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The Indian IT industry has started scouring the provinces for graduates to fill the burgeoning number of vacancies in the sector.

The National Association of Software and Services Companies (Nasscom), India's IT trade association, this month begins testing graduates in "tier-two cities" to vet them for employment in multinational services firms.

In collaboration with India's 26 largest firms, Nasscom designed a test to determine a graduate's ability to work for foreign clients.

Nasscom vice president Sunil Mehta said: "Graduates from tier two cities are not able to access BPO* jobs, so what we are doing is putting in place entry level certification programme [to examine] English, maths, comprehension skills, and reasoning."

"We believe talent is available all over India. We need a national standard for assessing that talent," he said.

He hopes the idea will become a "global benchmark" that could be used by outsourcing firms to identify untapped pools of talent around the world.

Skills shortages are a massive problem for the Indian IT industry, Mehta said. Even though there are approximately 14m graduates in India - almost twice the number on the US labour market, and growing by 2.5m a year - the rapid growth of India's service sector has quickly absorbed much of the available graduate pool.

The labour situation is so tight that demand for skills will outstrip supply by 2008. Demand has already pushed prices up by 23 per cent a year since 2001, eroding one of India's competitive advantages.

According to the McKinsey study**, research that preceeded Nasscom's recruitment drive, multinationals think only 10 to 25 per cent of Indian graduates are worth employing. The rest are, employers believe, poorly educated or coming away with irrelevant, non-engineering degrees and poor English.

For Mehta it means that only the top 15 Indian services companies are world class.

"India's policymakers must make a priority of helping companies to avail themselves of the country's untapped pockets of supply before too many more of them discover the charms of other offshoring locations," it said.

McKinsey also recommended that Indian services firms disperse throughout the country, instead of "crowding into the same few locations", such as Bangalore, Mumbai and Hyderabad. That way they'll find a fresh pool of local talent.

Accordingly, Mehta said his tests should convince employers that there are enough quality graduates outside the major outsourcing centres for them to be a little more daring in choosing their next office locations.

The first tests are to be run in Rajasthan in the first fortnight of September. Gujarati graduates are due to be tested in the second half. The roadshow will then move on to Chandigarh, Kerala, Sikkim, West Bengal, and Tamil Nadhu. ®

* Business Process Outsourcing - some catch-all for the varied things Indian services firms do for European and North American customers, like answering the phone, designing the software, filing the accounts, and so on.

** Ensuring India's Offshoring Future, McKinsey Quarterly, 2005 Special Edition: Fulfilling India's Promise, Diana Farrell, Noshir Kaka, and Sascha Stürze

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