IIT Labor Not a Problem for the US Software Industry

At this point in terms of the global software industry it does not appear that Indian software developers are an immediate threat to the Unites States software industry. The two software development locations are countries providing a vastly different type of service to the global arena. If we are only talking specifically about the highest levels of software engineers in India who graduate from the Indian Institute of Technology (IIT), then there may be a threat to that same specific group that exists in the United States in terms of jobs. However, if we are talking about industry surrounding United States software development as a whole, then there is not an immediate threat.

In terms of the top percentage point of India’s 1.1+ billion population who attend IIT and even less who study Computer Science, it is well understood that most of this extremely small group do not stick around India once they graduate. Instead they immediately head off to the United States to find work with a software company or begin some sort of start up business themselves. While this obviously takes away from Untied States students hoping to get the same jobs, it does not take away from the Software Development Industry as a whole. The Indian students are not staying in India and not creating an India/United States rivalry in the software industry. Instead they are bringing their wealth of knowledge to American companies or creating American based companies that are furthering the Unites States software industry.

There are a multitude of reasons for why software startups and the software industry are mainly in the Untied States and are going to stay there for the near future. Look at India as a software development arena. With such a large population willing to work for so little, it makes no sense to offer a high level software product. The global economy needs service companies to due the work (help lines, low level programming, etc.) so they can work on the high level development of the company and product. Since India offers such a cheap and large labor force the service industry is far superior to a high level software company. Also, there are far fewer investors to offer capital to a startup company in India than in the United States. While it can be difficult to get a capital investment in the United States, investors in India have been averse to putting their money in a high-risk start up company where there is already a booming service industry. Besides the availability of investors it is also supremely simple to start up a company in the Untied States. Within 72 hours you can “[launch] a “real” company. By “real”, I mean it will be registered (LLC or S-Corp), have a Federal Tax ID, have a merchant account to accept payments, a bank account, and a small business credit card” (1).

These factors along with others are the reason that the software development industry will remain grounded in the United States for the foreseeable future. While the computer science talent exists in India, there is no reason for most of the brightest India students to stay when the United States offers more advantages and opportunities.

Kirk Banks

Tags: CS292, IIT, India, Indian Institute of Technology, outsourcing, Software, United States

Ref 1) http://onstartups.com/home/tabid/3339/bid/429/Why-There-Aren-t-More-Software-Startups-In-India.aspx

~ by kirkbanks on February 8, 2008.