Companies & Sectors
India IT services: Improving demand but no spike in attrition, salaries

The bargaining power of Indian IT companies with respect to entry-level employees is at its peak with real wages at their lowest in more than 15 years

Indian information technology (IT) companies are witnessing improved demand without much pressure on wages due to significantly better supply of engineering students coupled with changes in business model. "This time the usual acceleration in wage pressure that accompanies improving demand seems absent. Attrition has remained low and wage inflation remains in single digits. We note the bargaining power of companies with respect to entry-level employees is at its peak with real wages at their lowest in more than 15 years. While some of the reasons for this may be cyclical and could reverse, we believe that part of the reason is structural, too," says Credit Suisse in a research note.


According to the report, a number of markers point to the lack of this pressure on IT companies. For instance, mid-sized companies such as Tech Mahindra and Hexaware have been able to postpone wage hikes without any significant increase in attrition. Tata Consultancy Services (TCS)'s guidance of entry-level hires is the same as FY09 despite twice the overall employee base and a vastly different outlook (more positive) on the demand environment. The necessity to hire from campuses 18 months in advance, as has been the case historically, seems lower now, it said.


An improving demand environment has not caused a spike in attrition this time

Significant improvement in supply of engineering talent

According to Credit Suisse, the capacity at engineering colleges in India has seen growth of over 20% CAGR over the past six years. While the quality of some of the colleges may be varied and the graduation rates may also vary, supply has increased over the past few years.

Intake capacity of engineering colleges saw an over 20% CAGR over the past six years

Given the significant oversupply, engineering colleges are now focusing on forging close relationships with the top-tier Indian IT companies. Industry efforts to incorporate their training programmes in the regular engineering degree curriculum are gaining traction. This can help companies reduce their cost of training employees and the time to ‘on board’ them, the report added.


Changes in the business model

Given the larger scale of Indian IT companies, Credit Suisse said, the higher proportion of fixed price work and some amount of automation, it believes that companies can continue to improve utilisation even beyond historical highs.


The companies are also focused on ‘non-linear’ avenues of revenue where revenue can grow much faster than headcount. Platforms are one such avenue. Also, the faster growing service lines such as infrastructure services are much less linear compared with traditional application development and maintenance, and package implementation. Further, the process of software development has become less complex in certain areas due to the reusability of code, and the development of tools and platforms. As a result, a number of positions can be filled potentially with non-engineering graduates, the research note said.


According to Credit Suisse, Indian IT companies have also stepped up overseas hiring. It said, the companies have entered new areas of IT services where local talent and expertise become important. Also, given potential immigration issues and the difficulty in getting visas, companies have ramped up hiring onsite at the cost of local hires. While this may create margin issues, it does ease the pressure on wages domestically, it concluded.


Letter from the Editor
Consumers are finding it easy to shop online, especially with the popular cash-on-delivery option, which accounts for more than 60% of transactions. It does hurt the margins of e-retailers but consumers can make hay while the sun shines. Make your online shopping a happy experience by following a few dos and don’ts. Understand that product returns for refund or replacement can take time and beware of online fraud too.
On a related note, R Balakrishnan warns readers not to fall for the ‘retail’ story manufactured by stock brokers to sell stocks of all sorts of companies that will ride an ever-prosperous and ever-expanding Indian middle-class. While consumer products companies will do well, there are other aspects of the ‘retail story’ that you should avoid. Turn to page 22 to find out more. 
In her Crosshairs section, Sucheta talks about a regulator that has not been discussed much in the mainstream media, viz., the pension regulator. The sudden exit of PFRDA chairman, Yogesh Agarwal, without any explanation, throws up pertinent questions on the transparency (or lack thereof) of how regulators are appointed and how their work is assessed. 
Since the National Pension System (NPS) has not taken off, PFRDA would need a lot more than just a retired bureaucrat, or a banker, as the new chairman. Interestingly, while the ministry of finance will deal with that, the Supreme Court will have to deal with one of most sordid cases of regulatory appointment, when CB Bhave was made the chairman of the Securities and Exchange Board of India, and allowed to continue, despite proven negligence as the head of stock depository NSDL in the public issue scam of 2006. 
We notice that fund houses have come up with a new fad: foreign fund-of-funds which have been doing well lately. But are they worth investing in? You will be surprised with our research which is on page 24. Happy reading and please do keep writing in with your views and suggestions.


