Labor issues in IT firms

I was just browsing through the news sites and I came upon this article about Infosys (a leading Indian IT company), "Infy likely to go through a mid-level crisis". It says that Infy is facing a shortage of mid-level employees. Percentage of employees with 3-5 year experience is decreasing, though at starting level company is hiring at unprecedented rate. Blame is given to the slowdown in 2002-03. This is not just a problem with Infy but also with other leading Indian IT companies. People don't regard them as ideal companies to work for or as aspiring place to work. With increasing number of IT players and MNC's owned ODC, competition for skilled employees was expected to go up. MNCs by entering Indian market are increasing not only the pay checks but also by their improved HR practices, raising the bar for Indian IT firms. This is already been a much talked phenomenon. The other news which made it interesting was news on CNN website. "Microsoft's labor troubles" was the heading. The causes for employee crunch were different from what listed for Indian companies but the sharp contrast was visible. Microsoft, though now being not considered as an aspiring firm to work for by techies in US, is still able to pull high skill techies in India. They are really pushing hard to increase their strength in India. Though, at managerial level Microsoft is not hiring much in India but the boost its hiring is getting is unparallel. More interesting fact is MS is hiring experienced techies mainly which previously worked for Indian IT majors. So, whereas Indian IT firms are facing mid-level employees’ shortage, MS is trying to fill it labor gap in US from hiring techies in India. In India, you still not have that many options in deciding your career. Infy and other Indian IT majors recruit freshers in bulk, so most of the engineering graduates end up in one of them. With entrance of MNCs, they have more options to choose from only after they get 2-3 years experience. MNCs which are loosing their charm as innovating firms in west are cruising to India where due to lack of other options people don't give much importance to these factors. Yahoo and Google are also hiring in India but their focus is mainly on high skilled techies (5+ years) experience. For managerial jobs, still these MNCs have not shown the will and their hiring at this level is minimal.

The expectations of western employees and Indian employees are at far end of spectrum with each other. Indian employees give very high importance to job security and firm's brand image. In brand image they don't consider if the firm is fun to work in or highly innovative but major importance is given to the fact that if the firm is financially strong enough to last long. On the same track, pay cheque become a major issue. More the company offers, more the Indian employees will be happy. Indian IT firms don't have a proper employee review system and employee being thrown out due to poor performance is a rarity. TCS (Tata consultancy services), though is trying to change this. These kinds of appraisal schemes give more emphasis on experience than person's performance. People can't move up the hierarchy without spending certain number of years in the lower level. This system is borrowed from Indian government bureaucracy which very famous for its inefficiency. This system strangles any creativity and innovativeness in their employees. Indian government system is also one of the remaining antic from colonist era. In times of British occupation, strategy makers, innovation and creativity were considered British property and Indians were not allowed in their scope. Government bureaucracy was developed in such a way that employees couldn't question the authority of their British superiors. Indian industry has retained this structure as to facilitate authoritarianism. Indian IT firms made some modifications initially to this system but as they grew authoritarianism crept in. Now, the same is crippling their growth. MNCs with their open culture and special rewards for being creative and innovativeness, provide a much better alternative to Indian techies. Though, they are not much accustomed to utilize this opportunity in a best way but time stand by them. Big salary, much higher financial strength compared to Indian players and open culture pull Indian techies out of slumbering Indian firms to MNCs. Microsoft is utilizing this talent pool in a big way and it’s the same story for other IT MNCs. They are all opening big shops in India.
But question, how long this advantage will remain with MNCs? Indian IT firms, in no way emphasize on authoritarian culture but they fail to eliminate this from their employee's mentality. Indians have very high interaction with government bureaucracy than any other system and its effect as a valid system or way of life on people's mentality are obvious. Indian IT majors though don't propagate authoritarian culture but their own culture is not strong enough to train new people joining in and impact their way of life. From this argument it’s obvious that MNCs with not so strong culture will not able to alienate from this Indian way of life. Authoritarianism will creep in their too and may snub the growth of MNC's Indian operations. Stiff competition is the only remedy which can keep firms on their toes to keep warding any negative attribute to enter their culture.
One of the major negative effects of authoritarianism is very high attrition rates in companies. Firms with this kind of culture loose their employees and difference between high level management and entry level employees become wider and wider. It’s the same happening in Infy and MS, though in different geographical regions. MS is trying to stretch itself and stay afloat by expanding in India, whereas Infy and other Indian IT majors don't have this option. China and other East Asian countries are still in their infancy in terms of IT education. In some of developed Asian countries, with their own strong markets, local firms have already passed on this stage. Though, almost all the Asian countries suffer from colonialism effect, as they all try to catch western countries by just coping their system. Japan and South Korea are example of this with authoritarianism being part of their industrial culture. Both these economies are struggling to maintain their high growth rates. Japan is loosing its own culture as more and more youths are looking to west for ideal system which can utilize their skills in better way. Pride of heritage is also getting lost as people relate heritage with the struggling economy.

Humans’ best prize their identity and when they find their identity behind the time, they loose charm in their life which further deteriorate their efficiency to stay with time. This cycle eventually eliminate lagging cultures which fail to improve themselves.