Salary Wars Push Up Earnings in India

India may lose its edge as a cheap IT outsourcing destination, if recent trends toward wage increases continue. A recent survey by Kelly Services has found that salaries in India have risen by nearly 14% over the past year, and by nearly 18% in the information technology industry. The reason: intense competition for talent among employers in rapidly growing industries.

Even though Indian wages remain a bargain by Western standards, outsourcers may be tempted to overlook India for cheaper (and perhaps riskier) alternatives. If this happens, Indian firms will need to differentiate themselves using other criteria, such as quality, stability and innovation. One must suspect that wage inflation will also reach other outsourcing destinations such as Russia, where workers who have helped build lucrative industries will seek better opportunities and a bigger piece of the pie.

Source: The Herman Group