April 3, 2014 12:00 am JST

How can India produce more talent like Microsoft CEO Satya Nadella?

ANIKA GUPTA, Contributing writer

NEW DELHI -- Indians all over the world rushed to congratulate Satya Nadella when he clinched the top job at Microsoft in February.

     Sree Srinivasan, a prominent Indian-American digital strategist at Columbia University, told CNBC: "It's a really big deal for the Indian community here as well as in India." Ravi Venkatesan, former chairman of Microsoft India, wrote in a newspaper column that Nadella allowed other Indians to "see the possibility of our own success" because he was just a "nice, normal and humble guy."

     But Nadella's success has also prompted some painful soul-searching in his home country. Prominent newspaper columnist R Jagannathan wrote that Nadella's rise was "a slap in the face for the Indian system." He went on to ask: "Why is it that India's tech and other geniuses flower only in the U.S.?"

     Nadella was born in the south Indian city of Hyderabad, home to one of Microsoft's largest international research and development centers as well as other gleaming IT infrastructure. The way he rose through the ranks at Microsoft, a company known for having a large workforce of Indian origin, was impressive enough. But one aspect of Nadella's biography has made his success even more inspiring in India: He did not go to the right college.

     Few outside India will have heard of the Manipal Institute of Technology, a midranked Indian engineering college and Nadella's alma mater. The fact that he attended an "ordinary" college makes him a great role model for ordinary Indians, according to Venkatesan.

     For IT professionals in India, more than many other places in the world, a strict academic hierarchy rules access to coveted jobs.

     At the top of India's academic pyramid sit the publicly funded Indian Institutes of Technology. Out of nearly half a million hopefuls each year, only around 2% of applicants get in. These are the lucky few. Rajul Doshi, co-founder of recruitment firm Sampoorna Computer People, said the best-paying companies rarely look beyond the top-ranked colleges for new hires. "When I do my top search, what happens is that I would put it in bold that (a candidate) is from IIT because it is a very respected institution," admitted Doshi.

     At some of the technology institutes, particularly the older and more established ones such as those in Kanpur, Kharagpur and Delhi, computer science graduates could earn starting salaries three or four times what other graduates with similar credentials -- but from less prestigious institutions -- get. The alumni have also gone on to found some of the country's most successful homegrown businesses, such as Infosys and e-commerce giant Flipkart.

     The education structure at the technology institutes provides a great "entrepreneurial ecosystem" by providing graduates with advice and role models, said Abhishek Gupta, general manager of startup incubator TLabs.

Quality concerns

As Nadella has clearly shown, employers could miss out on promising candidates by screening out students from lesser-known universities. But there is a lot of concern over the quality of teaching outside the top establishments.

     "The problem in India is that after the top 100 colleges, the quality (of teaching) suddenly drops to a level where companies find it very hard to employ a candidate," said Abhishek Gupta. Employers like to recruit from the established tech universities and other top-tier institutes because they are tried and tested.

     According to a 2011 study by the National Association of Software and Service Companies (Nasscom), only 25% of India's technical graduates have been taught the skills they need to work in a top-level IT company. Sangeeta Gupta, senior vice president at Nasscom, said that figure is likely to be the same today.

     Competition for jobs is about to become even more unforgiving. More than half of India's population is of working age, and that percentage is predicted to rise as high as 64% by 2020. Drawn by the perception that engineering -- particularly computer science -- leads to well-paying jobs, more and more Indian students are trying to get into the profession. This year, some 868,000 students will graduate with degrees in engineering and science, according to Nasscom, nearly 80% more than in 2011. The increase in nontechnical graduates over the same period has been 20%.

     As India's general election looms, education and employment have become highly political issues, especially among the young. An Indian government report from 2012 said India would need to generate 10 million to 15 million new jobs a year for the next decade to generate meaningful employment.

     The current government has increased the number of Indian Institutes of Technology from eight to 16 since 2008. That will, in theory, allow more students to have top-notch academic training, and give companies a larger pool of strong candidates to choose from.

     Rather than dilute the elitism that has blocked the paths of talented young graduates, the new institutes and the roughly 1,600 other engineering colleges that have appeared since 2006 may have only reinforced it.

     So far, the new institutes have failed to match the reputation of more established campuses. As of 2013, most of the new ones were being run from temporary sites, according to several reports. All but one were struggling to fill their teaching positions, according to an investigation in late 2013 by the Times of India newspaper. The same report found that graduates from the newer campuses have found it harder to get jobs compared with the placement rate at the more established tech institutes.

     Things may be about to change. Both the government and the IT industry have realized the need to create better vocational and industry-specific training models for new graduates. Nasscom has partnered with the National Skills Development Corp., a public-private partnership, to map the precise skills required for 69 entry-level roles within the IT industry. Sangeeta Gupta said that the project, which started in 2012, would help colleges better equip their students with the skills that the industry needs.

     The less academically inclined can also take heart from how U.S. technology companies are placing less emphasis on fancy university credentials and focus more on interpersonal and technical skills. In "How to Get a Job at Google," a February article in the New York Times, columnist Thomas Friedman said the proportion of employees without any college education has increased over time. Friedman wrote that academia does not necessarily prepare students for a work environment where innovation is increasingly a group endeavor.

     In the wake of the global financial crisis, many big Indian companies started rethinking their hiring strategies, according to industry officials. Nadella's story only reinforces the trend. Large IT services businesses such as Tata Consultancy Services and Infosys traditionally followed a model of hiring en masse, sometimes as many as 10,000 to 20,000 graduates each year, and then conducting lengthy training sessions for those new hires whose skills were not quite up to scratch. But uncertain export demand over the past few years has forced companies to be more efficient.

More skill-based hiring

"The two buzzwords that have emerged are agility and flexibility," said Sangeeta Gupta. "People are recognizing that there is a need for more skill-based hiring."

     Sachin Gupta, an IIT graduate, is among those trying to improve the IT recruitment system to match companies' evolving demands. In November 2012, he and a friend co-founded HackerEarth, an engineering community and recruiting platform where people looking for work are asked to complete virtual challenges and are ranked by performance.

     HackerEarth now has a community of thousands of engineers, and recently raised $500,000 in seed funding from Angelprime and GSF, companies which invest in startups. A similar Indian startup, InterviewStreet, allows clients to set coding challenges for prospective employees. Founded in 2009, InterviewStreet is backed by Indian-American venture capitalist Vinod Khosla and startup fund and "boot camp" Y Combinator. The Indian company lists Facebook, Amazon and Evernote among its clients. The website makes InterviewStreet's proposition clear: "Too many resumes promise what candidates cannot deliver."

     HackerEarth recently ran a recruitment exercise for InMobi. Founded in India by an Indian Institutes of Technology graduate, InMobi is today a global leader in mobile advertising. The company hired six engineers through HackerEarth. Out of these, Sachin Gupta said, only one graduated from one of the main tech institutes.

     "We are pedigree agnostic," he said, which is a blessing to the many young Indians who aspire to be like Nadella. It also shows a new path to take for the companies looking to hire the next generation of tech talent.

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