The dilemma for Bangalore software industry

I am in Bangalore (called Silicon Valley of India which I totally disagree – more about that topic later) for the last few days. I have learnt a lot in the last few days.

First, while the IT boom has helped a small percentage of people directly and a larger percentage of people indirectly, it has created a bunch of problems for all the people. Let me just focus on the dilemma for the software industry here, in this short note.

1. Small and mid-size companies typically are having a hard time attracting top talent to their companies. How can a small company match all the perks and resort-style living offered by big companies anyway?

2. The big companies are able to attract top talent. However, they are focused on getting bigger projects. Majority of bigger projects are focused on commodity work.

3. The big companies are not interested in working with smaller clients as the deal sizes are small. These smaller projects may be “really cool” but it may not make business sense for larger companies to chase them. Margins may just not justify the effort.

4. Smaller companies won’t get projects from bigger clients (size does matter) so they get the cool projects for small and mid-size clients. Unfortunately, since they can’t get top talent to work on these cool projects, they have to work “extra hard” to satisfy the clients.

5. The big companies are thriving on big commodity projects staffed by top talent. I think top talent who are working on commodity projects are held as prisoners as obviously they are being “overpaid for commodity work” but they can’t exit as they have to make a “big sacrifice” to make the switch.

In summary, small companies are “struggling” to deliver on “cool projects” as they have to deliver them using “average” people. Big companies are “thriving” on “mediocre work” (also called mega projects) and staffing them using top talent. Who is really winning here?

My $.02 of course.