From his perch atop one of India's most successful software companies, Lakshmi Narayanan sees a potential storm brewing.
His firm and others like it have had little trouble finding first-rate engineering graduates for entry-level jobs, capable young men and women lured by the glamour of cutting-edge work and generous salaries.
But a shortage of talent is looming that could put a dent in India's reputation as the world's information-technology outsourcing champion. Three or four years from now, Narayanan and others forecast, qualified engineers in India are going to be at a premium as companies like his vie for their services to sustain the industry's remarkable growth.
"Clearly there's going to be a challenge," said Narayanan, the president and chief executive of Cognizant Technology Solutions Corp., which produces business system software for such clients as Wells Fargo & Co., Aetna Inc. and ACNielsen.
The imminent dearth of talent may come as a surprise to observers in the West, where India is popularly perceived as an engineer factory, churning out every year hundreds of thousands of well-trained, highly motivated, low-cost professionals who are ready to join the country's growing army of technology workers.
To hear many American officials, academics and business leaders tell it, the huge number of engineers produced by Asia's developing giants, India and China, poses a major threat to American competitiveness at home and abroad.
But talk to executives here, as well as experts in the field, and a different story emerges. The problem, they say, is not quantity. It's quality.
At high-tech firms across India, hiring managers must comb through mounds of applications to find suitable candidates. A report by the McKinsey Global Institute last year estimated that only 25% of Indian engineering graduates were employable by multinational companies. Some executives here are even more critical, putting the figure at 10%.
For China, only 1 out of 10 graduates had the skills necessary to join an international firm, the study said. "You need to be technically skilled. You need to speak good English. You need to understand cross-cultures. The expectations are growing," Narayanan said. "It's no longer good enough just to be a good engineer."
Established players like Cognizant enjoy some advantage in that they can pick the cream of the crop; jobs at the big firms are highly coveted.
But Cognizant and other industry leaders such as IBM Corp. have had to invest heavily in training in India, building entire campuses devoted to molding recruits and filling in the gaps in their education, particularly with regard to so-called soft skills and managerial know-how.
Infosys Technologies Ltd., for example, recently announced that it was investing $176 million in its Global Education Center at the company's complex in Mysore to triple the number of trainees the center could accommodate in a single sitting, to 13,500 from 4,500.
"These are very bright kids -- the basic intelligence is available," Narayanan said in an interview in his office here in Chennai, the southern Indian city formerly known as Madras. "The only question is shaping them into what the industry requires."
The looming squeeze in the supply of qualified engineers in India is starkly at odds with widely quoted statistics in the U.S., which have assumed almost totemic status in the debate over the future of American dominance in the high-tech marketplace.
According to these figures, India graduates 350,000 engineers a year, China 600,000 and the U.S. a mere 70,000.
Officials such as U.S. Commerce Secretary Carlos M. Gutierrez, influential media outlets such as Fortune magazine and the National Academies' Committee on Science, Engineering and Public Policy have all cited those numbers to warn of a gathering threat to American scientific and technological preeminence.
But the origin of the statistics is murky. And recent research suggests that they are, in fact, wrong.
In December, Duke University researchers found that when comparing the number of students earning degrees from accredited four-year programs in engineering, computer science and information technology, the U.S. remained in a strong position, with about 137,000 in 2004. India had 112,000.
China graduated about 352,000, but that figure, based on less directly comparable data, could well include "the equivalent of motor mechanics and industrial technicians," the study said.
For India, the problem is twofold, experts say. Access to higher education has historically been restricted to a tiny fraction of the population. And while trying to widen that bottleneck, many of the start-up institutions offering engineering courses are of dubious quality.
"The country that's in the deepest trouble now as far as education goes is India. China has gotten its act together; the U.S. has already had its act together. It's India that's going to be facing severe challenges," said Vivek Wadhwa, a coauthor of the Duke study. "The number of graduates that they're churning out is not keeping up with economic growth. If the country wants to grow at 7% to 8%, they simply don't have the number of graduates to sustain that."
When spread over their respective populations, the pool of engineers stretches extremely thin in India and China, which together account for one-third of all humankind.
The scarcity of engineers holds ramifications not just for the vaunted high-tech sector but also for issues of basic development. In New Delhi, for instance, municipal officials have warned of a massive shortage of engineers to oversee public works in a country whose infrastructure is notoriously bad.
Though China and India are working hard to increase their share of top-notch engineers, that should not be the focus in the U.S., despite widespread hand-wringing by some officials and educators, Wadhwa said.
"Because India and China have greater numbers, we think we have to have greater numbers too. But we'll never match them in numbers. We can't compete on their turf, which is quantity," Wadhwa said. "We need to make them compete on our turf, which is quality. Yes, they have more numbers. Of course they do. Between them they have 2 1/2 billion people. Yes, they graduate more engineers. They graduate more dentists, and they have more shopkeepers too."
In some ways, India is a victim of its own success over the last decade in the IT world.
Stories of Indian entrepreneurs made good in Silicon Valley, of the meteoric rise of homegrown companies such as Wipro Ltd., have made engineering jobs more attractive than ever and encouraged more young people to pursue engineering degrees.
Graduates from the seven prestigious IITs, Indian Institutes of Technology, hold their own against those from Caltech or the Massachusetts Institute of Technology. But they represent only a small portion -- about 3,000 graduates a year -- of the talent pool. From there, the drop in quality is steep, experts say. Many of the private engineering colleges and other programs that have proliferated in recent years do not reach anywhere close to the standard of the IITs.
Prasad Krishna, head of quality assurance at the All India Council for Technical Education, which oversees engineering programs, said his staff had found it difficult to keep up with all the new schools. Currently, India boasts 1,475 approved engineering programs.
"There are many institutions running programs not approved by the council," Krishna said. "Some of these fly-by-night operators should be checked."
Industry insiders express grave concern about the quality of teaching in India's engineering schools. Many of India's best and brightest opt for the private sector, where they earn far larger salaries than they would as professors.
To ease those deficiencies, and to help guarantee their own survival in a competitive labor market, companies are increasingly joining up with colleges and universities to strengthen faculties and to sharpen students' communication and leadership skills. A number of "finishing schools" have also sprung up to equip graduates to enter the workforce.
"Today we have to not only [improve] quantity substantially; we also need to improve quality substantially. And there is a problem in doing both together," said Sam Pitroda, a member of India's Knowledge Commission, a body appointed by the prime minister.
Narayanan of Cognizant is hopeful that the impending shortage of qualified engineers will be temporary, lasting several years at the most, until some of the initiatives to increase supply start bearing fruit.
"People have recognized the problem early enough," he said, "and everyone is talking about it."