India's big four services giants bemoan rising labor costs India's big four outsourcers are worried about rising labor costs and their impact on profits, according to their most recent quarterly financial statements. TCS, Wipro, Infosys and HCL have all filed quarterly results in recent days, and all reported healthy finances – but they've also warned of future challenges. Infosys …
Those pesky workers want to live comfortable life and they don't understand the pain of being short $5m to buy that dream private island your mistress found on the internet for sale.
Would it make a difference if the workers had to skip meals every other day? Do they even need a home? They could live in the office it's free to them!
I mean all they do is write code. One might think that they would have finished by now?
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A business model that has no concept of quality, only the wringing of the highest price contracts by snake-oil salesmen at one end and the sourcing of the cheapest possible labour at the other. The continued success of a 20,000+ headcount company being held together by string, duct tape and those few dozen genuinely competent people who haven't jumped ship yet.
If these companies were in any way efficient in the way they operate, they wouldn't need cheap labour. Maybe 1 employee being paid 40k can perform better than 4 employees being paid 10k each.
Play them a tune on the world's smallest violin
I don't know how wide this phenomena is, but I have seen in my little corner of the world a lot of Indian emigrants wanting the full financial benefit on offer in Europe. So, from my perspective, the older more experienced Indian techies are leaving for greener pastures and thus the quality per <insert currency here> is still relatively low for those technical jobs outsourced to India. And now it seems the Indian techies themselves are demanding more so this Indian outsourcing house of cards is really about to come crashing down. So where to next? Africa?
BTW: I work with some of the Indian emigrants and they are really good. I think it's just fair that they also finally get paid a decent salary. And there is still a huge shortage of experienced techies, so from my perspective there is no immediate risk for local EU jobs - but perhaps there is a longer term risk?
Agree with you there. My country of origin is a minor player in outsourcing, whose major asset is being located in Europe rather than half way around the world. Eventually I realised that there were layers and layers of different companies, each with their own bullshitting managers and salesmen, between myself and the ultimate client, and they each were taking their cut, so I resolved to cut out the middlemen. and moved first to UK then to mainland Europe.
My current income is about 10X what my starting salary in my native country was. Would be more if exchange-rate adjusted, but also would be less if inflation-adjusted but 10X is in the right ballpark. If I had stayed there, I would right now be making at most 3X my starting salary, and meantime the layers of intermediaries would still be creaming the bulk of what the client is paying.
While I have no claim on being a guru of any sort, I am competent at what I do, and have both the technical experience and client-facing skills that have helped me prosper. So I have nothing but encouragement for competent IT workers who wish to make themselves a fair living in the US or Europe rather than stay home and be ripped off by marketing bullshitters and then getting the blame for low quality results.
It's always amazed me that companies want to hire clever, talented people , but don't want to pay them the wage for a clever, talented person.
In 2003 I was working on a contract involving relocation to the Czech Republic, and we had a very capable Czech programmer come to the UK to help us.
We were talking about contract rates one day and he went very quiet, then said "with that kind of money I could work for one year, and then go home and buy my village" lol
Needless to say he didn't stay with us that long but moved on to better things.
It's the classic board room fairy tale that somewhere on the planet there are talented IT staff who work for barely anything; maybe true a while ago but nowadays with the maturation of the internet and cheap connectivity everyone knows what they are worth and the low payers either have people who are unemployable, or those just starting out who need a name and experience on their CV, but they won't hang around for long.
Infosys had it cushy for a long time.
They exploited labor in the US in the name of giving its workers "an opportunity to get onsite experience" - and at the first sign of a recession in 2008 enforced the "zero onsite unbilled" rule - sending home staff in droves - one extreme case I have personal knowledge involved someone whose wife was 8 months pregnant and was asked to return to India against his wife's Gynaecologist's advise.
Now, when Infosys is NOT the most sought after organization for jobs and when employees are calling the shots instead of managers - the shoe is in the other foot.
OMATs (Operating Margins After Tax) used to be as high as 32% - Infosys refused projects whose OMAT was less than 22%.
Lawsuits to make Infosys pay fines for unpaid Overtime work - tightened the belt.
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