Is globalization starting to level the playing field? Perhaps in some
segments of some markets it is. Check out these few paragraphs from a
long piece in the Wall Street Journal -- Some
in Silicon Valley begin to sour on India: A few bring jobs back as pay
of top engineers in Bangalore Skyrockets
Several years on, the forces of globalization are starting to even
things out between the U.S. and India, in sophisticated technology
work. As more U.S. tech companies poured in, they soaked up the pool of
high-end engineers qualified to work at global companies, belying the
notion of an unlimited supply of top Indian engineering talent. In a
2005 study, McKinsey & Co. estimated that just a quarter of India's
computer engineers had the language proficiency, cultural fit and
practical skills to work at multinational companies.
The result is increasing competition
for the most skilled Indian computer engineers and a narrowing
U.S.-India gap in their compensation. India's software-and-service
association puts wage inflation in its industry at 10% to 15% a year.
Some tech executives say it's closer to 50%. In the U.S., wage
inflation in the software sector is under 3%, according to Moody's
Rafiq Dossani, a scholar at Stanford
University's Asia-Pacific Research Center who recently studied the
Indian market, found that while most Indian technology workers' wages
remain low -- an average $5,000 a year for a new engineer with little
experience -- the experienced engineers Silicon Valley companies covet
can now cost $60,000 to $100,000 a year. "For the top-level talent,
there's an equalization," he says.
That means that for a large swath of
Silicon Valley -- start-ups and midsize companies that do sophisticated
tech work -- India is no longer the premier outsourcing destination.
While such companies make up just a fraction of India's outsourcing
work, they had been an early catalyst for the growth of India's
information-technology business and helped the country attract other
outsourcing clients. Their rethinking of India raises red flags for the
So, the article seems to be articulating the position that maybe India
is not the best place to grab your cheap labor anymore because the
cost of top engineering talent is rising.
Oops. Sorry, Silicon Valley. A funny thing happened along the way of
globalization -- a new market was created and its beginning to assert
itself. Better look elsewhere for your outsourcing needs. And the
article points out that this is actually the case. Vietnam and the
Philippines are now hot for cheap tech labor.
Don't get me wrong. This article is a pretty fair piece. I'm only
criticizing mildly. But my perspective has changed
significantly, and I read stuff like this very differently now. Ok, so
wages of top engineers in Bangalore are rising, and as a result, some
tech firms in the Bay Area are looking elsewhere to save some cash.
Fine. That's part of globalization. But why is that considered a "red
flag" for India? Why can't it
simultaneously be considered a "green flag" demonstrating the growth
and increased value
of the top engineering talent in India
That's exactly how an American would view it had we been discussing
Silicon Valley. But I don't see that context expressed in this article.
It's all one way -- saving expenses by outsourcing in far away places
so one side benefits. But you can look at it another way. Since these
Indian engineers are worth more they must be putting out better stuff,
so what new innovations will they create in the future that will
transform India's economy and make it even more competitive? Isn't that
a perfectly reasonable perspective as well?