Wednesday, January 16, 2008

Rupee rise and the US-India salary gaps

Among all the queries that I get almost daily-from the aspiring returning Indians, the most popular is the very sensitive issue of salary.."what salary can I expect in India?'!!

It is a typical catch 22 situation- everyone admits that they dont expect the same dollar salary-and surely they would take a drop- but how much?? And then begins the 'cat n mouse' game!!

In the past, I have 'parrot'ted the concept of PPP-and how a dollar's value isnt the conversion rate-but more like 9-10 times the rupee- since thats the value it can buy! One is also aware of the media hype of the 'premier school placement offers' that touch obscene proportions-and ofcourse, everyone has a pal or relation-who had recently made a move to India- and got a bomb!!

Well, I guess the debate continues- and I do hope the white paper compiled by the leading search firm Manpower does give some of us some pointers to mull over!

While the article does give some home truths, like :

"1. the robust local currency is also narrowing the gap in salaries of software professionals in the United States and India

2. the companies taking other remedial measures to increase productivity and improve efficiency in their operations instead of resorting to cost cutting around people"

it quotes a few figures -comparing how the salaries have eveolved during the years 2006 to 2008(projected).

However, one really can't draw too much from the article, and am hoping we can see more about the survey in the public domain soon.

I have culled out some of the numbers given in the article, and tried to reconstruct the missing figures to help us analyse it a little better: --

-Typically, at staff levels, where the numbers are high, it is indeed a cost arbitrage scenario-when the salaries in India are typically less than one-fifth the cost of an employee in the US.

-As the hiring gets to the middle and senior management, there is indeed a premium on the skills and international experience, for the salary levels are almost 40% and above. Which is perhaps where most the of the returning Indians are being hired.

-However, the caveat is that while the salaries in US have been more or less stagnant for the last 2 years, the middle management salaries in India seem to have gone up by almost 70% from 2006 to 2008!! How much higher will it go-is anybody's guess!

Ofcourse surveys do tend to generalise...and this is restricted to the software industry. I can't resist but ask -is the party for returning Indians in the IT sector beginning to come to an end??


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Anonymous said...

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