- Wednesday, 10 February 2010
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India's IT outsourcers cut their rates
INDIAN IT OUTSOURCERS are aggressively slashing their prices in a bid to lure recession-hit foreign companies into shifting more projects offshore.
According to the Times of India, the big outsourcing firms are marking down their bills by 35 to 40 per cent.
Apparently it is now possible to hire an IT specialist in India for about $16 per hour, which analysts say is the lowest rate for human labour since Kunta Kinte was imported into the Southern US to pick cotton.
Siddhartha Pai, MD, at the India offices of TPI told the Times that such rates will continue at least until the first quarter next year.
Avinash Vashisth, chairman and CEO of Tholons, echoed that message by saying that, for large testing projects and other services of similar value, $16 to $20 per hour is now the prevaling rate.
This general rate decline across most of the Indian IT outsourcing sector is more than the 20 per cent cut that BT demanded from its outsourcers Infosys and Tech Mahindra earlier this year.
Even some high value efforts like SAP projects have faced pricing cuts of around 25 per cent.
With rates like these, it must be difficult for companies looking to cut IT costs to justify not sending projects offshore. µ
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According to XE.com, $16 is about £9.77 (going on the current exchange rate of 1.63728 USD for every £1.
Half of the IT jobs I have seen advertised locally in my area have been around the £7 to £8 mark and in one case it was something like £5.80 an hour (just over minimum wage). So it seems to me that these Indian IT bods are charging too much.
Rob
I saw the writing on the wall in 2002. I left tech for greener pastures.
If an IT professional gets 10EUR per hour, the company will pay about 15EUR (in Europe). If you add other costs (location, unproductive, personal, marketing..) you get 30-40EUR/hour. Now, consider that the productivity is 80-90% and that a company will pay for a project, only productive hours you have 50EUR/h. Add the company profit, and you end up with what an european company will charge for an hour.
in Macedonia, programmers for example are payed 5 US$/h.. or something like that... so i think that information about costs for IT personal in India isn't correct.
Just go to this AMD career website https://www.amd.apply2jobs.com/index.cfm?fuseaction=mExternal.searchJobs. But unfortunately, in the job posting is only available for AMD main operation offices in selected cities in the US and Canada.
Outsourcing price can not be taken lightly (blindly). There are two main aspects to get to the "true price". True price to the business and to the society as fertile soil on which that business grew initially. So, there are many details for the price to business, like lost productivity due to time zone, lack of communication, lack of knowledge, training, etc,.. Anyways most of best engineers move to the heart of Hi-tec wherever that is. As Mr. "sorin" pointed this price to business goes approx 1:5 and from my vast experience more around 1:6 (if you get $10/hour at the end it will cost you $60/hour)! For that price and mostly lower you can hire localy and be much better off.
Price to society is another factor in today's lack of democracy/republic (corporatocracy). This price is much higher in damages to society than the upper 1:6 loss. It consists of many "externalities" as today's economists call it, like trade deficit, lost future for new generations (our kids), deteriorating society (who in first place should be rewarded instead of punished).
Now consider other factors, like security, IP protection.
So, in the lack of rules/methods, in developed economies we have flood of short sighted and selfish managers, who care more for their own short interest (promotion, stock options, bonuses, etc) than to the true big picture. So, I would call any of them who do not do very DETAILED DUE DILIGENCE for each case to be IMORAL and IRRESPONSIBLE CRIMINALS to society from which they grew.
That much is crystal clear to me and many of people with brains and morale!
They are cutting their rates to match the quality of code they generate. They should cut their rates even more considering the cost to fix their junk code.
$16 BS - Maybe with the overhead and markup for CEO bonuses. Bet that the person on that phone gets less that $5 an hour. Maybe way less than that.