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Saturday, August 23, 2008

Certifications, IT

In the early 1990s, if you had looked at the potential for an IT industry in India, the answer could easily have been: "Not possible, because there aren't enough decent colleges and universities around". Yet, the IT industry happened. I find the build up of the requisite human capital of this industry to be rather interesting. Going beyond IT, more generally, if you look at the tripling of India's GDP and the immense internationalisation in this period, it seems to have taken place against daunting odds given that higher education is dysfunctional. For almost all students in India, the knowledge they command when stepping into the labour market is not substantially different from the knowledge they had when finishing 12th grade; the undergrad / masters degrees add next to nothing. This could have held back India's growth. It didn't.

How do we explain the tripling of GDP? The bulk of human capital in India has been built by self-motivated people. This was largely learning-by-doing - as economists have always known - supported by a little timely training. This process can be speeded up through the use of high quality certification exams, that really challenge the exam-taker, and that push forward to international standards of quality. Both processes - learning by doing and certification - are largely independent of formal education.

I read a column by Robert Cringely which links up to these issues. He talks about a certification in computer networking : ``Cisco Certified Internetwork Expert'' (CCIE). As he says:

The CCIE is Cisco's top certification category and VERY hard to earn. Being a CCIE doesn't mean you have Len Bozack on speed dial, but it might as well. Cisco products dominate the Internet and CCIEs are Cisco gurus, so if you are serious about the Internet as a nation you'll have CCIEs hanging about, or that's the theory. Conversely, if you just talk a good game as a country with technological aspirations, maybe you won't have many CCIEs at all -- maybe none. It's one way to determine who the posers are.

Cisco publishes the number of CCIEs by country every quarter. Here's what it shows for India:

2000 4
2001 17
2002 39
2003 72
2004 102
2005 115
2006 144
2007 200
2008 410

It shows a nice exponential build-up, despite roughly zero progress on higher education in this period.

In the case of finance, I know that the headcount of FRM certification is a useful measure of the number of people in India who actually know some finance (does a time-series exist?). I don't know anything about the CCIE. Is it a very Cisco thing? If this is the case, fluctuations in the number of CCIE would partly merely reflect the success or failure of Cisco in India. My informal impression is that Cisco is much less important in price-sensitive-India than they are elsewhere in the world.

The Cisco data also has numbers for other countries. I'm curious what blog readers think about (a) The extent to which the headcount of CCIE can be interpreted as a measure of the presence of high quality skills in the country and (b) A common sensical interpretation about inter-country comparisons - e.g. China's count is 8x bigger than India but China hasn't made the same impression in the international software market.


  1. In my view CCIE is not the right criteria for judging IT industry growth. Higher number of CCIEs just indicate that the country has need for more cisco experts and that could mean a lot of things. Like in china government is driving internet and infrastructure related to it like anything and hence such a high number. In India although IT industry is doing well, network is not that elaborate.

    I think CCIEs can be linked to the kind of internet backbone that country has.

  2. I dont know but do we really have any certification course which can demand attention?
    Well, I do know of de facto standard of training in IT- the Infy training program is known to be the toughest of all.
    But apart from such insider titbits, I dont think we have any real meat of any certification course over here, which will actually hone IT professionals.
    But going away from this, let me take the liberty to comment on China's 8X thing. Well, I really dont think IT revolution came in a decade. Yes, Indians definitely learn a lot by 'leaning through doing' method, but I think China is actually putting its money where the mouth is. Its training people.
    Yes, B.Tech/M.Tech unfortunately doesnt hold any water here in this land, but neither do we have any real good certification exams here.At least till what I know.

  3. "It shows a nice exponential build-up, despite roughly zero progress on higher education in this period."

    What exactly does this mean?

  4. Zen babu, I apologise if I was cryptic. What I was trying to say was this. From 2000 to 2008, India has made zero progress in higher education. Yet, the number of CCIEs went up sharply. This is a non-trivial juxtaposition if you think that CCIE measures good knowledge of computer networking (and is not just a reflection of Cisco sales).

  5. Ajay,

    Every morning when I open the computer, the first thing I do is to open the page for RSS feed to see your blog. This is because of credibility of your writing supported by unbiased analysis. Let me just point out my views on your advocacy of FRM as THE CERTIFICATION in Finance. I am both a CFA Charterholder (USA one and not Hyderabad one)as well as FRM charterholder. I agree with your views about FRM as a very good certification but I wonder whether your omission of CFA is by design or merely an inadvertant omission. I rate CFA as an excellent certification. Both FRM and CFA are good in their respective fields (CFA putting stress on overall grooming as investment professional and FRM putting stress on risk aspects) and I will like to avoid a comparison but if I am forced to compare the quality of certification of these two, I will rate CFA few shades higher than FRM. CFA also stands apart in its efforts on quality continuing education and bringing out the best journal in the field of Investment. FRM journal is no where up to the mark.

    Aftab Alam

  6. Aftab, I will look harder at CFA. But here's my reason for liking FRM more than CFA.

    I think of CFA as the stuff that one can pick up on the fly through on-the-job experience. I think of FRM as being the stuff that one can't pick up on the fly. A person simply gets assigned to different kinds of work if the FRM-style skills are absent, and then that kind of skill building does not develop. For that reason, I think the FRM does more in terms of jumping a person up to a new level of skill, when compared with the CFA. What do you think?

