Global Enterprises Pin Their Hopes on India’s Software Engineering Talent

Karat’s 2024 list of top 30 cities to hire software engineers includes six Indian cities, reflecting the country’s growing prominence in the global tech landscape

With technologies like AI and the Cloud at center stage, businesses face one of the biggest challenges of modern times – finding the right talent to accelerate their digital transformation initiatives, get ahead of their customer experience game, and make their operations future-ready.

According to a recent report, 2024 Top Cities to Hire Software Engineersby the tech recruitment startup Karat, six out of the top 25 cities from which the majority of tech talent emerges are situated in India. These cities include Bangalore, Hyderabad, Delhi, Chennai, Pune, and Mumbai. The report further strengthens India’s position as a go-to destination for businesses seeking top-notch software engineering talent. 

India has a vast software engineering talent pool, with over 1.5 million engineering graduates produced annually. This is mainly due to the cultural perception of engineering as a financially rewarding and stable profession. Bangalore, for instance, is the world’s largest market for software engineers, with over 360,000 professional developers. According to the study, this makes it a more attractive location for companies looking to establish new capability centers than smaller hubs like Amsterdam.

Bangalore is home to roughly the same number of engineers as Seattle, San Francisco, and New York combined. The city also hosts more than 1500 GCCs, a number set to increase by 20% in the next 2-3 years, according to Arun Sundaram, Sr. Director at Karat.

“India’s top cities, particularly Bangalore and Hyderabad, are key magnets for software engineering talent. More than 60% of all GCCs are located in these cities, leading to a significant influx of talent from other top cities in India. This trend has sparked a transformation, with an increasing number of elite Indian developers taking on full-time roles for multinational corporations. As a result, demand from the country’s tech services companies is rising.” Sundaram highlighted.

Amsterdam is a smaller market but has a high concentration of top candidates. This is because it has a host of companies operating in fintech, e-commerce, and navigation technology. Some of the most robust engineers gravitate to these business segments.

What makes India a major hub for software engineering talent

India’s engineering talent results from its skilled graduates, high-quality education, English proficiency, cost-effectiveness, and growing tech ecosystem. Companies leverage these factors for outsourcing, development centers, and access to diverse talent.

“The transition from back-office operations to global capability centers in India occurred through a focus on delivering high-quality services, adopting international standards and best practices, building strong client relationships, embracing new technologies, and capitalizing on globalization trends,” says Karat’s study.

Sundaram adds that companies are leveraging that by moving more critical engineering functions to India. With the quality of developers, engineering leaders are more confident about moving essential full-time product development functions here, not just tech services or contract work, as we saw 20+ years ago.

Nevertheless, the country also faces its unique set of challenges. The study notes that although there’s an enormous number of engineers in India, the talent competition is fierce. The rush to hire in India is now leaving the country with more talent to meet demand in fields like AI and data science.

Elite talent prefers stability

Although India boasts a thriving startup ecosystem and has become the world’s largest market for tech talent, the appeal of startups is decreasing among top-tier tech professionals due to the increasing instability in the industry.

According to Arun Sundaram, the reductions we saw this past year hit the sense of invincibility and job security many Big Tech companies have benefited from. There’s a noticeable shift in the job preferences of top-tier tech professionals in India. While the country boasts a thriving startup ecosystem and has become the world’s largest market for tech talent, the appeal of startups is waning. Increasing instability in the industry is driving these professionals towards big banks and enterprise organizations. These organizations, which hired cautiously in the past few years, have laid off fewer employees, providing an increasingly valued sense of stability. For example, Bank of America publicly declared they would not lay off employees last year.

Sundaram also notes that there has been an increase in the quality of new hires last year compared to 2022. Big banks (+16%) and retailers (+33%) hired more top-performing software candidates than in previous years. Meanwhile, tech industries like SaaS, Fintech, and Gaming saw little to no improvement in quality of hire stats, remaining flat or down year over year. Meanwhile, quality of hire stats for tech industries like SaaS, Fintech, and Gaming remained flat or down Year over Year.

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