Posted on 06/01/2003 6:42:07 PM PDT by nwrep
File photo of staff walking in Infosys Technologies campus at Electronics City in Bangalore, January 20, 2003. Global firms such as IBM and Accenture are increasingly taking advantage of relatively low wages to hire software engineers in India, lifting the pressure on local firms already struggling with tighter margins. REUTERS/Pawel Kopczynski
The newly opened International Tech Park in Bangalore, India
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By Anshuman Daga
BANGALORE (Reuters) - Global firms such as IBM and Accenture are increasingly taking advantage of relatively low wages to hire software engineers in India, lifting the pressure on local software firms already struggling with tighter margins.
Headhunters and jobseekers say the draw of the big global name, their higher pay and employment promotion chances offshore are making it harder for the biggest home-grown firms like Infosys and Wipro to attract staff.
"An offer from a top notch foreign company is just too appealing. Besides the higher pay packages, there's always the thrill of being part of a global team," said 26-year-old Anurag Garg, a software engineer working at a small Indian firm.
Software engineers in India with about two years experience are being paid about 25,000 rupees a month, roughly one fifth of what their counterparts earn in the United States.
Foreign companies in India are offering nearly 30 percent higher salaries than their local rivals, head hunters say.
The weekly recruitment supplement in the leading "Times of India" daily is peppered with advertisements from global names like IBM, Hewlett Packard and Accenture, which are boosting local operations.
"What boom? What bust? Join the contrarian and zig not zag," says a job advertisement by Nasdaq-listed Cognizant Technology Solutions, which employs 4,500 engineers in India.
India's software services sector added 130,000 or nearly 25 percent to its workforce in the year to March, taking the sector to 650,000 and improving on 20 percent growth the previous year.
This is making it harder for local firms that have used their low cost bases to power their growth in the $68 billion global market for outsourcing of computing services like help-desks, software design and accounting back offices.
Increasing competition, weaker demand from investment-shy customers and higher wage costs have sliced into their margins.
MARGIN PRESSURE
Infosys, India's biggest listed software exporter, sent shock waves through the sector last month when it said its profit growth rate would drop by a third this year. Wipro, the second biggest player, also warned of sliding profit margins.
They also face the prospect of losing existing staff to global competitors as these very margin pressures force them to restrain pay increases -- creating a vicious circle.
"The combination of global brand names and higher pay packages is ensuring that candidates with at least two years experience are much more willing to switch jobs than earlier," said B.R. Sheaker, director at head hunter CRV Consultants.
Walk-in interviews are common at the gleaming offices of companies in Bangalore, India's "Silicon Valley," which houses about 1,000 technology firms.
Oracle aims to add about 1,500 people in India by December to its 2,500 staff, hiring people for software, product support, consulting and back-office work.
Consulting group Accenture plans to more than double its software and back-office staff in India to 2,500 in two years. IBM has about 5,000 people in India and is still expanding. Intel aims to double its staff by the end of 2004.
"We provide staff an opportunity to move in different lines of businessses and participate in developing global products," said S.M. Udupa, human resources director at Oracle India.
It would be one thing if what the outsourcing companies got was the productivity of 1 US worker for less than 5 Indian workers. I don't believe this to be the case. More likely, the outsourcing companies are getting the productivity they would get by hiring a US Software engineer at 1/5 the pay. So, its basically a wash.
This is very unlikely. 1/5 of a U.S engineer's pay in India is a lot of money. More over, I don't think there could be such a gross descrepancy in terms of efficiency between two similarly trained engineers.
In other words, they're about as competent as the folks who code WinBlows for MicroSquish.
LOL!
More PCs are sold in the United States than ever before - and more of those are logging on to the internet.
And of those, a huge portion is logging on using AOL.
Anyone called an AOL tech support rep lately?
You'll be talking to someone in India or Pakistan!
LOL!
MCSE = McDonald's frenchfry cook.
The poor saps pursuing this holy grail may as well invest their time and energy in developing New Coke.
The perception of India as a nation of a billion highly-trained software engineers willing to work for poverty wages is hilarious.
While a "globalized" work force is a natural and inevitable consequence of exponentially improving technology (and, notably, the Internet), these "innovators" are about to prove once again that you get no more than what you pay for.
Meanwhile, wages for techies in India are going to get a very sweet bump. Grats and peace out to my bruthahs and sistahs in Bangalore, yo!
Thought so!
Since I retired, I have turned down more jobs than I've ever looked for.
People can talk about how rough things are for IT pros these days, but the hard truth is this: if you know what you're doing, there's a good, well-paying job out there for you. All you need to do is be willing to find it, go forth unto the land to look for it (i.e. travel) or make it for yourself if you're not finding what you're looking for.
If you are the kind of person who throws up your hands when things get tough, then you have no business working with computers.
The only people who are really going to lose their jobs to outsourcing are the snake oil salesmen pushing it on unwitting and underinformed "upper management types".
Trust me, you don't want the kind of work these jokers are shopping out to the third world.
Basically, somone met indians here in the US and assumed the ones over there are just like them.
This is why I believe in individualism.
Funny you should mention that. Has anyone noticed what a pain in the X upper mgmt has become in the last few years? The only kind of work they know how to dish out lately is piecework. There's a trend of not actually connecting "business value" with "productivity" that's becoming appalling. It's especially noticable at outfits which make a point of being Microsoft-centric in the IT end of things.
It is a curious phenomenon whereby managers tirelessly profess to know virtually nothing about computers on the one hand, while insisting on personally making all important decisions regarding their company's computer infrastructure on the other.
It seems that every business school graduate sporting an MBA possesses this puzzling and somewhat paradoxical trait, which has proven to be a source of both great frustration and immense profit for me over the years. I think it has something to do with wanting to be "in the know" on where the money is going. With their guidance, it usually goes down the toilet.
This schizophrenic relationship with computers practiced by a shockingly high percentage of formally trained managers the world over tends to be an extraordinarily expensive indulgence. I know of no one in business who has not witnessed at least one major strategic disaster related to computers in their business, and most have witnessed several. These kinds of errors do not occur when experienced and competent computerists are calling the shots.
It usually takes a great deal of patient counseling to persuade insecure managers to Do the Right Thing and thereby save hundreds of thousands of dollars otherwise wasted on IT boo-boos.
But if you're good at it, you can make a killing.
Patience is difficult when you are spending a lot of time on the frustration end of the scale. Combatting the pernicious influence of the latest management fads has never been more difficult. Also the warm body outfits are pushing the section 1706 myths again. Especially the Indian ones with the visa drones.
Of course I know it's futile to rage against the cluelessness of management. I dream of finding a customer who really wants the right thing, gets it from me, and wins big with it...every great once in a while it's not a dream, excepting the part where you ask what would be good for the business and they give you a clueful answer the first time....
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