October 24 to 30, 1998

 

 

Meet Naresh Kripalani, proprietor, ProSoft, in Mumbai. Kripalani has returned to India after 31 years in the US where he worked with IBM and later sold real estate to non-resident Indians. The reason he’s back: he detected a huge, untapped opportunity in training people in enterprise resource planning (ERP) programmes.

Begun in May, Kripalani’s ProSoft offers training on ERP software from market leader SAP and charges upwards of a Rs 100,000 to 200,000 for three- to four-month courses. No one can strictly call Kripalani’s outfit illegal, but here’s the surprise: he’s not one of SAP’s authorised training centres in India.

Kripalani is typical of the hundreds of entrepreneurial souls — from diamond merchants, finance companies and even owners of computer game centres — who are crowding into the ERP schools business offering training in the coveted software packages developed by SAP, BaaN, Oracle and PeopleSoft. Many of them even promise lucrative placements, mostly in the US.

Officially, the Big Four of the ERP business have limited training institutes in India. BaaN, has four education centres. SAP, which has a 65 per cent share of the Indian market, has its own institute in Bangalore and seven authorised training partners. Oracle has four centres and three authorised partners and PeopleSoft has one centre.

Yet, consider these statistics. In Mumbai alone, some 140 ERP training institutes have sprouted in the last eight months. In Hyderabad, until a US consulate crackdown (see box), some 35 institutes were flourishing and Delhi boasts 12 to 15 such schools.

So how do these crammers flourish without seemingly breaking the law? All a proprietor has to do is acquire a minimum number of user licences from one of the four (approximate cost: Rs 12 million) and set up the infrastructure. Now, SAP and company do not allow licensees to set up training centres. But, crucially, they can train their own employees as do companies that are implementing ERP programs, like Hoechst, Cadbury, Mahindra & Mahindra to name a few. This is the loophole many ERP training start-ups have exploited.

Instead of students, these outfits acquire ‘employees’. “We get around this by employing people who want to take this course. No one can stop us from giving our own staff on-the-job training," admits Gurinder Singh, managing director of Delhi-based Impex Information Technology, which teaches SAP's accounting module and BaaN's inventory functions.

"Of course, there are strings attached. An ‘employee’ has to shell out anything up to Rs 300,000 and sign a service bond. "We are not doing anything illegal. Certainly, no copyright infringement can be attributed to us. The bond is just a formality," insists Dimple Anand, marketing co-ordinator of Delhi-based Fateh Computer Services (FCS), which employs candidates either as ‘programmer trainees’ or ‘recruitment trainees’ for the duration of the course which lasts all of 90 days.

There are variations on this technique. For instance, Okhla-based Systems America — which recently changed its name from SAPient India (which too closely resembled SAPiend, SAP’s authorised training centre) — likes to project itself as a cut above the rest.

"We are doing troubleshooting for Crompton Greaves. Make no mistake — we are into SAP implementation, not SAP training," emphasises Dinesh Parekh, vice president, sales & marketing. This still does not explain why the Systems America bulletin board announces exams scheduled in October for its students.Do such practices put these institutions above board?

“These companies are not infringing the law, only circumventing it,” says Supreme Court lawyer Joy Basu, adding, “It is difficult to prove any copyright violation. Every IT firm is well within its rights to impart in-house training. But that doesn’t absolve them from the ethical question."

Certainly, companies like FCS, Systems America or Maars Software, which is even listed on the Chennai Stock Exchange, or Chennai-based Bitech, promoted by a Dubai-based group with interests in cables and hotels, are following the letter of the law. Indeed, some institutes have even developed good reputations with stringent entry-level tests.

But the danger of this unfettered growth is that thousands of ‘employees’ who flock to these schools may never find the pot of gold at the end of the rainbow: placements in India or a job in the US with annual packages as high as $ 80,000-$ 100,000.

There are broadly two kinds of offers institutes make. One is a ‘committal’ offer, which could cost Rs 200,000 - 300,000 and promises both training and a visa to the US. The other is a ‘non-committal’ offer, which is relatively cheaper at Rs 125,000 or so, because it promises only the training, no visa.

Eighty per cent of the ‘employees’ opt for the ‘committal’ offer. In FCS, 100 recruitment trainees have landed jobs in the parent company in the US out of a student population of 200. "We never made pucca promises, but simply said we would give references, whatever assistance people need," says Anand. "But we start the visa work for our recruitment trainees the day they join."

The trouble is students have often put their life’s savings into an ERP training course on the most tenuous of promises. Take Mumbai-based Cyber Star, which is owned by Manoj Mehta, who also runs a video games parlour. He assures his students jobs in the US. How is he so certain? His brother, you understand, works for a Donald & Company, a software firm in the US, and has assured Mehta that he has enough contacts to get Indians ERP-related jobs.

