A Working Mystery

Unless you are a qualified professional or an IT person in India; chances are you can identify with what I am just about to say.

You begin job hunting – you’ve spent a fair sum of money obtaining a higher education, a bunch of degrees, you’ve been a good and dedicated student and an active participant in extra-curricular activities. By no means are you a blithering idiot or a fool and therefore you feel entitled to a well paying job.

Now here’s the problem- every job you look for and feel qualified for will state minimum requirements along the lines of “5 to 8 years experience”. If students are busy getting qualified how are they supposed to have that kind of full-time experience? Unless of course they are expected to also work while studying, which is against collegiate law in most full-time university courses.

Higher education is supposed to qualify you to handle jobs that simple graduates cannot- which I gather is why people spend time and money doing it. If you emerge from a higher degree and still find the job market biased towards a decade of experience how are you supposed to deal with it? Simply put, where do students get this decade of experience? If no one wants to pay or hire articulate, young and bright yet inexperienced people - how do they become the ‘experienced’ people these companies want?

One solution is the ‘internship’ idea which works remarkably well in some cultural and national contexts, for example, in America. The only reason it works is because potential employers are willing to consider internships in lieu of full-time working experience. Most times they do; they also carefully consider waitress experience, window-washer experience and even the experience of planning a wedding!

A career counselor in Washington asked me rather quizzically why the ‘internships’ on my resume were simply not put-down as ‘work-experience’. I had a hard time explaining that in India internships are not generally acceptable as quasi work-experience qualifications; at least employers don’t see it that way. In my lifetime - I am yet to see an Indian company hire a data quality person who has McDonald’s on their resume.

So we have a problem. One plausible explanation is that Indian internships, except at premiere institutions, are simply not ‘good enough’. Employers demand such exorbitant years of experience because candidates with lesser experience are simply not good enough.

This however seems like a fairly poor explanation to me two counts; the first one is best explained by an analogy to Indian sports (think Beijing Olympics) — how is it that a billion people seem to be able to produce only three world-class sportsmen? In a similar vein, what is it about the Indian education system or the job market that makes the vast majority of college graduates unemployable? The second reason for my skepticism is simply that the explanation is not intuitive enough to be true.

The truth seems to be mid-way and is really an economic phenomenon. Increasing the ‘experience required’ section narrows the pool of applicants which makes an HR person’s job much simpler. Just as most of the hiring in any company is done first through network exploration and lastly through the Internet.

Understanding this simple truth is like crossing a huge ice filled river with deep dangerous crevices to arrive upon a gigantic smoking sausage and a cup of hot chocolate. Strangely enough most job seekers begin their job searches on the Internet and turn to their networks last. In my case which I suspect is rather ‘normal’ this has more to do with self-esteem than extreme stupidity.

In India reducing the HR executive’s load is a vital exercise mostly because we turn out a huge number of potential employees from educational institutions, who are at the very least ‘formally qualified’. Reducing the number of applicants is therefore one way of reducing huge transaction costs and makes things easier.

Unhappily for a job-seeker, the incentives too are designed to make this system work and sustain itself. Because people are seldom paid what they deserve and even less so in response to the amount they actually work; there is a fairly large pool of people with a decade plus of experience who will work for peanuts. My network mostly consists of such people, which, explains the bit about self-esteem.

There are other powerful incentive structures in place to skew the job market and the economics of hire-and-fire. One of the more apparent of these is the simple fact that by hiring people with ‘at least half a decade or more of experience’ companies bypass training costs for their employees. A new recruit is almost always more costly than a more experienced one, especially in a situation where jobs are fewer and farther in between than there are people to claim them. By increasing the amount of experience required of potential candidates employers offset training costs to themselves at the expense of a prior company who actually invested in the recruit when he/she was new.

This, of course, is of no consequence whatsoever to the average job-seeker who jumps at the opportunity of a marginal pay raise in a new company. There is nothing surprising about this sort of behavior. Indeed a systematic study of the resumes of people ‘forty and above’ versus ‘thirty or below’ will reveal similar truths.

The vast majority of those who started working before higher-education exploded (which is vaguely linked to the arrival of the computer generation in India and the persistent presence of the government in higher education) have changed as few as three companies in their entire career spans, the more eccentric of these get to five. Contrast this with the BPO happy crowd and you will see a plethora of companies all over their resumes, a vast majority of these companies don’t even make it to the candidate’s CV thanks to space concerns and a ‘job-hippy’ tag.

Why does this happen? I reckon this has to do with the fact that job loyalty has hardly any benefits in India. This too is a consequence of the large pool of candidates companies can choose from. The costs of re-hiring, conventionally known as ‘menu-costs’ in economics, in the whole scheme of things are now negligible.

Little wonder then that more and more young people desperate to beat the ‘experience barrier’ fake everything from degree divisions to references and now increasingly ‘experience’ on their fancy templated resumes written on pirated versions of Microsoft Word. You have to admit the temptation to do so is strong - so strong in fact that there is unlikely to be a better man-made designed incentive structure to get people out of their beds and to work every single day of the week.

Companies are now moving towards investigative firms that do ‘background checks’ - which is all rather pointless given the incentives for these companies to ‘fake’ background reports themselves is astronomically high. India will have yet another informal information market functioning in the blink of an eye and it will be perhaps be one of the most effecient prototypes the world has seen so far.