Rising Salaries Threaten Indian IT
Soaring salaries and poor quality of manpower are prompting foreign firms to shut their outsourcing operations in India although there is no cause for alarm yet, officials and analysts say.
Jun 27, 2006
U.S. based Apple Computer and software maker Pervasive have been joined by Powergen, a British subsidiary of German energy supplier E.ON, in announcing their exit from Bangalore, the epicenter of Indian IT.
Stating that the potential cost savings of an offshore development operation can be mathematically compelling, John Farr, president and chief executive officer of Pervasive Software made clear that he found that the complexity of managing such an operation and the increasing costs of labor, employee turnover, training and facilities in such a hot market as Bangalore made it challenging to realize those savings.
The National Association for Software and Service Companies (NASSCOM), said salaries of freshers had shot up between 11 percent and 15 percent in the past few years while wages for senior managerial positions had risen by a whopping 30 percent.
Analysts added that labor arbitrage for India existed only at the entry-level where engineers earned about $9,000 a year, about one-seventh of the wages being paid their counterparts in the U.S.
Stating that the potential cost savings of an offshore development operation can be mathematically compelling, John Farr, president and chief executive officer of Pervasive Software made clear that he found that the complexity of managing such an operation and the increasing costs of labor, employee turnover, training and facilities in such a hot market as Bangalore made it challenging to realize those savings.
The National Association for Software and Service Companies (NASSCOM), said salaries of freshers had shot up between 11 percent and 15 percent in the past few years while wages for senior managerial positions had risen by a whopping 30 percent.
Analysts added that labor arbitrage for India existed only at the entry-level where engineers earned about $9,000 a year, about one-seventh of the wages being paid their counterparts in the U.S.