Skills shortage could freeze India's outsourcing success

The head of India's IT trade body Nasscom has said that the offshoring hot spot will soon suffer a skills shortage unless it revamps its education system.

Speaking in Bangalore, the association's president, Kiran Karnik, said that the country wasn't producing enough high-end students to keep up with the demand from IT companies looking to outsource.

Despite the fact that India produces 2.5 million graduates a year, only 5,000 are PhDs and only a very small percentage of graduates are right for BPO industry, Karnik said.

He also warned that if the situation continues, the country could be looking at a deficit of 262,000 suitably skilled workers by 2012. Coupled with the expected increase in Indian software exports of around 30 per cent in the 2004-2005 financial year, the personnel - or lack of them - could weigh heavily on firms looking into where to offshore.

A recent Gartner report fingered some Far Eastern including Malaysia and Eastern European countries as potentially stiff competition for India.

Karnik said Nasscom was in talks with universities and IT firms to improve the education Indian students receive and to bolster modern languages and communications training.