The Indian labor arbitrage opportunity is shrinking fast
A friend who grew up in Pasadena alerted me to this AP article about a guy who runs a local news Website there. He has apparently decided to outsource reporting to India:
James Macpherson, editor and publisher of the two-year-old Web site pasadenanow.com, acknowledged it sounds strange to have journalists in India cover news in this wealthy city just outside Los Angeles.
But he said it can be done from afar now that weekly Pasadena City Council meetings can be watched over the Internet. And he said the idea makes business sense because of India's lower labor costs.
How much lower? Well, the two journalists Macpherson hired after putting up an ad on the Bangalore craigslist will cost him $20,800 a year for the pair. That's cheaper than entry-level journalists would go for here in the U.S., but not that much cheaper. According to the annual survey of journalism and mass communication graduates by the University of Georgia's Grady College of Journalism and Mass Communication, entry-level jobs at daily newspapers paid a median salary of $28,000 in 2005; at weekly papers it was $24,980.
When I was last in Bangalore, in 2003, I seem to remember that Indian call-center and IT workers were making about one-tenth what their American peers did. Now, just four years later, in journalism at least, we appear to be up to one-third (one should add a few thousand dollars to those American salaries for health care and Social Security costs).
That's a pretty dramatic change, and it indicates that the ranks of well-educated, perfect-English-speaking Indians are not limitless. Yes, there are a billion people in India. But the overwhelming majority of them are not prepared to cover Pasadena City Council meetings over the Internet (which is kind of a joke in itself, but that's another story), and those who can are able to charge ever more for their valuable services. It's still less than similarly qualified Americans make, and smart Indians willing to work for less will continue to put downward pressure on wages in certain occupations here. But their salaries are no longer on another planet, and that's a significant development.
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1
Salaries are definitely rising, and the amount Macpherson paid for the Indian reporters raised some eyebrows since they're not even on the same continent.
We found this case fascinating because we're local bloggers covering Pasadena. We have a great conversation going after our comments yesterday (thanks to links from Hit & Run and LA Observed). We'd love to hear your take and give you our Pasadena perspective on this.
http://foothillcities.blogspot.com/2007/05/pasadenanow-outsources-local-news.html
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2
I worked in software product sales in India from 2001-2002. I had an engineering bachelor's and an MBA. I used to earn 13,000 USD per annum (bonuses not included) which was just about the average for a rookie MBA. As of now that figure has just about doubled and a rookie MBA in software sales can hope to get anything ranging from 20-30,000 USD per annum. Yes, salaries are rising but not to an equal extent across all jobs.
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3
I started a startup to commpete with Tivo.
I listed jobs on craigslist.org with no salary.
The engineers that built the prototype were from India (software development) and Thailand (hardware) . If and when my startup gets funding not only with the software be done in India but the hardware development too. And that is a big change.http://siliconvalleystartupjournal.blogspot.com/
My second startup though is to completely
circumvent the Indian software factories
in India and cut costs on developing software
itself with the creation of the algorithm engine
that will utlimately be able to generate more than 1 billion algorithms per second on a supercomputer.Blake Southwood
P.S. Two of my past jobs were outsourced to India, (web developer at Charles Schwab and before that customer service rep at Franklin Templeton)
It's pay back time.
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4
I think societies exist to support its citizens. Just think of scenario where it is the law for enterprises to hire and manufacture evrything they sell in the society and the country, in that society and the country.
Sure, it would cost more to build but it would be similar cost to all companies, leading to same competetive pressures.
The citizens would have to pay more as there is extra cost to produce the goods and services, but their salaries would be more stable and possibly higher.
Globalization, with a mix of developed and undeveloped countries has no benefit for the developed countries. It is like osmosis of resources and talent to undeveloped areas of the world to the detriment of developed societies.
Another thing, having a law so that companies build in the local country what they sell it fully 100% capitalism. Only, now they would have compete at equal footing, with common laws.
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