Why one say “No” to IT start-ups?

I have personally interviewed a lot of students and asked them why they do not want to join a start-up or SME. I have even asked many IT professionals why they always prefer joining IT MNCs and not SMEs/start-ups.

I will not elaborate much on this, but just in brief would want to share with you the reasons for someone not joining a start-up.

80% of the candidates feel start-ups (1-7 employees) are more interested in “Profit Maximization” rather than “Wealth Maximization”. Hence they feel in secured. Few of the candidates say that start-ups need to be professional (not casual). Some of them feel that start-ups are not “stable” in nature. There are even cases when candidates do not prefer joining a start-up because of peer pressure of the society.  So all these negativity spreads via word of mouth and goes viral, almost like a grapevine,  because of which a candidate does not dare to take the “risk” of joining start-ups (No, I am not blaming the candidate for not taking the risk).

Let me assume 80% start-ups are ambitious, they have a future plan, they are working ethically and are thriving hard to achieve something. But may be out them one player has caused a problem, ill treated a candidate or did something unethical, which in turn spoiled the brand name of the entire IT start-up community.  

Branding does not come by building a glossy website or having a presence in social media. Branding should be an “in-ward – out” approach.  Branding is an evolutionary process and fragile in nature.  So next time if you are not getting any resource to work for your start-up, do not blame the candidate. Let us accept our mistakes (if we have done any) and correct them, minimize the problems as much as possible and let us hold hands to build a strong IT start-up community.

Advertisements

I am not an Engineer, how can I join IT Industry?

I often get to hear this question from students, parents and even from working professionals of other sectors. To the audience I tell one simple thing that “Our IT Industry does not follow any caste system”. At first instance most don’t understand this phrase but later when I simplify it and say, “Even non-engineers can be a part of our IT Industry”, for a moment I see an initial glow on their face. But, the glow fades away very soon. I have to face series of questions just like bullets. Some of these bullets hit me hard. I overcome some of the bullets, while some take a reverse direction (credit goes to NASSCOM for teaching me the reality).

 Let me share with you some of points, which I usually advice them.  Someday you may even face such questions, so these points might help you (act as bullet proof jacket).

 Note: When I mean IT Industry, I am only considering the software segment.

Designing (User Interface Professionals): This is one area, which is of high demand and one need not have to be an engineer to become a designer. Currently there is a “war for talent” among IT Companies to hire world class UI Specialists from India. UI Design is an important and in-demand skill. UI Designers enable the development of complex user interface navigation and workflow process, which further enhances customer experience and increases product value.  There are designing schools where one can pursue designing as a career. Apart from that one can even learn designing from various institutes. At this juncture let me warn you, do not think Web Designing, Animation and Multimedia are the same. These areas are interlinked but not same.  I want to stress on one point – almost 80% of the IT-Software companies are web based companies and they need good web designers. On completion of web designing course – which usually takes a month (you can learn the tool in less than 15 days and rest depends on the level of passion and practice) one will get a job in IT SME/Start-up with starting salary ranging from Rs 8,000 – Rs 10,000 per month (for a fresher).

Content Writing: This is one more area where there is a huge requirement. But content writing is not like essay writing/paragraph writing. One needs to have knowledge about Search Engine Optimization to write good web based content. There are even requirements in areas like technical writing. As more products/services are becoming localized, there are huge requirements for vernacular (e.g. Bengali) content writers. There is a huge growth market in verticals such as Media (Printing & Publishing). As per NASSCOM report the total addressable market for year 2020 for Media (Printing & Publishing) is around USD 17-20 billion. Another business segment where content writers are required is in the field of e-learning.  There are very few institutes who are teaching content writing but the numbers will go up very soon. For a fresher who want to join an IT SME/Start-up can get a salary ranging from Rs 6,000 – Rs 8,000 per month.

 Note: Content Writing and Designing is interlinked, we are living in an age of “info graphics”

 The other areas where there is a huge requirement – Search Engine Marketing, Internet Marketing, Social Media Marketing, Mobile Search marketing. And to learn all these you do not have to be an Engineer.

 There are many students who cannot pursue engineering – may be they could not clear the join entrance examination, or may be some have cleared but due to certain family issues they could take it ahead or maybe there are many students who are not privileged enough to take up engineering.  So if you now have this question in mind “I am not an Engineer, how can I join IT Industry?” or if you come across this question from anybody, you have few points to answer.

