"One of the other guys" tells us that he was working in the U.S. for quite some time (under a work visa I'm sure) and has since returned to India. He says: "I can also see lot of my colleagues/friends are all returning, so now the talent pool in India is not necessarily the 'cheap lot', but…experienced professionals returning back home with the skills they learned outside."
"One of…" tells us that experienced programmers and technical architects in India now earn close to $3,000 a month.
He says: "Five years back this would have been more than the upper middle class income. But now with all the other industries, including [consumer goods] booming, this is the upper middle class income."
"One of…" adds: "Cost of living also has risen drastically." He disagrees with a statement he read that the cost of living is one tenth of the U.S. "Just like California, New York, Chicago are expensive cities," Mumbai and Bangalore are expensive by Indian standards, he says. "Your average monthly rent for a decent two-bedroom apartment might come to 600-700$ + per month now in Mumbai or Bangalore… Bangalore is where most of the IT jobs are coming by the way." (That's surprising, considering I remember back in the early '90s when you could find a $700 two-bedroom in San Francisco, if you weren't picky about the neighborhood.)
My report from India continues: "This has to do partly with all the industries booming in India. Five years back IT salaries where five or ten times the industry average. But now all the other industry segments are catching up. And these industries have grown because of domestic demand in India. Outsourcing revenues form only a tiny percent of India's Trillion dollar economy. The stock market ( SENSEX BSE ) has risen by over 7 times within the past 2 years."
He goes on, "Of course even with all these statistics there is a significant percentage of the population living under the poverty line. But the middle class is also growing and with everything else the cost of living."
I think the insight "One of…" shares with us from India is interesting for a couple of reasons. One, it shows that any U.S. company hoping to find dirt-cheap software coding in India will likely fail. Since there's no sign of a slowdown in India's economy, these salaries will only rise.
It also seems to underscore what numerous CIOs have told me, which is that they now offshore outsource to India not JUST because of cheaper costs (which they still get, but acknowledge are rising), but because India provides a very large pool of talent from which to draw--talent they can't always find in the U.S. If companies are now shelling out $36,000 for an IT pro, add to that the costs of managing an offshore relationship, and it may not be too far off the average U.S. IT salary. So why would they continue to outsource if it weren't for the talent they can't find here?
But that's where we hit the fork in the road, folks. Because many readers of InformationWeek, through their blog posts, are telling us that this isn't true. Even though the IT unemployment rate is about 2%, according to the U.S. Labor Dept., there's still clearly a lot of people out there who are fearful of losing their jobs or have lost their jobs to cheaper labor in India.
This is a very real concern throughout the IT workforce and it can't be ignored. It's in CIOs self-interest not to ignore this, either, since they have also told me that it's very important that they continue to recruit and develop good talent here in the U.S. If people leave IT in droves or discourage their children from entering it, their search for homegrown talent will intensify. There's a huge discrepancy here between management claims of not enough talent and the claims of U.S. talent saying they're not getting job offers because too much work is going offshore. What to think of that?