The end of experience

While it might have turned out that the stories about TCS laying of tens of thousands of IT workers in India are simply not true, the fact remains that the Indian IT sector is bloated around the middle. There are way too many employees in the middle management level who have few skills apart from project management, and who are essentially dispensable to their employers. The question is what the change is at the industry level that is putting to peril careers of so many people in their 40s.

Back in my parents’ generation, you could choose two paths, especially in a government job. If you were ambitious, you could choose to be an officer, for which you had to write (and pass) exams and be prepared to work demanding hours (unlike what people usually expect from a “government job”). In return you got advancement in your career, get promoted and get a chance to be part of your company’s top management.

Of course given pyramidal structures of organisations things wouldn’t have worked out so well for everyone had everyone chosen to go along this path (growth would’ve been painfully slow) so there was a parallel track – you could choose to not become an officer. While this meant that beyond a point you would stop getting promoted, you continued to get paid quite well (my parents’ “senior assistant” friends made almost as much as my officer parents did), and you retire with a comfortable pension. It worked well for everyone. Or so it seemed.

As Deepak Shenoy explains so well in this excellent post (same link as above), back in the days when IT exporters made big margins, they could afford to pay their employees well. And they gave them fat raises every year irrespective of their performance. Employees went to middle management. They stopped coding. And the only skills they developed was “project management”, and perhaps people management. And they continued to get fat raises each year. Until margins started thinning down.

Now, as Deepak explains, IT exporters are facing diminishing margins, and they need to cut cost. When you are cutting costs, the first person on the block is one that is drawing a fat salary for not doing too much. And in the Indian IT sector, it’s these mid-level project management guys, who don’t code, are not key to management and have no specific skills. And so, sooner or later, as margins thin out, their jobs are going to be in trouble.

The problem with this particular cohort of workers is that they haven’t developed enough skills as they have gone along, and the skills that they have are easily replaceable with someone much younger (and thus drawing a much lower salary). In something as generic as project management, you are not going to lose too much by replacing a project manager with 15 years experience with one with 10 years experience, especially if the one with 10 years experience will get paid much lower than the other guy.

From a company’s perspective, it should not matter how long a particular employee has been there in its compensation decision. So if an employee with 10 years’ experience is offering the same value as one with 15 years’ experience, they ought to be paid similar salaries. Except that given the massive raises in salaries back in good times and the power of compound interest, the employee with 15 years’ experience is getting paid much more than the one with 10 years’ experience. And that is what makes him dispensable.

The big lesson from this story is that you should continue developing and never “settle”. With 15 years’ experience, you get paid more than someone with 10 years’ experience, but you should also demonstrate sufficient skill sets that show you as being significantly superior to the other guy. Experience, to put it in one way, is a proxy for measuring how much you’ve learned in your job, and if you stop learning there is no point in attributing value to that part of your experience where you’ve not learnt much!

4 thoughts on “The end of experience”

  1. Good points. But I don’t know if this is only an IT sector issue. The problem starts with colleges where readiness for a job is not a concern. School teachers (especially govt), IAS officers, IT folks and many other professionals put very little emphasis on continued education.
    So, overall, the issue appears to be lack of employability. These problems occur across the spectrum.. but due to the reasons you mention (dwindling margins over the last decade etc), the
    IT industry maybe in focus now.
    I wrote about this a while ago:

  2. I think there hasn’t been much research done into the actual psychology of India’s ‘engineers’. 99% of us (including me) did engineering not because we actually were interested in engineering (yes, we had a so-so aptitude for maths/physics etc) but were told that (at least in the mid 90’s and late 90’s) that doing engineering was a means to get good employment relatively quickly (as opposed to medicine, which takes years and years of education and practice). This obviously made us (i have not worked in the IT field so this is a theoretical concept only) turn our heads to this IT sector which was throwing out $$ and jobs to anyone and everyone. Majority saw this as a cash cow and not a career(or interest). Genuine interest seeks genuine learning. Without that stagnation creeps in and the fat belly (literal and metaphorical) kicks in.

    1. I don’t think every job needs to involve passion, or at least an interest. A large number of jobs are done just because people doing it are capable of doing them and the job pays. So if you don’t really have a passion and go with the drift, you end up in one such, and it’s not a problem!

      So I can see a lot of these middle management types who came in through that process. Yet, I think the good times meant that they weren’t pushed hard enough when they needed to be (the right kind of incentives can foster learning) and are now possibly going to pay for it

  3. I disagree on this. Coding will have less opportunity, where as PM skills will have lots of opportunity. PM means, it is not just people management, it is much more than that. The only thing middle level managers should think is, they should not expect hike or promotion for every year. Think about long term assignment in the same salary. Develop the skills, like communication, presentation, stakeholder management and sales. Organizations will realize soon their importance. Majority of the middle level managers understands the coding very well and the logic what they used will never die/

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