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!
