Several multinational companies that outsource technology development work to India are reworking their budgets, The Economic Times reports. That’s because a sharp rise in tech salaries here has diluted projected cost reductions, making the proposition less attractive.
Some techies with 10 years’ experience are earning ₹50-60 lakh, or $70,000-85,000, per year. Vinu Nair, the managing partner at recruitment firm Antal India, says most MNCs set up captive centers in India for cost benefits and such salaries make the “sector uncompetitive from an offshoring perspective”.
While India remains a preferred destination, MNCs are looking to reduce their over-reliance on the country with teams in other technology hubs. Poland, Ukraine, Vietnam, and the Philippines have emerged as popular secondary locations, according to Vikram Ahuja, co-founder of staffing firm Talent500.
To be sure, there’s still a wide gulf in salaries: A senior engineer in India could be making over ₹70 lakh (about $100K) annually, compared to the $200K that companies need to fork out in the US. But for a senior engineer in India to be effective, you would need a manager and some junior engineers to actually do the job, according to Ranjit John, founder of San Jose-based cloud data platform provider Hawkai Data. “The costs just shoot up,” he says.
Part of the reason for the rise in tech salaries is that Indian engineers no longer do just application maintenance. Hardcore software product development, including R&D, is happening here and the country has transformed from being a low-cost software services center to a “cost-effective, idea-to-implementation technology hub,” according to Sanju Ballurkar, President at Manpower Group arm Experis IT.
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