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Costlier techies blunt IT edge

The average wages for programmers in India and China have grown from 20 to 40 per cent, reports Prerna K Mishra.

business Updated: Mar 17, 2007 01:56 IST
Prerna K Mishra

Somebody's income is somebody else's cost.

A day after Indian technology workers rejoiced at consultant Hewitt’s projections of a healthy pay increases in the fiscal year starting April, global management consulting firm AT Kearney has rung alarm bells for India as the preferred destination for call centre agents and software programmers.

The average wages for programmers, call centre representatives or similar positions in India, China, and the Philippines have grown anywhere from 20 to 40 per cent. This is rather high given that average wages for similar position in developed countries rose by only 5 to 10 per cent. In other words, the cost advantage that propelled India's information technology revolution is getting a little blunted.

Even though the AT Kearney Global Services Location Index still identifies India as the world’s leading offshore services location, it also has some early warnings that the Indian BPO (business process outsourcing) industry needs to heed.

Reflecting the growing number of countries competing to establish themselves as remote service locations, there are ten new entrants in this year’s index: the three Baltic States and Ukraine in Eastern Europe, Sri Lanka and Pakistan in South Asia, Uruguay in Latin America, and Morocco, Senegal, and Mauritius.

The survey has recorded a double-digit growth in university enrollment in countries like China, Brazil and Egypt, and the number of firms with quality endorsements like Carnegie Mellon’s CMMI certification and the ISO 27001 data-security certification almost doubled in several emerging markets.

And telecom costs in many emerging markets have dropped by 25 per cent or more, as competition and volumes in the industry increase, according to the location index.

India, closely followed by China, continues to lead the index by a wide margin, with declines in cost advantage offset by further improvements in talent supply and business environment.

Virtually every country in the index, even those that fell in the rankings, improved their absolute score in the last year – confirming that competition is intensifying, and simply maintaining current performance levels are no longer sufficient to attract and retain the world’s fast-growing remote services business.