Doctors and consumer complaints

Sometimes, doctors make mistakes and consumers file complaints. Some of the complaints are genuine as in case of Anuradha Saha decided by the Supreme Court, for medical negligence. But what about genuine and well trained doctors who care for the patient?

“Men who are occupied in the restoration of health to other men, by the joint exertion of skill and humanity, are above all the great of the earth. They even partake of divinity, since to preserve and renew is almost as noble as to create.”

-Voltaire (1694-1778)

Medical profession is a serious business and a noble one at that. We have obligations to society for the exalted position we enjoy. One must try and understand the medical profession within the context of the recent Supreme Court (SC) judgment that stirred up a hornet’s nest. I am happy that Anuradha Saha’s loss has been adequately compensated, but I’m also equally concerned that the SC judgment might further escalate the corporate sickness industry’s bills and might make it impossible for an ordinary person to get treatment. No one can question the wisdom of the learned judges who had to go by the evidence, while at same time kept their emotions at bay, to deliver their verdict. Rightly so! Now, the doctors’ indemnity insurance will go through the roof and many doctors will be unable to afford it, unless they join the corporate juggernaut.

Now, comes the dark side of the moon. Why should only doctors work in the villages, look after the poor and the downtrodden, round the clock without any time of their own? If a lawyer charges lakhs per hour of his/her time, the doctor is not supposed to charge like that? IIT, IIM and MBA graduates—most of them—leave the country immediately to work abroad. Nobody bothers about them but if a doctor wants to charge patients, people fault them. The tax payer pays for all of their education equally anyway, except for the ones who pay through their noses to get admission and degree at many of our (in)famous private universities. The bribe might run into crores these days.

We are all come under that same umbrella; no human being is infallible but why does society and the courts find fault for a wrong diagnosis? If my interpretation of the act is right, we are supposed to exercise due care to see that we do OUR best to the patient. Medical diagnosis is not as easy as it is made out in the press. There are no black and white areas in human physiology. Imponderables abound in the diagnostic arena. Even in the best centres in the world, where they pool the wisdom of many people in difficult cases, at least 12% of the patients’ medical diagnoses could only be made on the post-mortem table. No patient’s death can be predicted or prevented no matter how good a doctor is. It is very difficult to even give a right prognosis. No doctor can predict the unpredictable future of the patient although we have been doing that.

We are, to a great extent, responsible for this exponential growth of consumer cases against doctors. Firstly, we assumed greater powers than we really have and, many a time claim to do wonders. We are no longer humble enough to state that we only dress the wound and nature (God) heals. We have taken medicine to the market place to make big money. That has brought in its wake the market forces working in our area also. In truth, the medical world revolves around faith of the patient in his doctor. It is the confluence of two human beings—one who is ill or thinks he/she is ill comes to seek the advice of another in whom the first has confidence. This confidence works wonders even in healing. Unfortunately, this holy relationship between those two human beings no longer exists in corporate hospitals. It is like the assembly-line work. Modern medicine in this century has become a corporate monstrosity according to a study by Hillary Butler, in London.

As long as the doctor is sincere, he/she works very hard to get at the diagnosis, taking into account all the available data. But, the doctor should document all these efforts to show that he/she has done all that needs to be done for “reasonable care” of his/her patient. Of course, in all these cases, there should be no wanton negligence at any stage. Communication skills are vital in keeping the patient and his near and dear ones in the picture all through the time that the patient is under care. This would go a long way in avoiding unnecessary litigation.

A second opinion is another safeguard against litigation. In hindsight, one might be able to do better. However, in an emergency situation there is the added element of urgency to intervene which will not be there for the reviewing doctor, court or, a witness, for which the primary doctor is denied.

