Sunday, May 29, 2011

Of IT companies and schools...

Heres a simple exercise. Look carefully around you. Pick about 10 schools around your locality. Actually colleges are a better choice. Now go over the list of owners or trustees. Sooner or later you will find a politician. Indeed the chances you dont know an educational institution that has the association of a politician is quite low.

Now, do a similar survey of IT companies you know. The chances you know an IT company that has the association of a politician is quite low.

Yet, all around the clamour by politicians is that the salaries of IT professionals is high. There is no similar clamour to increase the salaries of teachers - which really is an issue - but we will come to this later.

Every alternate article that laments the state of industry in India points to the fact that the IT industry (together with its much derided cousin, the BPO) is sucking talent from where it is really needed. Yet, the number of articles that similarly lament the fate of lowly paid teachers and its effect on schools and education are quite less.

IT companies are said to have it easy and it is the sign of the commentators astuteness if you agree with such a stupid and uninformed statement. The next time sometime tells you this, heres what you got to tell them. "If IT money were easy money, politicians would be starting IT companies and not schools and colleges."

And then will ask you, what is the connection? The connection is obvious, you will say.

"Starting a school is all about knowing the right persons in power. They allot you land - often at a throwaway price. No, make that, always at a throwaway price. In most places, getting land for a school in the name of a trust is the easiest and most hassle free - not for you and me, but for the politicians kith and kin who often have very little else to do anyway."

"But", they counter, "getting land for companies is easy too. Anybody who flashes his card as an industrialist and lobbies a bit can buy land. What makes you think that companies are not a favoured lot."

Thats when you shoot for the kill. "Then", you ask, "Why aren't politicians opening IT companies in droves, if IT companies are that easy to open and make money out of?"

"Thats because," they tell you, very informatively, "there are enough IT companies out there, but there arent enough schools"

"Assuming you point is right", you ask, "why arent there enough schools? or Colleges? If there were equality in opportunity, why would anybody need reservations?" The answer is here that the government severely restricts the opening of schools and colleges - leading to a supply crunch. It is only now that foreign and local universities have been permitted to set up shop - leading to a few private universities being set up. Till now, we have had private colleges mostly - but now there are more private universities too - but the rules do not make very easy. But then not too many people are opening private universities - why is that?

The reason is that it is far far easier to set up a school or college under an established university and wait for the donations in the name of "management quota", "donation", "infrastructure", "capitation fees". Creating an entirely new university is tough work. Same as setting and running a company - setting a company, getting business, managing employees is not quite the same as getting land on the cheap, hiring teachers at throwaway salaries and waiting for the money to roll in.

And for the technical educated person, strange as it may sound, it is far far easier to start an IT company and go out on his own than for a person passionate about education and wanting to start a school on her own. And heres Tavleen Singhs piece today which elaborates on this point at length.

Do remember this the next time you hear a holier than thou politician (or any uninformed person) talk about how IT companies have it easy.

PS: Why are salaries of IT companies high? Most companies have a margin of 20-30 odd percent. IT companies have a slightly higher profit range because their overall investment in equipment is lower. Salaries are among their major expenses - since they hire professionals and not workers. However, it is the IT companies which started the trend of sharing their profits better with their employees by paying them better - unlike other industries before them.

So, the next time you hear this, ensure that you educate your audience. "IT salaries are high because IT companies share their profits better - not because making money is easy - either for the owner or for the employee." A longer post on this required - coming soon. 

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