Wednesday, January 02, 2008

Is Bangalore no longer a cost-saving location?

This article is interesting, suggesting that Bangalore's cost differential is no longer that attractive:

Munjal Shah, the CEO of Riya points out in his blog that for some programmers, the salary rapidly rose to 55% of US salaries. He writes: “Bangalore wages have just been growing like crazy. To give you an example, there is an employee of ours who took the first 5 years of his career to get from 1% to 10% of his equivalent US counterpart. He then jumped from 10% to 20% of his US counterpart in the next 1 year. During his time with us (less than 2 years) he jumped to 55% of the US wage.

In the next few months we would have had to move him to 75% just to ‘keep him at market.’” Once the salary rises to 75% of US salaries, the overhead cost differences between India and the US would overwhelm the financial viability.

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