IT product organisation for the better remuneration and greater challenges it offers. Vinutha V on the new trend

Multiple job opportunities abound in the IT world today. As always, graduates of the top 20-25 technical and management colleges are in demand. It has become a candidates’ market, and they have a major say in the recruitment process. However, there has been a shift in the mindset of these candidates in choosing their career path. The urge to join an IT services company is slowly but surely giving way to finding the right opportunity in an IT product company—be it an MNC or an Indian firm.

Credit it to the shift happening in the IT industry over the last decade. During 1998 and 1999—the first phase of the IT boom—the scene was dominated by IT services companies, and they absorbed a major chunk of IIT and IIM graduates. It was only after 2001 that a lot of MNCs and Indian IT products came into focus. These companies began competing with IT services in grabbing the skills available. This has triggered quality placements in top techno-commercial colleges. Companies now look at campus recruitment seriously.

Both IT services and product companies have started targeting the same chunk of people, i.e. candidates in computer science and electronics & communication. On the other hand, there has been an evolution in the mindset of graduates while opting for a career.

Graduates are well aware of the opportunities available in India, and hence are not looking at moving abroad. In fact, students who were willing to take up GRE are now moving to take up CAT examinations. Various factors are contributing to this increasing level of awareness. They are well-informed through their alumni on the trends and opportunities in the market. Parental pressure in taking up a particular job is slowly diminishing, and any taboo associated with joining a new venture is also fading.

Escalating salary

Meanwhile, the expectation levels of candidates are increasing. More challenging work, visibility and individualised salary structures are at the top of their list of priorities. Both IT services and product companies are now striving to attract top-notch graduates. However, both cannot give benefits on similar lines. Says Nandkishore Rathi, Manager, University Relations, Oracle India Development Centre, “There is a huge difference in the business models, and consequently they offer different sets of benefits. The business in a service company depends on the size of the project, whereas in a product company speed of innovation is what determines the business.” Since the productivity of product companies is much higher than that of services companies, recovery of payment can be achieved more easily. Typically, an IT services company generates an employee productivity of $45,000 per month, while a product company can generate as much as $200,000.

If the salary pattern in IT services companies is increasing at a rate of 10-15 percent annually, it is almost double in the case of product companies which offer an increase of anywhere between 20-25 percent. While Indian IT majors may be in a position to meet such requirements, MNCs coming to India for cheap labour are facing problems. “With the rise in the salary structure, a mismatch has been created between Indian and American salary structures. In order to bring down the average salary bill, companies are forced to look at campus hiring,” says Rishi Das, Director, CampusConnect, a division of CareerNet.

Controller to enabler

Placement heads are also contributing to the move up the value chain of the recruitment process. Unlike in earlier days, they are more open and approachable now. Concerned about their students’ future, they were choosy about the companies they allowed to come to the campus. Now, accepting the boom in the job market, they have transformed themselves from being controllers to enablers. They are encouraging ‘dream job’ offers; that is, even after getting selected by a company, the candidates are free to choose any other job. A few placement heads even opine that IT services are considered to be the lower-end of the IT industry value chain as they work on narrower margins. They surmise that services companies require basic aptitude skills rather than focussed technology skills.

IT services vs. IT product firms

Even if a few leading IT services companies are paying close attention to the IT product company salary structure, they [the former] have to still manage the attrition rate. Since services companies are considered a launching pad, attrition has become inevitable. In order to overcome such challenges, IT services companies are churning out different strategies to recruit freshers. They have started eyeing beyond the top 50 colleges to recruit people in large numbers while they look at the top 20 colleges only for candidates with specialised skills. A few placement heads from the top colleges observe that there has been a decline in the number of applicants joining IT services firms.

On the other hand, it may not be true that IT product companies are on the gaining side alone. They too have tremendous challenges at the campus recruitment level. The latest MNC entries in India and a few start-ups here also reach out to top colleges. “The bigger IT product companies poach people who have exceptional coding ability. Small players have challenges in terms of the brand, work, job security and access to the talent as it is a huge cost,” says Piyush Dixit, Director, Engineering, Net-Devices India. It is becoming increasingly tough for these small firms to explain their operations and the technologies they are working on.

Overcoming challenges

During campus recruitments, IT services should communicate well about the learning opportunities, technology, projects and onsite opportunities one can get Manoj Mandavgane General Manager, HR 3i Infotech

The corporate sector has realised that its entry into academia has become crucial to gain the attention of candidates. “To overcome paradoxes associated with campus recruitment, companies are looking at creating more brand awareness, networking, sponsoring technical festivals, quizzes, and internship programmes. Companies are thinking in terms of long-term investments,” adds Das. Some companies are also setting up labs and giving projects. These organisations are partnering with placement consultants to focus on campus recruitment. For instance, CareerNet arranges presentation, common tests and brand building on behalf of its clients. Communicating with candidates is of paramount importance during the course period and at the time of recruitment. Upfront career counselling and forums before starting the campus recruitment should be encouraged. When IT services companies cannot match the salary levels of product companies, publicising about their operations and opportunities may help. Says Manoj Mandavgane, General Man-ager, HR, 3i Infotech, “During campus recruitments IT services should communicate well about the learning opportunities, technology, projects and onsite opportunities one can get.”

Although services companies are always high on numbers, they cannot expect to hire a majority of students from the top-end colleges. An edge in the training facilities that services companies have can accommodate freshers from the non-circuit branches too.

Change for good

One cannot rule out that the highest rate of hiring has been happening on the IT services side. The same trend may not continue in 2006. In 2005, all candidates of circuit (computer science and electronics) branches of the top 25 colleges were placed in IT product companies. This is paving the way for candidates to look at non-circuit (mechanical, instrumentation, metallurgy and so on) branches to enter the IT industry. Poaching talent from across industries will continue to happen as 70 percent of the IT services companies are looking at hiring at the entry level which requires basic aptitude skills. Graduates focussing on innovation and challenging work may be good for the industry. The value chain moving from the mere servicing of customers to invention would be a positive sign of innovation.

vinutha@expresscomputeronline.com