  7. Ajay,

    I do agree with you to an extent that some of stuff in CFA course content can be picked up on fly. But investment knowledge will remain half cooked and therefore potentially dangerous. CFA has 3 levels. Level 1 is simply the basics of investment. Level 2 can be picked "on the fly" to an extent of say 30% but level 3 requires one being seriously into studies. The proposition that Level 3 can be picked up "on fly" is akin to one's avowed claim about knowledge of astronomy because he knew the rhyme "twinkle twinkle little star".

    Ajay, I have differences with you on this. I attach credibility to articles in "The Economist". I invite you to read these two small write ups in this magazine, which will give you a flavor of CFA.

    Since there are many (like me) who attach credibility to your blog, I advise you to give a close hard look to CFA and give your final views.

    Aftab Alam

  8. In India, there are a quite a few institutes that offer networking courses. Jetking is one of them. The company claims to have trained more than 300,000 students over the past 25 yrs. And, currently claims to be training 40k students per annum.

    Which is why I think the author of the PBS article has this to say:

    "There is no doubt that there is plenty of network expertise in India, but these numbers show that expertise isn't making it out of the technology centers to the rest of the country."

  9. Ravi,

    I know there is a lot of computer networking knowledge in the country. What attracted me about Robert X. Cringely's text was his suggestion that CCIE is a really hard exam. If he's right, the average guy coming out of Jetking wouldn't be able to pass the CCIE.

    Certification examinations are most useful, in the Indian setting, when they substitute for the gaps in formal education. E.g. I like the FRM because it addresses the lack of serious finance education in India.

  10. yes, you are right about the possible inability of the average jetking student to clear the CCIE exam.

    But, jetking is a classic case of what u said in ur previous post on certifications v/s formal education. Off the 300,000 students that is claims to have trained over the past 25 yrs, a large number are not even graduates!

    the jetking certification is reasonably well accepted in the industry (atleast in the middle and low tier companies) and empowers a lot of pple to get decent jobs without having formally completed their graduation.

    but yes at the end of the day, we want to produce the best talent, be it in finance or IT or anywhere else. Certification courses are equipped to fill that gap to some extent, provided the narrow-minded brains @ AICTE let them.

  11. I agree with your thesis that certification can make up for a subpar higher education system. But it puts a high burden on the system. A poor higher education system is a waste of resources if the student is going to largely ignore or tolerate it and focus on the certification instead.

    Business should actively support curriculum changes and better education. The 3 month entry level training at IT Services companies, for example, is a huge cost to them. As is the recruitment test. A well targeted undergrad computer science curriculum, with good teaching and grades that have integrity, can take away the need for the entrance test and most of the training.

  12. Interesting post.

    But leaves the impression that "good" or "serious" or "quality" (finance, say) education can be unambiguously defined, and verified.

    How many UChicago MBA's (say; or those from other "serious" finance schools) can get throught the CFA exams without intense study, and on their first attempt?

    Why would a Goldman or a Morgan Stanley "train" MBAs from places like, say, Wharton? Or even a generalist like McKinsey?

    Yes, what passes for education in India is more or less a serious joke - and IMHO that is due in equal parts to (the usual bugbear) policy, beaureaucracy, etc, and the business sector. I.e. those in the "business of education".

    Markets don't necessarily always work, you know. Even when they are unrestricted by policymakers/regulators. Especially when it comes to production of goods whose quality is difficult to verify. Surely, Ajay, you have heard of (inefficient) signalling & Michael Spence.

    I'm not championing more of Delhi-style controls. But lets not pretend that Mumbaikars left to themselves, acting in their own interests, will be led by invisible hands to ALWAYS do better.

    Both "mechanisms" are useful - expecially in the production of public goods (and surely, there is something of that in "human capital") - but each has its major problems.

    And, no, I don't have any novel "constructive" suggestion on how to improve the lot of education (not just in India; but the world over).

    I also do think your basic point on the role of certifications is very relevant and useful. I just think some added perspective is needed.

  13. Ajay did you have time to go through CFA body of knowledge. I feel more and more of CFA charterholders in India will lend support to whatever you advocate so intensely like second generation reforms, giving market mechanism full avenue to work, reducing the role of Babus in financial matters, full convertibility of INR etc. To my mind, FRM as supplementary certification to CFA will work wonders.

    Aftab Alam

  14. My 2 paisa on FRM vs. CFA. I was going through same dilemma of CFA vs. FRM when i was doing my MBA. when i compared the course content of CFA-L1, it was very basic stuff covered in the finance subjects of my MBA. There was some overlap in content of CFA L2 and FRM. In fact, real value addition in terms of knowledge of finance through CFA happens only after you clear L2 but FRM provides a good flavor of financial concepts in 1st go itself. Plus FRM can be done for 20k while a CFA-l2 would cost you 70k. I am glad that I chose to give FRM over CFA becuase it gave me a right perspective of things to expect in this field.


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