In India, the US technology industry’s demand for offshore services is apparently beginning to drive up pay rates raising questions about the long term benefits of outsourcing work to the country. From the United States, growing demand for offshore services in India is raising the cost of labor causing US firms to begin eyeing China, Romania and other options. Even though the companies turn to other countries for outsourcing, India would by no means be in dire straits. The India’s offshoring business is more advanced than those of other countries and has unique benefits. Most of the executives of Indian companies also believe that the political changes will help their industry to start developing technologies of its own.
India’s Information Technology workers reported that the double-digit salary growth in 2003 while pay for the similar work within US borders has been relatively stagnant if the narrowing wage gap and other unforeseen factors are leading at least some of the American companies to reassess the cost savings to be had by sending work offshore. About the benefits the expectations are becoming realistic. This is all according to the report by the DiamondCluster International, a Chicago-based consulting firm which is recently released a survey of more than 180 companies involved in the offshore outsourcing. Many of the buyers in the previous study expected gains in efficiency in the range of 50 percent. Nowadays, those of the expectations have declined to 10 to 20 percent.
Last year, India’s wage inflation which approached an estimated 14 percent is a natural by product of a classic supply and demand scenario. However, the projections for outsourcing remain highly speculative, Forrester Research has estimated that 3.3 million American jobs will be moved to other countries by 2015. Although as far back as a year ago, India technology trade association Nasscom or the National Association of Software and Services Companies was already concerned that the India would fall short of demand for the workers by as many as 235,000 professionals. India quickly became the outsourcing nation of choice for US companies years ago because of its abundance of engineers, large English population and historical ties to Western countries as well as its relatively low labor costs.
The India reported gains of 12.8 percent and 13.7 percent for the positions in categories labeled, Information Technology solution provider and software development. India’s highest increases were reported in Chennai by region at an average of 13.5 percent followed by Bangalore with 12.5 percent and Kolkata with 11.5 percent. The study predicts that the average wages will rise again as much as 13.4 percent. In choosing China, the rise in India’s salaries could prompt more US companies to consider other parts of the world though it is too early to predict any sort of bubble on the horizon where the wages are far lower.
The China’s universities like those in India, award more bachelors degrees in Engineering than their counterparts in the United States. Chinas wage growth rate for the technology jobs was about half as much as India. The Eastern Europe may also become more attractive as an offshoring center. A research report estimated that a recent graduate of a specialist university in Romania could be hired for $6,500 a year in software development.
REFERENCE:
http://news.cnet.com/2100-1022_3-5180589.html
