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Physicist, Startup Founder, Blogger, Dad

Tuesday, April 05, 2011

Human capital and Indian development

Another story in the WSJ on human capital in India. Some readers objected to a related post I made last week, accusing me of Chinese jingoism for pointing out some qualitative differences in Indian and Chinese economic development. Let me say that I have nothing but respect for the many talented Indians I have known in physics and in technology. But it's important to clarify to what extent elite (highly selected) subgroups, such as, e.g., Indians in the US, or IIT graduates, are representative of the broader population upon whom India's continued economic growth depends. It's entirely possible, as the article below suggests, that India's IT and outsourced service industries are starting to experience real human capital limitations.

WSJ: BANGALORE, India—Call-center company 24/7 Customer Pvt. Ltd. is desperate to find new recruits who can answer questions by phone and email. It wants to hire 3,000 people this year. Yet in this country of 1.2 billion people, that is beginning to look like an impossible goal.

So few of the high school and college graduates who come through the door can communicate effectively in English, and so many lack a grasp of educational basics such as reading comprehension, that the company can hire just three out of every 100 applicants.

India projects an image of a nation churning out hundreds of thousands of students every year who are well educated, a looming threat to the better-paid middle-class workers of the West. Their abilities in math have been cited by President Barack Obama as a reason why the U.S. is facing competitive challenges.

Yet 24/7 Customer's experience tells a very different story. Its increasing difficulty finding competent employees in India has forced the company to expand its search to the Philippines and Nicaragua. Most of its 8,000 employees are now based outside of India.

In the nation that made offshoring a household word, 24/7 finds itself so short of talent that it is having to offshore.

"With India's population size, it should be so much easier to find employees," says S. Nagarajan, founder of the company. "Instead, we're scouring every nook and cranny."


... Muddying the picture is that on the surface, India appears to have met the demand for more educated workers with a quantum leap in graduates. Engineering colleges in India now have seats for 1.5 million students, nearly four times the 390,000 available in 2000, according to the National Association of Software and Services Companies, a trade group.

But 75% of technical graduates and more than 85% of general graduates are unemployable by India's high-growth global industries, including information technology and call centers, according to results from assessment tests administered by the group.

Another survey, conducted annually by Pratham, a nongovernmental organization that aims to improve education for the poor, looked at grade-school performance at 13,000 schools across India. It found that about half of the country's fifth graders can't read at a second-grade level.


At stake is India's ability to sustain growth—its economy is projected to expand 9% this year—while maintaining its advantages as a low-cost place to do business.

... Trying to bridge the widening chasm between job requirements and the skills of graduates, Tata has extended its internal training program. It puts fresh graduates through 72 days of training, double the duration in 1986, says Tata chief executive N. Chandrasekaran. Tata has a special campus in south India where it trains 9,000 recruits at a time, and has plans to bump that up to 10,000.

Wipro runs an even longer, 90-day training program to address what Mr. Govil, the human-resources executive, calls the "inherent inadequacies" in Indian engineering education. The company can train 5,000 employees at once.

Both companies sent teams of employees to India's approximately 3,000 engineering colleges to assess the quality of each before they decided where to focus their campus recruiting efforts. Tata says 300 of the schools made the cut; for Wipro, only 100 did.

Chinese university graduates would probably perform even worse on tasks requiring English-language skills. However, I do think that the strong performance of Shanghai high school students on recent PISA exams (administered in Mandarin) is a reasonable indicator of education levels in China. That is, although Shanghai averages are likely higher than national averages, the rest of the country is probably not that far behind.

21 comments:

Anton Mescheryakov said...

This article

KenC said...

It's curious the article fails to mention the still intact caste system that is a powerful disincentive towards upward mobility in India. I know it was legally eliminated years ago but for all "intensive porpoises" it remains fully intact.

Mee_so_horny said...

It's funny how sensitive Chinese racists can be.

Yan Shen said...

says the guy who's been intentionally mocking Chinese English speakers in the majority of his recent comments. now i know i know, you're not really a bigot, you're just behaving this way to get back at Steve for his supposed bigotry, you're really just trying to make a point here and therefore you have the moral high ground...

steve hsu said...

You may see comments from the nut I've banned from this blog (he posts under lots of pseudonyms). Please don't respond to the comments as I'll delete them as I find them.

It just takes me one click to delete lots of his comments, which forces him to re-register. It just shows how unbalanced he is that he can't take a hint and just go away.

indianguy said...

Indian colleges, outside of an elite few, are joke and tend to be degree mills. However, India does have a vast lead over China in outsourcing work and call center employment, despite having much worse educational and social infrastructure.

People say that Indians have an advantage because historically they spoke English. This is BS. Other than the colonial employees, who were few in number, Indians did not speak English. The Indian masses were ignorant of English. Now Indian professionals are learning English because it's a language of advancement to money, but they do not come from an English-speaking culture.

indianguy said...

Indian colleges, outside of an elite few, are joke and tend to be degree mills. However, India does have a vast lead over China in outsourcing work and call center employment, despite having much worse educational and social infrastructure.