Another area where the problem gets complicated is the jealousy of our own brethren who might inadvertently create a situation where patient’s relatives become suspicious. If a patient’s health worsens and is then shifted to another hospital, then someone there might inadvertently say, “if only you had come early we would have been able to do lot for the patient.” This single sentence is the most important abettor of consumer complaints.

These days the massive bills generated in most corporate hospitals work as seeds for litigations to grow. In some instances, the grievances are genuine: Keeping dying patients in the intensive care units (ICUs), dead patients from wheeling dead patients into the ICUs, on ventilators, before being declared dead, admitting healthy people for all sorts of tests and scans, abdominal deliveries where normal delivery was feasible, operating on the wrong side or wrong limb, leaving operating instruments inside the patient’s body, administering dangerous wrong medications, all fall under the genuine list of consumer court complaints. However, complaints regarding the competence of a fully qualified and licensed doctor fall in the grey zone.

“Is it not also true that no physician, in so far as he is a physician, considers or enjoins what is for the physician's interest, but that all seek the good of their patients? For we have agreed that a physician strictly so called, is a ruler of bodies, and not a maker of money, have we not?”

                                                                                                -Plato (BC 427-BC 347)


(Professor Dr BM Hegde, a Padma Bhushan awardee in 2010, is an MD, PhD, FRCP (London, Edinburgh, Glasgow & Dublin), FACC and FAMS. He is also Editor-in-Chief of the Journal of the Science of Healing Outcomes, chairman of the State Health Society's Expert Committee, Govt of Bihar, Patna. He is former Vice Chancellor of Manipal University at Mangalore and former professor for Cardiology of the Middlesex Hospital Medical School, University of London.



Moreshwar Vanamali

3 years ago

The thrust of Dr. Hegde's article is : "why punish only us, for our errors?" By implication, it says: "Either punish all or none"

1. It is not true that only doctors are punished.All service providers at a cost, even a cook (no less a professional) who spoils a broth is punished, (though not in the same manner or extent.) She may lose her job or at least warned that she will lose it, if she repeats the error.

2. The highly skilled (Also high priced) professional's errors (like doctors, lawyers etc) are likely to have life threatening consequences like permanent disabilities/death, or long/life imprisonment,death by hanging etc.

3.The clients of such professional are mostly ignorant of the nature, causes, consequences, procedures etc. relating to their complaints.So they approach the professionals with great hope and blind trust.
They have no competence to kow, if and what error is committed, They only face the consequence.

4. Because of these special considerations, in case of such errors, the issue is not merely to find out if it was intentional, but whether the professional has acted with sufficient precaution, care , knowledge and ability to avoid such disastrous consequences for his trusting client.

In view of the above, does it not appeal to reason that there has to be greater vigilance and deterrence against malpractices of such professions?

- Moreshwar Vanamali

nagesh kini

3 years ago

Unfortunately the once revered medical profession has in the recent past moved away fom the Hippcratis oath.
It is more of mercernery commission cut business and no loger a noble profession.
Medical insurance has made it worse. Both the GPs and Consultants as also service providing hospitals/nursing homes don't hesitate to hike their bills arguing -"It doesn't pinch the patients' pocket."
The insurance companies have created a monster going by the name TPA which harasses the insured no end.Yet IRDA is an absolute tooth less non-barking watch dog.

Ramesh Iyer

3 years ago

Even in these times where people take to medical practice more to make money than to do service to humanity, many people look upto doctors as next only to God Almighty. Hence, when doctors err, sometimes with irreparable and irreversible damage as in Anuradha Saha's case, they ought to be penalized for their negligence. Doctors are seen as life-givers, especially in cases of terminal illnesses such as cancer. Hence, when their callousness leads to loss of life, no amount of money can be enough to compensate the next of kin. Yet, adequate monetary compensation should be provided in such cases, if only to deter doctors from taking their profession too casually.

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