Offshore pay increases won’t raise outsourcing costs

Offshore wage gains won’t raise the cost of IT work heading to India. So claims Marc Hebert, executive vice president of marketing at Sierra Atlantic Inc., an offshore outsourcer in Fremont, Calif.

Despite annual wage increases of 15 per cent to 20 per cent for IT staffers in India, the cost of technology operations there won’t edge upward, Hebert argues. He says that those pay increases are being compensated for by better productivity from India-based IT workers, with the subcontinent’s improved technology infrastructure contributing to the productivity boost.

Hebert adds that India’s universities today produce four engineers for every one graduating from a U.S. school — a ratio that he predicts will reach 10:1 by 2015. The prevalence of graduates in India means that Sierra Atlantic can hire well-trained entry-level programmers and IT administrators, which helps keep its costs down, Hebert says.

When it comes to outsourcing, Canadians are doing a good job, according to industry analysts.

After researching Canadian IT outsourcing attitudes among businesses here, an IDC analyst learned that corporations in this country are pretty good at devising sustainable contracts with service providers. Read more

To keep up with demand, Sierra Atlantic added 400 jobs last year, increasing its total workforce to about 900 employees. About 50 of those new jobs were in the U.S.

Hebert claims that during the last presidential election, the opposition to offshoring voiced by many Democrats backfired and gave the practice some “good PR.” Similarly, he suggests that television commentator Lou Dobbs, who regularly criticizes offshoring on his show, “does more to help the industry than anybody.”

The offshore phenomenon is spreading, Hebert says, noting that some companies in Canada — which itself is considered a “nearshore” alternative for U.S. businesses — have begun moving IT jobs to India through Sierra Atlantic.

Related links:

Australian banks look to India to cut costs

India outsourcing firms eye employee screening

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