Quotes of the Day

For job seekers in India's tech sector, it's the best of times—and the worst. When Venugopal Rao Moram, a 29-year-old software engineer living in Bangalore, began looking for a new job in June this year, it took him just two weeks before he found the work he wanted—a position with Microsoft in the city of Hyderabad. "The moment you put your résumé on the Internet, the offers start coming in," says Moram, who's been working in the tech sector for six years. "Everyone looking for a job has at least five offers."

Lalit Kumar, a 22-year-old resident of New Delhi who works part time as a data-entry operator, hasn't found the job market quite as receptive to his talents. Kumar, one of the tens of thousands of young Indians who thronged a giant IT job fair in the city's Pragati Maidan exhibition center on Aug. 23, squats in a corner of the hall at the end of a long day. He's been trying to hand out résumés all morning, but no recruiter has bothered taking one. "Everyone in Delhi wants to be in IT right now. There are a hundred applicants for every post. It's impossible to get a job unless you have experience," he says. Pankaj Kamboj, a 22-year-old recent engineering graduate who has come with a half-dozen friends from the neighboring state of Haryana, complains: "We've traveled 200 km for nothing. There are no software positions here, only call-center jobs."

India's tech sector is in the grip of an extraordinary paradox. With almost all tech companies on a hiring spree, there's never been more demand for élite employees who have attended the right colleges or have a few years' experience at a prestigious company. Yet for hundreds of thousands of starry-eyed young men and women who are drawn to the IT sector in the hope that it will provide a way out of India's crushing unemployment problem, the promise of a high-paying job is turning out to be a mirage.

India's tech companies are expected to hire 75,000 to 100,000 people this year—a 50% increase compared with last year—because after years of relatively sluggish growth, the sector is roaring again. Revenues for India's IT businesses will grow by a heady 40% this year, according to Vijay Baoney, a technology analyst at Indian brokerage house Enam Securities. The problem for companies is finding enough midlevel executives who can train, groom and oversee the influx of raw recruits. "Experienced hires are not there on the scale that the industry needs them," says Hema Ravichandar, head of human resources at Infosys, one of the three largest Indian IT companies.

Because demand is outpacing supply, tech analyst Baoney believes wages in the IT sector will rise by 15-20% this year—and it is midlevel managers, who command salaries ranging from $20,000 to $40,000 annually, who are getting the fattest increases. Indian companies are resisting, but they're losing the battle as American companies like Accenture and IBM expand in India and often lure executives with better pay packages. Silicon Valley-style job hopping is suddenly in vogue. "If an executive is working with a firm for two or three years, and he doesn't get a pay raise, then he starts to look for another job as a way to increase his salary," says software engineer Moram.

Some observers worry that rising wages will eventually erode India's competitiveness—the country will price itself out of the software outsourcing business, which has provided most of the sector's growth. "If the Indian [technology] industry keeps growing at present rates of 40-50% annually, then the current outsourcing model could break down in two to three years," warns Avinash Vashistha, a managing partner at neoIT, an IT consulting firm. U.S. outsourcing clients "will stop thinking of India as a one-stop shop for all their technology needs" and will turn instead to the Philippines, Russia or even Vietnam.

But that day seems far off for the nearly 3 million graduates and postgraduates who will hit the job market in India this year. The majority of them will meet with the same disappointment that Kamboj encountered at the job fair in Pragati Maidan. The disillusioned college graduate says he'll keep trying for a software opening for six months more, but he is already considering a less glamorous alternative. "I don't want to work in a call center," confesses Kamboj, "but I'll have to take it if I get nothing else."

• Aravind Adiga | New Delhi
• Masses of starry-eyed Indians are trying to cash in on the country's tech boom. But where are the jobs?