“Great Indian IT Product Story” – what is stopping us?

I am sure my friends from the IT community will be able to relate to this. I have read a number of articles and have heard many people giving their insights on this topic. Some will say ecosystem matters a lot and start blaming the government and the state, some will allege “skills are missing”(some will state India produces less PhDs compared to other countries) , and some will say “they need proper funding”.

Let me not get into all these for the time being but, let all of us for sometime start thinking from a different angle.

To start with I want to make a simple statement “You don’t need to invent, rather innovate”

It is completely wrong to say India do not have products (IT products are not included here). Let me give you some examples of products, which are built on Indian innovations and are now slowly moving into world markets (developed countries) – a) Ford, Toyota want to sell their India designed low cost cars globally b) Maggi noodles – a low cost and high nutrient product of Nestle which have been primarily developed for India is on its way to Australia and New Zealand c) General Electric’s low cost versions of ECG and ultrasound machines primarily for Indian markets are now moving to world markets d) Pepsi’s – Kurkure and Nimbooz e)  McDonald’s Aloo Tikki Burger. The list can go on. All these products are “innovated –in-India” and then slowly are moving towards the global markets.

So how such innovations (non-IT) are possible? Why cannot the same happen for our own IT Industry?

If you analyse carefully – traditionally products were designed in developed markets and adapted by the rest of the world. Technology came first followed by price. But what is happening now and will continue to happen is called “reverse innovation” that is low-cost but high value products being developed primarily for emerging markets (like India), which will eventually graduate to the developing world. Now technology is tailor-made keeping cost in mind.

Now back to the IT Industry. Indian IT companies (start-ups and SMEs) are unable to build a product on Indian innovation and then scale up globally. But MNCs or foreign companies have been building products (example many MS products are build from India development centre, many small start-ups in India are working on product development, which have been outsourced to India) How is it is happening? In my opinion “Cost” is a major factor. I totally do not agree with the fact that “we do not have ideas”, we do have ideas but the “cost of execution” and “scaling it up” is a hindrance to this.

By the year 2020, total IT addressable market (NASSCOM-McKinsey Report- Prospective 2020) from new geographies – BRIC region (Brasil, Russia, India, China) will be around USD 380-420 billion ( For India – USD 90-100 billion). That means we will see a lot of IT Innovations happening in Indian Markets. But the question is can our IT start-ups/SMEs do it? US IT Companies can achieve their growth, build products and reduce cost by outsourcing it to India but how can we (Indian IT start-ups/SMEs) innovate? – outsource (how? and to whom?) or focus on our frugal engineering skills (Jugaad)?

Because of these numerous questions I sometimes see a bad dream quite often – Re-birth of East India Company .

For how long will your job stay?

I know this a scary question but let us face it for once. I have been doing an analytic study on this for a long time and telling it to many people from our IT sector. Better we understand this now or it will be too late.

I have already stated one very important point in my previous blog post that “IT professionals” constitute 85% of the IT community. (Not taking into consideration the entrepreneurs/business promoters for the time being). The majority of our daily work (technology services or business services) is done by these IT Professionals. The “work” is given to us (India) primarily because of low cost arbitrage. That does not denote work only comes to India because of fairly low cost. The skilled resources (IT professionals) are affordable that is the primary reason why work comes here. This is a true fact and let us accepts it.

For a company there are two kind of costs:

  • a) cost of resource
  • b) other costs – infrastructure cost, various kinds of taxes etc.

Cost of resource is the primarily cost factor (80%) and if it increases work may not come to India. And this alarming trend has already started. A time may come when you (IT professionals) have skill sets but no job is there in the market.

So what are the solutions?

My recommendations are divided into two parts:

a)      For the employees –

    1. A Fresher, who is new to the industry, must not worry about salary (as long as they are at par with the market). I keep hearing fresh graduates saying, they are not interested to join an SME because “they pay lesser”.
    2. Do not keep asking for a salary hike.
    3. Speak with your employer and do some extra work and earn money. I am not telling you to do freelancing (hidden manner) by stealing company clients. What I am suggesting you to do is, “go and teach few students, who need you as mentors”. I know some developers who are teaching students after work or during the week ends. They are earning well and have stopped asking for salary hike.
    4. A visible problem with the IT professionals – they keep changing jobs and hopping from one company to another. I have asked few of them the reason for this and they have told me “we change jobs because of career growth and for security”.  I ask them “how do you define career growth? Do you think salary hike is equivalent to career growth?” Most of the times I do not get any specific answers from them. And as far as security is concerned I tell them “No one is secured. A company is not God” and I even tell them “Your Company will not take away your job; you will lose it because of market forces”.

