I came across an article in the Economic Times a couple of months back. It was about the fact that India was paying well but losing out on the essential cost advantage.

         Salaries across corporate India are on an upswing. Therfore was it really a reason to celebrate? If you would think insightfully, I really dont think so. A study conducted by Hewitt Associates have predicted that India will be experiencing one of the sharpest salary hikes in the world next year. An Assocham survey of Universities said the starting salaries for new recruits have risen four-fold between 2000-2004. A survey of IT professionals revealed that the annual salary gap between equivalent employees working in India & Singapore had narrowed down to around $10,000.  If that’s not food for thought then sample this: while Indian salaries are still far lower than western salaries, cost arbritrage will disappear much before parity is achieved on the salary front. For instance, operating in India entails several hidden costs like poor or at the best “developing” infrastructure & regulatory delays. To add to that urban India is gradually becoming expensive with real estate prices shooting through the roof & hotel rooms being among the most expensive in the world.

  Are circumstances then leading to the typical “Hot Dog” scenario- where it bites the very hand that feeds it?

Advertisements