People say that Indians have an advantage because historically they spoke English. This is BS. Other than the colonial employees, who were few in number, Indians did not speak English. The Indian masses were ignorant of English. Now Indian professionals are learning English because it's a language of advancement to money, but they do not come from an English-speaking culture.

indianguy said...

Indian colleges, outside of an elite few, are joke and tend to be degree mills. However, India does have a vast lead over China in outsourcing work and call center employment, despite having much worse educational and social infrastructure.

People say that Indians have an advantage because historically they spoke English. This is BS. Other than the colonial employees, who were few in number, Indians did not speak English. The Indian masses were ignorant of English. Now Indian professionals are learning English because it's a language of advancement to money, but they do not come from an English-speaking culture.

indianguy said...

Indian colleges, outside of an elite few, are joke and tend to be degree mills. However, India does have a vast lead over China in outsourcing work and call center employment, despite having much worse educational and social infrastructure.

People say that Indians have an advantage because historically they spoke English. This is BS. Other than the colonial employees, who were few in number, Indians did not speak English. The Indian masses were ignorant of English. Now Indian professionals are learning English because it's a language of advancement to money, but they do not come from an English-speaking culture.

indianguy said...

Indian colleges, outside of an elite few, are joke and tend to be degree mills. However, India does have a vast lead over China in outsourcing work and call center employment, despite having much worse educational and social infrastructure.

People say that Indians have an advantage because historically they spoke English. This is BS. Other than the colonial employees, who were few in number, Indians did not speak English. The Indian masses were ignorant of English. Now Indian professionals are learning English because it's a language of advancement to money, but they do not come from an English-speaking culture.

KenC said...

And I also wonder "indianguy" if you are the last person I spoke to when I had a technical problem with my Taurus PT 92 9mm. If so please get in touch with me. I have a few ballistic problems I would love to discuss with you.

reservoir_dogs said...

This article is precisely why I think the high growth rate of the recent years are unsustainable. The brightest comes to the U.S. The multi-nationals got the rest of the mentally endowed. Given her current education level, even the call center people are significantly above average. They are paid a salary which is much higher than what the masses can earn, so their lives are much better than average (in a relative sense). The government got the rest of the bright people due to money that could be made in curruption. This will also ensure that the status quo remains. Who is left to do start ups in all the other fields (like toy manufacturing or textile) which will benefit the masses?

Without the participation of the poorer half, there is another problem. The infrastructures like roads and electricity, they need scale to be profitable. Without the masses participating, they simply won't get built.

I predict that within the next two decades, unless something drastic could be changed, the growth rate will come down. You couple this with the two things that we hear often about India, democracy and the "demographic dividend", it is a recipe for unrest like the kind that is seen in other countries with similar situations (Egypt and Libya comes to mind).

The only saving grace is that the top level government is not as incompetent as the leaders in some of these other countries, so they might be able to avert the worst of the outcome.

Christopher Ludlow said...

Have you heard of the idea of Indian subpopulations, from thousands of years of different eugenic effects of the separate caste systems? That is probably going to be related somehow.

Scott said...

Can you ban his IP instead of his account?

steve hsu said...

He's sufficiently sociopathic that he is willing to use a proxy, fake email address, and fake account in order to post his juvenile stuff. I already have his home IP address blocked. The work factor I've described would be enough to deter most normal people.

David Backus said...

I spent a week in India speaking to people in government and industry, and they all have the same view as you. Public education is a mess, even poor people are looking for private alternatives. Many companies have extensive training and education programs of their own. One clear difference in the data betw India and China is that India has much a much more skewed system: lots of PhDs but also a relatively low literacy rate. I wouldn't panic, progress takes time, but this is an area that needs work, no question.

Max B said...

But 75% of technical graduates and more than 85% of general graduates are unemployable by India's high-growth global industries,


I find those sort of statistics intentionally misleading. By what standards "unemployable"? What would be statistics if same standards would be applied in US or China? By some statistic about 50% of adults in US have college degrees. It did not make magically as employable as top 10%. Measuring qualifications by college degree does not work when there is inflation of education due to lowering of standards for broader accessibility

Segment of smart population stays the same or actually decreasing. Only about 5-10% are smart enough to work in tech fields. And only about 0.1 to actually advance them .

Breaking News at eleven - people do not become magically smarter by having college diploma!

Christopher Ludlow said...

Its a doggy dog world in there, huh? They have to dig deep to find the diamond dozen.

unbarance_sociopassic_nut said...

Chinese racists are way too sensitive.

reservoir_dogs said...

You mean dog EAT dog don't you?

KenC said...

LOL. When I was a kid I heard or misinterpreted a few things. Actually quite a few. One was the alphabet. Elemenope. OK, what was that supposed to mean? I knew the letters of the alphabet ---but?!

Then there was “left freedom ring.....” The Democrats were responsible for that most likely. There were a few more but they have (in my mind) vanished for now.

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