India’s Indian Institute of Technology (IIT) and Indian Institute of Management (IIM) campuses are on a warpath against companies who made offers to their students but backed out or postponed hirings at the last moment, leaving students in the lurch.
It makes me question whether students at institutes like the IIMs are taught about the basic principles of a free market economy and worry whether this is how they would run the companies they would eventually get hired in.
Many of the placement offers (not all) that were pulled or postponed came from companies whose business models are under severe pressure, in turn because their existence was supported by free-flowing capital and not revenues.
Actually, it’s more than just a revenue glitch. In many cases, I would question whether these businesses ought to exist at all. But that is my view and obviously someone sitting in the Valley sees (or saw) things differently. Good for them.
What I cannot fathom is how any student of management, particularly if you spend a few minutes on the internet every day—is not aware of these changing dynamics, including the fact that hordes of senior employees of these very companies are scrambling for the exit door.
India produces 1.5 million engineers every year. Barely 7% are employable as the India head of Dassault Systemes, Chandan Chaudhury, told me two months ago. That suggests the job market is severely skewed towards a few. Obviously, if you are from an IIT, your chances are deservedly better. But between the jobs you want and those that are on offer, there might a huge gap.
The fact is that job creation is slowing down as I wrote in this report. And it looks less encouraging for manufacturing as I pointed out in thisarticle. You might argue that the nature of jobs are shifting, which is true, but to believe that the nature of jobs are shifting to companies whose only reason for existence is a series of wild bets by VC firms is to ignore the very textbooks that are part of your course. Yes, innovation drives change, but not so fast.
The real world
In my last job, I was part of a larger media company that also made films. I recall a senior management meeting where there was a heated discussion about a well-known actor who tore up a three-film contract because the first film did resoundingly well at the box office.
The actor now wanted a higher revenue share from the next two films and the contract re-written. Amazingly, for all the legal resources that had been poured into this and other, similar, contracts, it turned out that there was little we could do.
It was an insight into doing business.
The bottomline is, stuff happens.
So even if the companies that yanked their offer letters are completely in the wrong, get used to it. This is just the beginning.
This is what the spokesperson told me:
“L&T is one of the largest recruiters of engineering students in India. While empathising with the students, we clarify that L&T Infotech had issued only Offers of Intent to prospective employees and not Letters of Appointment. This was explicitly stated in the terms of our offer. All stakeholders are clearly aware of the terms of the letter issued by us. All actions by the company were consistent with our Offers of Intent. The applicants who cleared an industry standard test duly received appointment letters to commence their training.”
And he rounded off by saying, “We continue to grow and remain committed to creating better job opportunities that build fulfilling careers and provide a platform for lifelong learning and growth.”
Do I think that this sounds like a dodge? Might be. But L&T is a blue-chip construction-to-finance major in existence from 1938, with revenues of around $15 billion as opposed to perceived market capitalisation. The company wants to be in business, arguably a little longer than the flip-as-you-go entrepreneur (no offense to them) with a one-billion-in-one-year-consumer-acquisition-via-newspaper-advertisements business plan.
To me, the fear that we want to benefit from the upsides of a socialist economy while being protected from the downsides of a free market economy is frightening, to say the least.Even more than the harm some crazy venture capitalists in the Valley can inflict upon our markets.