A worrying reco of UR Rao report

Article from ET

Apparently India produces seven times as many engineers as it should!

Stop. Rewind. Let's go for some background bullets:

§ Up to 1 million tech jobs will be off-shored from the US in the next 10 years

§ 50,000 financial services jobs will be moved to India in the next 4 years

§ There are 20 per cent more engineers in Bangalore than in Silicon Valley – and the gap will only grow

That’s the demand side. How about the supply? On current trajectory, India should be producing 500,000 engineers a year by 2010, up from the current level of about 260,000, according to Nasscom estimates.

But not if U.R. Rao has his way. The former chairman of the Indian Space Research Organisation believes that India produces way too many engineers given the job scenario.

So, in a report that is being used by the Union Human Resource Development Ministry to slash the fees of the IIMs from Rs 1.5 lakh to Rs 30,000 a year, Rao has recommended cutting the number of seats in engineering colleges to 30,000.

What???!! Yeah, the scientist believes that the human resource pool that is enabling India to become a major work centre for the world’s knowledge industry should be made to shrink. Arguing that the 1,200-and-odd E-Schools in India today – up from about 300 a decade ago – cannot assure quality, Rao has recommended shutting down most of the institutes.

Wait, there’s a method to the madness. For, Rao’s reccos are based on the following points:

§ With a recommended teacher-student ratio of 1:15, there should be about 30,000 professors. Given that only about 375 PhDs are given out every year, it would take nearly 90 years to churn out enough professors. Likewise, says Rao, there are 25,000 master’s degree-holders too few to service so many students.

§ There is no stipulation that an E-School has to register with the AICTE. Which, in turn, means that the majority of E-Schools remain out of the jurisdiction of the body that is supposed to regulate the technical higher education market in the country.

§ At 350,000 engineers a year – Rao’s estimate – there will be 15 lakh engineers in four years, at a time when unemployment across all engineering sectors is running somewhere between 15 and 20 per cent

But wait a minute. Isn’t it precisely the enormous pool of qualified, English-speaking grads in general and engineers in particular that is leading globocorps to India? Isn’t this pool the reason GE Capital Services employs 18,000 people in its back-office ops? That IBM is planning up to 10,000 people in India? That EDS will have 3,500 people here? That Intel employs 1,700 and Oracle, 6,000?

That not a day goes by when some global IT company or the other announces plans to hire in India?

If Rao’s recipe is followed, wouldn’t all these companies find it far less attractive to be in India? After all, simple economics suggests that cutting the supply of people will immediately raise prices, lifting tech salaries to levels where American companies, for instance, will not find it worth their while coming to India.

As for the over-supply problem that Rao envisages, the dramatic increase in outsourcing and offshorign predicted by every major forecaster – whose estimates place the job-flow to India at anywhere between 200,000 and 350,000 a year – should take care of the availability factor.

Following the Rao formula would, of course, make mockery of the very advantage that global corporates are discovering in India. In the words of Steven Clemons, executive vice-president of the New America Foundation think-tank, quoted in an article on a Website on the finance business: "There's a culture of inquiry here. I've never met so many smart, so incredibly inexpensive people."

It would be interesting to see what Union HRD Minister Murli Manohar Joshi – who cited Rao’s report to cut IIM fees even though the IIMs were not part of the ambit of the report – makes of this particular downsizing strategy.