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Staying competitive in the global economy

Via The Indian Economy blog, an article in Forbes details the success of an Indian entrepreneur named Sridhar Vembu, the founder and CEO of AdventNet, a software company that is one of the few thriving firms in India producing products (rather than providing services).

What the Chinese have done in manufacturing, he is showing that the Indians can do in software: undercut U.S. and European software makers dramatically.

What’s significant is how Vembu has done it.

“We hire young professionals whom others disregard,” Vembu says. “We don’t look at colleges, degrees or grades. Not everyone in India comes from a socio-economic background to get the opportunity to go to a top-ranking engineering school, but many are really smart regardless.

“We even go to poor high schools, and hire those kids who are bright but are not going to college due to pressure to start making money right away,” Vembu continues. “They need to support their families. We train them, and in nine months, they produce at the level of college grads. Their resumes are not as marketable, but I tell you, these kids can code just as well as the rest. Often, better.”

As the United States tries to enhance its competitiveness in the global marketplace, maximizing human capital is key. Vembu has built a $40-million software empire by paying to educate and train the equivalent of high school graduates. Currently, American firms might pay for the graduate training of a promising employee. The Indian experience suggests that American firms should reexamine the utility of the 17-year old. Considering the massive cost of college (and questionable value for job preparation) , many firms might be better off targeting high schoolers directly.

If training and hiring high schoolers is as profitable in the US as it is in India, there could be significant economic and social dividends, enhancing competitiveness by reducing labor costs, while helping restore the promise of economic advancement to a population that has few reasons to keep faith.

Perhaps then Silicon Valley will be losing business to Detroit, and not New Delhi.

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Filed under: Economic Policy

One Response

  1. Andrew Cheesman says:

    very interesting! this is entirely contrary to systems in place here (and elsewhere, to be sure) where a premium is paid for top employees. i’d like to see more evidence or data to compare the quality of the work churned out by these would-be high-school dropouts.

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