What the U.S. Can Learn from Indian R&D

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• Recruitment. Résumés can fail to reflect the true aptitude and potential of job applicants and to provide a basis for comparison, and educational degrees are often not a sufficient proxy for proof of skill and competence. So leading Indian companies now hire for ability and aptitude rather than only specialized technical skills. They provide the training needed to bridge skill gaps. Instead of hiring only from top engineering universities, technology companies recruit from second- and third-tier colleges; they also hire arts and science graduates. Many companies have negotiated deals with colleges to hire in bulk; they'll automatically offer jobs to the best students; no interview necessary.

• New Employee Training. Companies in India assume that new recruits will have to be trained practically from scratch. So they invest substantial time, money, and effort in training. Nor is training relegated to less-experienced personnel: Even the most senior executives participate in training new employees. Most large companies have built dedicated learning centers, and some employ hundreds of training staff. They typically provide one to four months of training in a wide variety of subjects.

• Continual Employee Development. Leading companies mandate that employees receive between one and three weeks of training a year in areas where they are weak. Some training is provided on evenings and weekends, but most is provided on company time. Many companies tie salary increases and promotions to the completion of such training. In Satyam Computer Services' (SAY) engineering-services division, yearly training requirements have been increased from 100 to 150 hours.

Employees also receive extensive coaching and mentoring by company executives. The Indian division of Cadence Design Systems (CDNS) has a program called "Leaders as Teachers," which requires technical leaders to spend one to two weeks a year delivering classroom training. Every senior employee must participate.

• Managerial Development. Shortages in managerial talent have made it necessary to build pools of potential managers internally. Most companies offer extensive management training, internally and externally through MBA-type programs. Companies like Adobe (ADBE), Genpact (G) and Satyam have policies to cultivate managers internally. Satyam gives internal candidates the right of first refusal on all new managerial openings.

• Performance Management. Most companies have sophisticated systems that provide frequent feedback to the employees and allow employees to provide feedback on their managers. At HCL Technologies, employees can even review their managers and these appraisals are available online through the company's intranet. Everyone can review employee assessments of their bosses—including their performance, strategic vision, ability to communicate, problem-solving skills, and responsiveness.

In all of the companies we studied, we found that the intense focus by senior corporate executives on implementing companywide staff-development initiatives caused dramatic improvements in productivity and performance.

Workforce development helps to explain, for example, how IT service firms have been able to increase billing rates and productivity levels and maintain high levels of growth and profitability despite skilled-talent shortages, rising salaries, falling exchange rates, and other challenges. Employee development similarly explains how companies in India are able to hire bright but largely inexperienced talent to successfully engage in R&D and other innovation.

The achievements of companies in India show that employee investment, development, and empowerment are central and critical means to building and sustaining long-term competitiveness and innovative capacities in a global knowledge economy. The U.S. can learn and incorporate these lessons from India as it rethinks how to train and develop its workforce to maintain its global competitive edge. U.S. companies have long played the guru. Perhaps the time has come for the guru to learn from a disciple.

Wadhwa is senior research associate at the Labor & Worklife Program at Harvard Law School and executive in residence at Duke University. He is an entrepreneur who founded two technology companies. His research can be found at www.globalizationresearch.com.