To the employees: Remember one thing, the more you change your jobs just for a rise in salary, the more you are increasing your “price”. A day might come when your job will be given to someone else in some other country even after you have the skill set.

  1. An important piece of advice for the students – higher education is not for everyone. I have seen many engineering graduates, who are unable to find work through campus recruitment, start applying for B-Schools. They simply do a blunder. I am not saying this because I have anything against management studies. Think of this situation, which is sadly a reality. An engineer spends almost 2-3 lakhs for his engineering course, then goes for management studies and there he spends another 4-5 lakhs. (Just imagine the state of the parents). So after passing out from a B-school 90% of the candidates are “qualified” but cannot be afforded by 80% of companies just because the candidate’s salary expectation is way higher now.

So my appeal to the students community – after passing out if you do not have a particular skill set then instead of doing some higher studies go for the following

  1. go to an institute and learn a particular skill set (PHP/SEO Content Writing/Ruby of Rails etc)
  2. go work in an SME or a start-up and learn the skills
  3. Find mentors from the IT Community who can help, teach and guide you.

b)      For the employers  –

  1. My appeal to the SMEs and start-ups is that do not expect that best students will join your company. Rather take normal students (with basic education) and train them up (increase your training & development costs). The more qualified candidates you take, your resource cost will go up. And from the very beginning “do not expect them to stay with you for lifelong.”
  2. The start-ups need to be more professional and organized so that students can join your company to learn. I have asked many students why they do not prefer to join a start-up (companies with less than 3 years into operation) and they reply “start-ups are not professionals”.
  3. Go to various districts and recruit students from those areas. ( Follow ZOHO’s model)
  4. My appeal to the companies who are into training business – keep the price of courses as low as possible ( without compromising on the quality) so that a student after completing his graduation can afford to pursue the course. (80% do not go for any course after graduation due to affordability issue).
  5. Another important point: Do not move to some other location just because the other location is more posh, they organize tech events etc. Think like a business man. Move to a place where your resource cost does not go up. Remember work comes to you as long you have a team (human resource) who can be afforded. Think smart, think inclusive.

There is a huge opportunity in the IT business. The total IT, global and domestic, addressable market by 2020 would be USD   1.5 – 1.6 trillion. The question (concern) is “can you (companies) tap this market”? Or “will your (IT professionals) jobs move to some other locations”? 

Background check – Why many entrepreneurs will fail?

I know “failure is pillar of success” but let us for a moment analyse why many entrepreneurs or start-ups will fail. You will get to read many blog posts as “Why start-ups fail” but let us go to the fundamentals and find the root cause of the problem.

Note: When I say start-ups and entrepreneurs, I mean IT start-ups/IT entrepreneurs with a team strength of 0-10 people.

If you do a dissection of a typical IT company there are 3 major parts each of which can be further sub-divided.

1. Business Promoters/Business Development Heads – their designation may vary from company to company.

2. Support – Finance Personnel, HR Personnel, Facilities Personnel.

3. IT professionals – Developers, Designers, Testers – (primarily)

The trend has been found that 60-70% of the IT start-up entrepreneurs are from last the segment – IT Professionals. Lets dive deeper into this:

Situations:

1)      IT Professionals just hop from one company to another. Life becomes monotonous. They start thinking that they know everything after staying in the industry for just about 4-5 years and then they move out to start their own IT Start-up. In many cases, they move out stealing client base from their previous companies. Sometimes these IT professionals move out because “they had a fight with the management.”

2)       IT Professionals stay in an IT organization say for about 10-12 years or may be even more and then they feel it is time for them to do something good for the society. So they move out to start their own start-up, without even understanding the “business”.

3)      Another trend which is seen recently is that students are discarding their education and getting straight into building start-ups. When asked why have you discontinued your studies? They reply “look at Steve Jobs and Bill Gates”. In some cases students with poor marks cannot get into IT companies and end up starting their own venture. Many start calling themselves “Next Gen-Entrepreneurs.” Even they will fail because 80% of them do freelancing projects and freelancing is not entrepreneurship.

