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Silicon Valley has helped power India's outsourcing boom by shifting technology jobs to that country. Three months ago, Munjal Shah reversed a bit of that shift.
Munjal Shah, who leads a California start-up called Riya Inc., had opened an office in India's technology capital of Bangalore in 2005, hiring about 20 skilled software developers. The lure was the wage level: just a quarter of what experienced Silicon Valley computer engineers make.
Then Indian salaries soared. Last year, Mr. Shah paid his engineers in India about half of Silicon Valley levels. By early this year, it was 75%. "Taking into account the time difference with India," he says, "we weren't saving any money by being there anymore." In April, Mr. Shah shut down the Bangalore office and offered half of its engineers a chance to move to San Mateo, Calif., with work visas."
The story lists a bunch of other companies making similar moves, including Kana Software, of Menlo Park, Calif., Teneros, of Mountain View, Calif., Apple, of Cupertino, Calif.
I think there's something unusual about Shah/Riya’s case; there is no way on earth engineers in India get paid about 75% of what their US counterparts make. I dare say the 25% figure is still the norm for almost every development hot-spot in India apart from maybe Bangalore where it might be higher.
The reason was - not enough value for the money he had to pay. Add some more and he would be able to get someone in his US team.
Value is obtained by learning how to hire efficiently and how to manage that team efficiently. Strategy and management makes all the difference between failure and success of an offshore team. Big vague words as they may seem, there are a few things for these that can be done quickly that can get this fixed 80%.
Munjal hypes up things. One cannot generalise about the whole market from the data gathered from a startup that cannot attract/manage employees at the right cost. Though this may be true for high-end engineers (PHds from Stanford/MIT) who may have returned to India, it is definitely not true that a normal programmer/software engineer is 75% of the US cost.
Well there's a war in WSJ and other media quoted this story. Anyways here’s the full article if you forgot to renew your WSJ subscription.
1 comment:
Man....I think 25% salary is too low an esitimate...But I do think yours is closer than his 75%...
I think it is around 40-45%
in the field of engineers with an experience of 4-6 years.
My datas are the salaries of my friends.And it strictly pertains to the piping engineering field in mechanical engineering.
7-8 lakhs in India +5 exp...
and the same...get traslated to 60K$ in US(for indian working in US.).so the salary is around 40% and this increases as the years of experience of the executive goes up.I am not speaking about a native working there.so it make sense to shut down the shop and work from there(almost zero attrition when compared to India.).
So offshoring indian professionals can very well be an alternative to offshoring work to india.
Anyway both are going to help india,the later being best for india.
"Strategy and management makes all the difference between failure and success of an offshore team."
"Strategy, management and technology(WEBEX, voicechat(not telephone) & office communicator) makes all the difference between failure and success of an offshore team"--I would put it like that.
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