Report on the Establishment of Computer Training Institutes

REPORT ON THE ESTABLISHMENT OF COMPUTER TRAINING INSTITUTES IN <?xml:namespace prefix = st1 ns = "urn:schemas-microsoft-com:office:smarttags" />INDIA FOR EXPORT OF SOFTWARE CONSULTANCY SERVICES TO THE WEST<?xml:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />

Garry Jacobs

June 28, 1984

Recent studies conducted in Europe, North America and Japan indicate that by 1990 there will be a worldwide shortage of qualified computer programmers to provide software services for the rapidly increasing number of commercial, governmental, educational and research organizations which require them. The President of Intel, the largest manufacturer of computer chips in the USA, predicts that the US alone will require one million programmers by 1990. A report prepared in France indicates that 1,50,000 additional programmers would be required before the end of the decade.

A study by the Mother’s Service Society of Pondicherry reveals acute shortage are already being felt in many countries. Mr. Garry Jacobs of the Society has just returned from a tour of nine European nations and the USA where he met with some of the largest computer manufacturers and software houses in order to obtain first hand information on the situation. The companies he met were unanimous in the opinion that severe shortages of qualified programmers will be a problem confronting all the industrialized nations over the next five years. Many companies said that they are already finding it very difficult to recruit suitable personnel to meet the growing market demands. The President of Volmac, the largest Dutch software house with 1000 programmers, said that he was recruiting 200 new trainees this year, but most of those who applied lacked the minimum educational requirements or intellectual capacities for the job. Digital Equipment Corporation, America’s second largest computer manufacturer, is faced with a shortage of qualified programmers for most of their European branch offices. CAP Gemini, a French multinational software house with 4000 programmers in Europe and the USA, has an urgent need for additional personnel, particularly for their offices in Scandanavia, West Germany and the UK.

There are two basic reasons for the situation reported above: first, the very rapid growth of the computer industry which is permeating every sphere of life in the West; and second, the absence of centralized educational planning in these countries to meet the changing needs of society. Educational institutions have responded to the challenge, but very slowly and inadequately. Companies and governments are gradually awakening to the situation, but so far there has been little success in evolving coordinated national strategies to deal with.

India is ideally suited to accept the opportunity and the challenge afforded by this situation and exploit it for the welfare of the nation, while at the same time meeting a pressing vital need in the West. Whereas in the West the supply of high educated talents is unable to keep pace with the demands of economic growth, in India the reverse is true. Educational development in many spheres has outstripped the growth of employment opportunities, thereby generating a temporary surplus of trained talents. The shortage of qualified programmers in the West represents a chance for India to orient its educational policy toward the needs of other countries and meet overseas demand with the domestic surplus.

Already Indian programmers working overseas have earned a very good reputation for their technical proficiency. Aside from the many Indians occupying professional posts in engineering, mathematics, and computer science departments of American Universities and those employed permanently by companies in the US, hundreds of Indian programmers have gone to the US on technical consultancy assignments representing Indian software houses. Tata has a tie-up with Burroughs Corporation for provision of software services to Burroughs’ customers in many countries. Computer Maintenance Corporation has an established presence in the US. About two dozen other Indian firms are also working in collaboration with foreign companies which include major American computer manufacturers such as Sperry Univac, Digital, NCR, Data General and Wang.

Until now the primary advantage of these collaborations has been simple economics. Indian programmers representing Indian software firms are sent over to the US to work on a contract basis for periods ranging from 12 to 24 months, and the US customers pay monthly fees to the Indian companies. These fees average around $2000 per person per month (Rs.20,000), which is 25% to 50% less than the cost of hiring American nationals to do the job. (Salaries for experienced programmers in the US range between $3000 and $5000 per month inclusive of perks). The American companies get the services of trained and experienced programmers at very attractive rates without incurring the costly obligations of long term permanent employment such as social security, unemployment insurance, pensions, etc. The Indian programmers receive a generous living allowance to meet their expenses overseas in addition to their salary in India. On an average they are able to save Rs.5000 to 6000 a month from the allowance and salary. They also gain invaluable experience in the latest applications of computer technology in the West and bring back their experiences to enrich Indian industry. The Indian software houses are able to cover the costs of sending and maintaining their personnel overseas and still earn a profit which averages about Rs.1 lakh a year for each programmer sent abroad. US immigration authorities have been quite liberal in extending business visas to Indian programmers for this purpose, since they travel as representatives of Indian firms and not as private individuals seeking permanent employment in the US.

The future opportunities that are now opening in this field are hundreds of times greater than the present level of activity which has been confined almost exclusively to the US market. By 1990 Western countries may be short as many as one million programmers. However, Indian firms will be able to exploit only a small fraction of this potential, unless a long term national strategy is adopted to actively exploit the situation.

This is so for several reasons. First, the present supply of trained programmers in India is very small. According to one estimate only 1000 Indian programmers are presently involved in software exports and growing domestic demand alone may require a five fold increase in manpower just to meet local requirements. Even if India aims to meet only 10% of the shortage overseas, 50,000 to 100,000 additional programmers need to be trained over the next five years, whereas the present level is only 500 per year.

Second, mere academic training by itself is not sufficient. The overseas demand is for experienced talents. Therefore an effective educational programme must include at least one year of on-the job work experience on problems similar to those existing overseas. This can be arranged provided that a close link is maintained between the educational institutions, private software firms which understand overseas market needs, and domestic customers for software services.

Third, the overseas market requires programmers conversant with the latest generation computers, many of which are not available in India; and since demand is always greatest during the first three years after a new computer is released on the market, it is essential to arrange for import of latest model equipment on a priority basis whenever it is available.

Fourth, in order to tap the European market, it is necessary to equip Indian programmers with multiple language skills. Each new trainee should learn at least one major European language. German and French are particularly important, since English is less commonly spoken as a second language in these countries.

With these facts in view, The Mother’s Service Society has drawn up a national strategy by which India can fully avail of the great opportunity this field offers to those who act with foresight. The major elements of the strategy are outlined below:

(1)              20 Export oriented Computer Training Institutes should be set up in different parts of the country during the next three years.

(2)              Some of the institutes can be established by the Central or State Governments, some by private companies.

(3)              Each institute should enroll 1000 students a year for a two year training programme.

(4)              Minimum entrance qualifications for the course should be a college degree in a related job application field such as commerce, economics, engineering, one of the physical sciences, etc.

(5)              Indian software firms should be actively involved with the establishment of each institute as a commercial partner. The role of the Indian firms would be:

-          to help design the training programme to ensure it focuses on useful vocational skills;

-          to arrange for on-the-job work experience inside India during the second year;

-          to recruit and employ graduates of the institutes for assignments overseas;

-          to help finance the cost of education and recover the investment through export of software services.

(6)              Each institute should be established in collaboration with one or more foreign companies (computer manufacturers or software houses).

The role of the foreign collaborators would be:

-          to help design training programmes specifically intended to meet the various needs of the foreign market;

-          to provide instructors or supervisors to insure programme quality is maintained and especially to generate confidence overseas in the quality of the training programme;

-          to recruit graduates of the institutes for work overseas as representatives of Indian software firms.

(7)              The training programme should include:

-          basic academic training in several computer languages;

-          training on a range of hardware;

-          special job application skills in one field such as banking, insurance, production, marketing, research, etc.;

-          foreign language training.

(8)              The cost of establishing each institute will depend on the type of computer hardware installed. The range will be Rs.2 to 10 crores per institute.

(9)              A very large part of the foreign demand is for personnel with experience on the latest model IBM mainframe computers (systems 3400 and 3800). Suitable priority should be given to installing these latest models.

(10)          The total cost of training each student for two years will be somewhere between Rs.10,000 and Rs.30,000 depending on the size of investment in equipment. This amount can be raised from the following sources:

-          The Indian software firm which will earn Rs.1 lakh for each person it sends overseas for a year.

-          The graduates of the programme who will earn Rs.60,000 or more in addition to living expenses for each year they work overseas.

-          Education loans to student which can be recovered from their salaries once they are employed.

-          Government subsidies to the institutions.

(11)          The outflow of foreign exchange for purchase of equipment will be more than compensated by export of software services. Each programmer sent overseas brings back to India a net inflow of Rs.1 lakh/year in foreign exchange. If the average graduate works overseas for just two years, each training institute could generate Rs.50 crores of foreign exchange earnings during the first five years.

(12)          Since the government has announced plans for large scale introduction of computers into Indian schools, there will be an enormous demand for qualified instructors within India by 1980, which will absorb any temporary manpower surpluses generated by the training programme.

During his recent tour, Mr. Jacobs discussed the establishment of these institutes with several foreign firms. All those consulted expressed interest and appreciation for the idea. IBM in the US expressed its willingness to collaborate with the Government of India for the establishment of one or more institutes.

Several questions remain to be resolved: The most important is regarding the willingness of European governments to issue business visas to Indian programmers representing Indian firms. Generally European companies believed that their governments will cooperate in view of the strategic economic importance to each country of continued growth of this industry.

So long as India is meeting a vital need of these countries which they are unable to meet by themselves, governments have everything to gain by offering cooperation and everything to lose by allowing themselves to fall behind the pace settling nations in this field, i.e. the USA and Japan. This subject should be explored further with the Governments of these countries to identify the most open markets for initial exploitation.