September 1, 2010 7:25 pm

Outsourcers warn US producing too few engineers

US universities are producing too few engineers to meet industry demand, Indian outsourcing companies say, leaving such businesses little choice but to hire foreign skilled workers to fill jobs in America.

Cognizant Technology Solutions, the US-listed Indian outsourcing group, says it has 57 recruitment staff in the US permanently looking for engineers locally but is still being forced to import Indians on work visas.

“If you look at the core of what we do, the technology work, the US simply doesn’t have the talent base today,” said Francisco d’Souza, Cognizant president and chief executive. “Although unemployment in the US today is high, IT unemployment is still very low.” 

The US last month passed a border security law that will be partly funded by doubling the cost of visas for IT workers, a move that will mostly affect Indian outsourcing companies.  

Indian outsourcing companies usually keep a small portion of their workforce in the US to work closely with clients, supported by the bulk of their staff in development centres in India.

But the protectionism move – a senator who sponsored the legislation described Indian outsourcing companies as “chop shops”, a reference to garages that dismantle and sell stolen cars – may have little impact.

About 70 per cent of US PhD students are foreign born and are often hired in the US, making their way into Silicon Valley or government agencies such as Nasa, said Partha Iyengar, of Gartner, the consultancy.  

“The bigger challenge for the US is, if they start to lose this talent at the lower end, the innovation engine that has been driving the economy starts to dry up,” Mr Iyengar said. 

India’s undergraduate university courses produce about 600,000 engineers a year compared with about 84,000 in the US in the 2007-08 academic year, according to the National Center for Education Statistics.

While less than one quarter of India’s engineering graduates are considered of international standard, they tend mostly to seek careers in the information technology outsourcing industry, creating a huge pool of talent for the sector.

By contrast, US engineering graduates are spread across all industries.

Mr d’Souza says about 20 per cent of Cognizant’s workforce of 88,700 work in the US and of those more than half are Indians or foreign nationals in the process of becoming permanent residents.

S. Gopalakrishnan, chief executive of Infosys Technologies, India’s second-largest IT company, said the group had 10,000 staff in the US but only 1,600 were nationals or permanent residents. The company wanted to hire 1,000 people a year in the US but faced a scarcity of talent. “It is a struggle,” he said.

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