India's software companies plan to add tens of thousands of new jobs this year as the information technology sector continues to boom. But as Anjana Pasricha reports from New Delhi, there are concerns that the country may be running out of skilled workers.

India's information technology companies added an estimated 75,000 jobs last year to handle hundreds of new clients.

But as Western companies continue to shift work to lower-cost India, that is not enough to cope with the amount of new business. So software companies are on the lookout for another 100,000 workers.

It is a task easier planned than executed. The exploding demand in the I.T. sector has created a challenge few anticipated in a country famed for its low-cost skilled workers: lack of competent engineers and technical personnel.

Partha Iyengar, research director at the Gartner India consultancy group, says many recent graduates do not have the skills to handle jobs at the top companies.

"Even though numbers are being bandied in terms of how many English-speaking graduates India produces, one of the key issues that we are coming up against now is the fact that there is actually a small percentage of these graduates that are actually employable," Iyengar says.  "As you are faced with a shrinking employable pool, shrinking because of increasing demand, what companies have to do is relax their recruiting criterion. What they are then faced with is having to recruit a much lower quality of resource."

Companies say only about one-quarter of the 400,000 new engineers graduating from Indian colleges meet the criteria of top companies. Some recruiters complain that the training is not good enough at many private schools.

The big I.T. companies are devising ways to avoid personnel shortages. Companies that once only recruited from top colleges are hitting the road to smaller and lesser-known institutions. Others, like Infosys, have opened their own training centers to hone the skills of new graduates. Companies are also looking at ways to upgrade engineering colleges.

An I.T. industry group, the National Association of Software Services Companies, estimates a potential shortfall of half a million technology professionals by 2010.

That is not surprising considering the explosive growth in the sector. Results released last month show that net profits for the country's five top I.T. companies, such as Infosys and Tata Consultancy, grew 47 per cent in the fiscal year that ended in March.