DKSuddeth
Senior Member
IT outsourcing link
IT companies, the building blocks of new India, are facing a conundrum. They are flying high and in their very success is lying the seeds of their problem. The culprits: Their own star performers, the IT pros whose constant job hopping is on the one hand leading to a constant attrition of trained people and on the other hand driving up the salaries.
It is not only attrition that is beefing up the salary bill. Increasing competition for workers, thanks to a rush by American companies to outsource work offshore, is mainly behind increasing IT salaries in India. This year, Infosys had to disburse $23-million worth bonus among its 10,000 employees!
But while higher salaries spell good time for the techie as well as the economy, it may have a different long-term effect. Outsourcing by US companies, which has mainly been responsible for the IT boom in India, may find Indian centres to costly and they may start looking for cheaper options.
The rise in salaries could prompt more US. companies to consider other parts of the world, where wages are far lower. Indeed, even some Indian companies have begun offshoring their own work to China.
By 2005, Tata Consultancy Services (TCS) plans to have 3,000 software engineers in China, or 15 per cent of their global work force! Adding to the cost escalation, is the high attrition rates being experienced by Indian companies. In fact, call centers can now expect to lose 15 to 20 per cent of throe work force every year, against single-digit losses in the late 1990's.
The attrition rates have been so high that BPO companies in India have often reached informal agreements no to poach employees from one another.
Others, like TCS, may outsource work offshore themselves, to China, Southeast Asia and Eastern Europe. India is still years ahead of countries like China in terms of its workers' facility with English, its telecommunications, the sophistication of its legal system and the stability of its political system.
I eagerly await the stories of 'benedict arnold corporation' remarks in India when it hits its peak. My day just got a bit better. :cof:
IT companies, the building blocks of new India, are facing a conundrum. They are flying high and in their very success is lying the seeds of their problem. The culprits: Their own star performers, the IT pros whose constant job hopping is on the one hand leading to a constant attrition of trained people and on the other hand driving up the salaries.
It is not only attrition that is beefing up the salary bill. Increasing competition for workers, thanks to a rush by American companies to outsource work offshore, is mainly behind increasing IT salaries in India. This year, Infosys had to disburse $23-million worth bonus among its 10,000 employees!
But while higher salaries spell good time for the techie as well as the economy, it may have a different long-term effect. Outsourcing by US companies, which has mainly been responsible for the IT boom in India, may find Indian centres to costly and they may start looking for cheaper options.
The rise in salaries could prompt more US. companies to consider other parts of the world, where wages are far lower. Indeed, even some Indian companies have begun offshoring their own work to China.
By 2005, Tata Consultancy Services (TCS) plans to have 3,000 software engineers in China, or 15 per cent of their global work force! Adding to the cost escalation, is the high attrition rates being experienced by Indian companies. In fact, call centers can now expect to lose 15 to 20 per cent of throe work force every year, against single-digit losses in the late 1990's.
The attrition rates have been so high that BPO companies in India have often reached informal agreements no to poach employees from one another.
Others, like TCS, may outsource work offshore themselves, to China, Southeast Asia and Eastern Europe. India is still years ahead of countries like China in terms of its workers' facility with English, its telecommunications, the sophistication of its legal system and the stability of its political system.
I eagerly await the stories of 'benedict arnold corporation' remarks in India when it hits its peak. My day just got a bit better. :cof:
