Saturday, March 24, 2007

The Salary gap

Aha, finally a post that puts it in perspective. The salary gap is big, huge. From Steve Hamm.

There's so much talk about tech industry salary inflation in India. And there's no question that it's a problem--both for India's competitiveness with other low-cost countries and, day to day, for companies that are fighting it out on the ground for talent. But my checks with a handful of data sources suggest that the wage differential between the United States and India will remain substantial for a long time.

Survey data from PayScale, another online recruiting site, show software programer pay averaging $8,200 in the state of Karnataka, where Bangalore is located. In Tamil Nadu, where Chennai is fast becoming a tech hot spot, the average is $5,800.

If you do the math you see that the average US tech employee's pay increase was more than half the total pay of an Indian programer in Tamil Nadu. At that rate, it will be a couple of decades before Indian pay scales draw close to those in America.

Thats obvious is it not, but not if you read the headlines as Steve says, "Pay scales are rising at 15 to 20%". The base here is way way lower. And then, when companies spokespersons spout those numbers, what they really are saying is, "My margins are shrinking".

Well, then you got to keep moving up the value chain. Only cost arbitrage will get you nowhere, companies have to add value and look beyond heads in "software maintenance" and "support". Many of them are already doing that and that is where the moolah is.

4 comments:

vslog said...

Its not so much the average monthly salary of an employee in India, its the total cost of outsourcing. At $30/hr, it adds up to close to 60k/year which is frighteningly close to hiring a full time engineer in house.

Dhruva said...

@authour_of_blog / @SteveHamm : When you compare India & US wages, I guess you have taken into account that USA cost of living is much higher as compared to India. Hence, to me (indian techhie working at USA) IT wages in both countries seem genuinenly reasonable at the time, and also the maturity that industry as a whole is gaining substantiates the exponential growth to quit an extent.

@vslog: 30 $ per hour should come down to 9K / year and not 60 K !? ... 30 X 8 X 25 X 12 ........ 8 hours per day .... 25 days per month

shelly said...

another survey data is from the community service of salarybase.com

jicnacho said...

check this web:
fairsalaries.com allows employees to anonymously share information about their salaries and jobs.
Find out if your salary is fair.