The initial 1-2 years is exciting for these so called entrepreneurs but slowly the problem creeps in – financial issues (because they do not understand business), human resource related issues (cannot recruit people nor can they retain them), marketing/sales (majority are “technical” and have never done sales/marketing in the past), operational issues (output affects).

Advices:

  1. Think a number of times before you start your venture. Journey ahead is not easy.
  2. Knowing technology does not mean you can start a business. Give more weight age on business. After all technology is just a tool.
  3. Think who will work for you before starting anything new.
  4. Motivate students to work in start-ups first, which is the need of the hour rather than telling them blindly “go start your venture”.
  5. Do not build something or start something just because you like it (just to satisfy your creative urge).  Indentify the need first.

What can you do? I am a B.Tech.!!

How many of you have heard of people (especially students) saying, “I am a B.Tech (or M.Tech)” when you have asked them what can you do? I have heard this “n” number of times especially in this industry (IT).

If you ask your cook “what can you do?”  He will say “I can cook food for you” and then he may get into his specialization – North Indian, South Indian etc.

If you ask a driver the same question “what can you do?”  He will reply, “I know driving” and then he will talk about his area of specialization – 3 wheeler, 4 wheeler, 6 wheeler etc.

If you ask a plumber the same question “what can you do?” He will reply I know to “fix the leaks” of the tap.

When I ask any candidate fresh out of college (sometimes even experienced IT Professionals) “what can you do?  He/she will reply “I AM A B.TECH.” But what can you do? The same answer “I AM A B.TECH.”

I am not making fun of anyone but trust me this is a serious problem.

When do we move from “qualification” to “skill set”? When will the time come when students, fresh out of college, will approach IT companies saying “I know programming in PHP, and I can build a particular solution for you in 72 hours”? When will the time come when students will start saying, “I want to work in a small medium company and learn a particular skill set”?

Some suggestions to the student community:

  1. Mention you skill set rather than qualification when someone asks you “what can you do?”
  2. Before visiting any company with your CV, write on a piece of paper 5 points – why that company should recruit you?
  3. Do not increase your “price” – remember you are just a new product without any brand value, just launched in the market. No one will buy you if your rate is high unless you have a particular skill set.

Continuous flow of “Low Cost Skilled Talent” is the NEED of the hour– Simple Case Analysis

A simple case analysis to find out the need for continuous flow of low cost skilled talent(human resource).

Let’s say there are 5 IT companies who are into web development. Each of these companies has 10 IT employees. Out of these 10 IT employees – 2 are designers and 8 are developers. Assume all of the 8 developers are working on open source technologies.  So that means total existing resource = 2*5 = 10 Designers and 8*5 = 40 Developers. Total = 50 resources. Now imagine cost of a designer is Rs 5k per month and for a developer it is Rs 8k per month. As the business requirement increases, resource crunch takes place in a particular organization. Due to lack of flow of fresh talents, the company tries to pull resources from other existing companies. So the same designer whose rate earlier was 5k per month, now is hired for 8k-10k. Hence the cost goes up.  So a project/work which the company was previously doing at X amount of money, now to do the same kind of work it costs 2X. This is because the resources hired are now costlier than before. But, the company at the same time also has to make profit.  The companies are unable to find fresh talents with required skill sets because they are not available. Hence, flow of fresh skilled low cost talent is required.

Lets look into another case, with the example as above stated company structure – 2 designers & 8 developers.  In most cases a single developer can handle a maximum of 2 client projects (if the scope of project is more, then minimum of 2 developers can handle a single project).

Development is not just coding, but it also includes documentation, client interaction and testing.  Hence a single developer has to devote almost 10-12 hours in a day to work on 2 client projects. Question is why the developer is working on 2 projects and why not 1?

The answer is very simple; the company does not have any other options.  Companies cannot hire fresh talents because they are not skilled as per the requirement and the companies are not able to hire from outside(other companies) because to hire the resources they have to be paid more and if the resource cost(hiring cost) goes up, the project cost will go up and ultimately the company will lose the  project/client.

And those developers who are working on 2 client projects, does not get time to do self study, their quality degenerates and productivity gets affected and all these ultimately affects the clients.  Hence continuous flow of fresh skilled low cost talent is required to stabilize the situation.

Remember the keywords: Continuous, Fresh, Skilled, Low-cost. You cannot ignore any. To achieve the exact match continuously is  really a challenge, which most of the SMEs are facing all over India.

Note: Companies here in the study denote SMEs with employee strength 1-20.