U.S. companies outsource to India primarily to save money. But tech wages on the subcontinent are rising at about 15% per year. Many U.S. programmers welcome this news--as Indian salaries rise, it's less likely that their jobs will be offshored. Or so they think. But a conversation I had this morning with the CEO of one of India's fastest-growing outsourcers reveals why jobs sent to India aren't coming back anytime soon.
Over scrambled eggs, coffee, and croissants at Brown's, a posh hotel in London's tony Mayfair district, Lakshmi Narayanan was explaining why he's confident India's wage inflation won't undercut its position as the outsourcing destination of choice for U.S. businesses. "It has almost no impact on the customer," says Narayanan, who is the top man at Cognizant Technology Solutions.
Like many Indian outsourcers, Cognizant is growing fast. Its revenues in the most recent quarter jumped 57%, and it's set to join Wipro, Infosys, TCS, and Satyam in India's billion-dollar sales club. As a result, Cognizant is hiring aggressively--it increased head count 49% last year and now has more than 28,000 employees.
India's other big outsourcers are hiring at a similar clip, as are Western firms like IBM, EDS, and Accenture as they look to gain a bigger foothold in the country. Hence, 15% annual wage inflation. But this needs some perspective, says Narayanan.
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