But of course there can never be guarantees of US jobs, especially now that the embassy is tightening surveillance. “We are also coordinating with other embassies for this,” says a senior embassy official in New Delhi. Few employees have the wherewithal to fight their ‘employers’ when the promised jobs don’t come through.

One exception is S Grover, a former Systems America ‘employee’, who recently filed a complaint with the Okhla police station against Nirdosh Tyagi, chief controlling officer of Systems America. Grover’s complaint says Nirdosh Tyagi had promised him a job in the company in India at Rs 1,80,000 a year or in its US affiliate at an annual salary of $ 55,000.

Grover joined Systems America in August 1997, paying a registration fee of Rs 15,000 and a course training fee of Rs 140,000. When he finished the course, he was hired as an SAP consultant but was paid only Rs 5,000 for three months and Rs 10,000 thereafter, not the Rs 15,000 that was promised. And although he did get a letter of offer from Systems America’s US affiliate, he was not asked to join there but continued to work at the Indian company on a monthly salary that was Rs 5,000 less than the original offer.

“They are cheating people,” says Grover, who has now left to join another company. For its part, Systems America vice president, operations Y K Gupta says, Grover’s complaint is baseless. “The fact of the matter is that Sanjay Grover had failed to meet the performance standards of the company.” Gupta says Grover was counselled on his work, but did not improve and his attendance was irregular. He also said Grover tried to use “political influence to force the management to depute him on foreign assignments and is now trying to use the press to do the same.”

The spat between Grover and Systems America is indicative of the kind of issues that are increasingly coming up in ERP institutes. Recently, FCS employees filed a complaint against the company for not getting them visas. That was withdrawn when the visas came through.The other, more serious hazard of the ERP training boom is the quality of education that students — sorry, employees — are paying lakhs for. Several professionals were sacked by their US employers for sub-standard training.

M Murugesan, who heads the training division of Ramco, which has developed its own ERP software, categorises institutes into vendors, implementers and body shoppers. “The quality of training deteriorates considerably as we move from the first category to the last,'' he says.For one, there’s no standardisation in terms of faculty. In many body-shoppping institutes the ratio of teacher to students is 1:8 or 10 and faculty is drawn from a variety of sources. At ProSoft, for instance, Kripalani says the faculty comprises former students as well as people who have had in-house ERP training in their offices .

ProSoft’s faculty currently consist of people from companies like Cadbury, Siemens, Hoechst. “People have quit their jobs and are now teaching full time here,” explains Kriplani. But, as he admits, “These people are not here because they are drawing a huge pay packet. They are just using this as a stop gap before they can migrate abroad. As a result the faculty keeps changing.”

Then again, there is no fix on the time span for a course. Some companies offer three-month capsules. Others like Mumbai-based Karrox, owned by Rakesh Tolia, who has been in computer education for seven years, turn out ERP-trained professionals in 35 days.

Although some cities, notably Chennai and Hyderabad, have grown wiser to the offers that some institutes make, demand is still exploding. “It is the hottest managerial tool worldwide with a market size of nearly $10 billion,” says an official at Nasscom, the National Association for Software Companies. In India, say SAP officials, the demand for ERP-trained professionals is growing at 280 per cent.

Surprisingly, the institutes pin the blame on the Big Four for this training scam. "Why create such a stink? A company that is worried about unrightful use of its proprietary information should look at providing consumers authorised services at a competitive price. This will automatically finish off the unauthorised business," says Dinesh Parekh.

Agrees Gurinder Singh of Impex, "A student enrolled at the BaaN Institute in Hyderabad pays Rs 8,000 per day for a 25-day capsule. I charge less.”There could, however, be good reason for students to start being risk averse. As Ramco’s Murugesan points out, “The turmoil in the world economies has affected the IT budgets of many companies. Annual salaries of good ERP professionals with implementation experience have dropped to $ 80,000 from $ 100,000 in the last one month alone. And SAP consultants who used to command about $ 110 an hour are now charging $ 65 per hour.”

In India, too, the recession is forcing firms to postpone implementing ERP. Result: a growing number of professionals unable to acquire the implementation experience essential for assignments abroad.For the moment, though, schools are mushrooming so rapidly that companies like PeopleSoft have approached Nasscom to look into those claiming to provide PeopleSoft ERP solutions. But this is unlikely to stop the tide. As Deepak Ruchandani, director marketing of BaaN Info Systems, puts it, “Can a watchdog stop AIDS?

(Reporting by Uttara Chowdhury and Maitreyee Handique in New Delhi, Debarati Roy in Mumbai and M Anand in Chennai)

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