half of global technology companies say they have difficulty finding
and retaining technical talent in emerging markets like China.

That's one of the findings of a recent survey
(pdf) published by PricewaterhouseCoopers in cooperation with the
Economist Intelligence Unit. Traditionally, this problem of skills
shortage has been seen as one that only affected the developed markets
of the west. Not any longer.

According to the PwC survey, 41 percent of all survey respondents
find it difficult to locate technical skills in emerging markets while
48 percent have trouble retaining the talent they do find.

The increased competition for skills causes salaries in the
technology sectors of emerging economies to rise. One executive
interviewed for the report said:

Compensation levels in many of the emerging markets are increasing
to the point where we no longer view India and now even China as
necessarily low-cost countries. Our operations in India and China are
already looking at offshoring to Indonesia and, believe it or not,

Indian-based outsourcing operations were first to wake up to this
trend as they realised that rising salaries and keen competition for IT
workers in Bangalore threatened to undermine their low-cost delivery
model. India's outsourcing trade body Nasscom warned last week that India's IT industry could face a shortage of around 500,000 IT workers in four years.

The HR director of one Indian outsourcing operation tells PwC there
is so much competition for talent that the firm has had to adopt
techniques such as employee engagement surveys and individual
career-pathing to prevent its workers jumping ship.

As India's attractions as source of tech talent wane, China's rise. In a recent interview with EngagingChina, Pierre-Yves Cros, director of global strategy at European IT services firm CapGemini, said:

We need a second offshoring country to give us a better balance and
not put all our eggs in one basket. China is the only other country
that can produce the volume of IT professionals that the world needs.
Ten years ago, it was India, but now it is China and Qingdao wants to
be the next Bangalore.”

However, the growing demand for tech workers in China has revealed
the inadequacies in the country's education system. China's
universities may produce lots of science and technology graduates, but
they are rarely encouraged to take the initiative and lack the
creativity that many multinationals seek, according to this BusinessWeek story.

Looming on the horizon is another problem. There is a fear that
China too could one day become a victim of its own success,
particularly if the demand for tech workers remains concentrated in a
few hot-spots like Qingdao.

To reduce their dependence on locations with known skills shortages,
multinationals are adopting distributed models of working in which
knowledge workers collaborate from a variety of locations spread around
the globe.

But nearly half of executives in the PwC survey say that managing a
global pool of talent is becoming one of their greatest challenges.

Nevertheless, PwC argues that technology companies must continue to
enlarge their global pool of skills. Approximately one third of
companies currently pursue offshoring to a significant degree. But this
figure will rise to nearly half of all technology companies over the
next three years.

More on the emerging skills shortage in China in this EngagingChina post.

Technorati : , ,