Although big local IT companies like Infosys Technologies and Tata Consultancy Services say that life is still the usual for them, smaller and mid-sized IT services companies claim that in their quest for talent, the IT biggies have started using the smaller home-grown tech firms as hunting grounds for new employees, which is impacting the future stability of many.

"The hiring plans of companies like IBM and even the local IT services companies are emerging as issues in the local IT sector," said a human resource official from Cognizant Technology Solutions, "and it is not a secret that big companies often target the smaller companies as hunting ground." The official, who requested anonymity, was quick to add though that Cognizant sees "few encroachments compared to smaller IT firms and is geared to meet such challenges."

Nasdaq-listed Cognizant is a U.S.-headquartered tech firm with major operation and almost three-quarters of its global 28,000 employees in India. Although at $1 billion revenues Cognizant cannot be considered small even by global standards, high attrition rate, which has almost become symptomatic of the Indian IT sector, is emerging to be an area of concern for this company too that spends about 3 percent of its revenues on new hires and has plans to hike up its employee count to 35,000 by the end of this year.

But if Cognizant's 25 percent increase in employee count over the next few months looks impressive, the hiring plans in India of the other MNC IT services are clearly ambitious. Following the recently announced mega $6 billion investment plans in the country, IBM's headcount for instance is expected to go past 50,000 from the current 38,000 over the next 12 to 15 months while Accenture too is targeting an equally impressive employee base (from 20,000 in India to 50,000 in South East Asia) by 2009. Similarly Electronic Data System is slated to employ 28,000 heads by 2008 while Cap Gemini has announced that it will increase its headcount from 2500 to 10,000 in the next few years.

As for local IT services companies, Infosys, Wipro, Satyam and TCS alone increased their headcount by 56,000 in 2005 and plans to add an equal number this year. According to NASSCOM, the local IT industry lobby, the technology services segment will hike employee count to 390,000 in 2006 and has a demand for 850,000 professionals and 1.4 million back office professionals by year 2010.

"Paucity of talent is causing IT companies in India to use fair and foul means to grab the best-of-best knowledge workers," said NASSCOM in a statement, which added, "Driven by their ambitious plans big IT companies in India are not only scouring the horizon for industry-ready IT professionals that have the necessary skills but in their quest for talent, these companies are also willing to battle with competitors to have and hold these people."

"Compared to a few years back the market for talent is much more buoyant today," said Mohan Das Pai, director, Infosys, who has recently taken over the company's human resources functions, "and it has become difficult to hold on to people if you cannot pay them well or have the right kind of work for them."

"If a small company cannot grow in line with the maturity or experience of its people, then these days, such companies not only face pressures of increasing employee costs but also retention problems," Pai said adding that top Indian IT companies have not started faced such problems yet.

For Azim Premji, founder and the de facto CEO of Wipro, one of India's top five IT companies, holding on to talent is clearly getting tough. "Attrition rate has been bothering us," Premji said. "Our current attrition rate is 12 percent but we would like that to be lower."

Nevertheless, the aggressive hiring policies of the handful of top companies are fast turning into a crisis situation for the hundreds of small IT companies, many of which are scaling up their headcount too although without attracting headlines. "The mercenary attitude shown by tech professionals has led to low stability of workforce," said Tarun Hukku, the chief recruitment officer of Microland -- a local IT outfit -- in an interview to the media.

But the problem is there's no near term solution. "The crux of India's talent crunch lies in the country's poor educational infrastructure -- like engineering and technical colleges -- and such problems cannot be solved in just a few years," says Pai.

This is why he reckons that even as the country's education system churns out 3 million graduates and 400,000 engineers every year, the IT industry may have to spend up to $2.6 billion in training an additional one million professionals over the next three years to make them employable in the industry.

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