To be a competitive employer in Bangalore, India, in 2008, you need to offer a salary that is around 55%-75% of USA salaries. See India Grows Up. This is happening all across the IT sector outsourced to India.
When companies began outsourcing in the late 1990’s, the cost differential was incontestable. You could hire ten highly-qualified engineers for the cost of one engineer in the USA. On any balance sheet, moving certain operations to India made perfect sense. I’d like to offer my perspective on what this wage inflation in India means for global companies like UltraMegaCorp.
There are costs of doing business across the globe. These include meetings at weird hours, employees swinging shifts around to match up more of their co-workers, being tired or late on a regular basis, a time-gap and slowdown in development due to not having engineers local to each other, and communication barriers of language, culture, and expectations. This last bit is critical: what I say and what I mean are usually two different things. English has evolved as the technical language of choice among co-workers, but the huge variety of accents means that written English is the de-facto tech language. When you need to relay time-critical information, often a quick back-and-forth dialog can take the place of a long stream of electronic mail.
I’ll be the first to admit that many of my Indian counterparts seem just as eager and knowledgeable in my field as I am. They are motivated, helpful, communicative, and work really hard. I have been regularly impressed by the ability of some of my Indian co-workers to dive in and come out with a brilliant solution to a complex problem without needing much, if any, hand-holding by more experienced engineers State-side.
Then, just like in the USA, there are the four out of five who aren’t all that. Some people suck at the job. Some are newbies who can’t get a handle on their duties. Some have a bad attitude toward the work The difference is that in the USA, those people get their asses fired. Then they go to work somewhere that the Peter Principle isn’t so obviously working against them.
My complaint today is that lately UltraMegaCorp has been simply relegating those people to my team. I’m not happy having fourteen useless engineers and only three guys I can depend on working with me.
IMHO, the days of widespread wage inflation in Bangalore are drawing to a close. The city has turned into a new Silicon Valley, paying wages which, given US Dollar and Indian Rupee exchange rates, are close enough to those paid in California that it doesn’t make a lot of sense to outsource there anymore. You can pay less for engineers in Middle America.
In the pursuit of the Almighty Dollar, though, US companies aren’t giving up hope. One easy target for outsourcing is saturated, but a wealth of engineering expertise exists in third-tier markets like China and Eastern Europe, as well as additional non-Bangalore targets in India with a wealth of untapped talent.
I don’t see this as a bad thing, really. I think it’s a great thing. Although I don’t feel as secure in my State-side job, this natural progression of outsourcing driving up local wages and lifestyles in second-world countries up to first-world Western standards will have the inevitable result of improving the overall human condition. I’m a Humanist; I’m in favor of helping Humanity, and think this is a logical, needs-driven, capitalist method of bringing it about.
On the other hand, I think that our short-sighted focus on reducing immigration in the USA is a policy that is going to kill our competitiveness in the long run. We want the best and the brightest of the world to want to come here; we want to expand the H-1B program and other incentives to encourage highly intelligent, motivated, and educated people from around the world to see the USA as the place to go for a great job in a great environment. Yet we’ve reduced our H1B placements to a quarter of their levels in 2000, and have introduced drastic measures to limit legal and illegal immigration. Our entire stock of H1B visas went in less than 24 hours this year, almost every one snapped up by placement companies who rate candidates based upon how much the candidate could pay rather than their merit as an engineer.
Where am I going with all this?
In the late 1990s, the US was inundated with tech workers. Between tech colleges cranking out applicants looking for a quick buck in the tech sector and a quarter of a million people a year immigrating to the USA under the H1B program, we had a glut of technology workers, and a market willing to scoop them up the moment they got off the airplane or walked off the stage at graduation. Those days ended in the Dot-Com-Bubble-Bust of the early 2000’s, and although the winnowing of the field was painful — as my string of failed dot-com employers attest — today, many of those remaining in IT are the dedicated ones who love the job and are pretty good it.
I’m frustrated with the current state of the tech sector in Bangalore. The rise in wages, and steadily increasing demand, has led to an overall decrease in quality and quantity of work. As in the US, there are a few stand-outs and superstars who make up for a lot of their co-workers, but the quality of system administrator right now is on-par with what I experienced in the late 1990s in the US: too many who are in it for the money, and not enough love for the job.
I love being a system administrator. I didn’t just fall into the job; I wanted to do this, this exact thing, for a living. Tuning, optimizing, deploying, strategizing, purchasing, getting bloody knuckles from wrestling sheet metal and carpal tunnel from writing systems automation scripts and technical documentation. This messy job isn’t for the physically or mentally weak, nor is it a bastion for failed programmers, but a haven for people who really want to get down to the metal and fix what other people break and are willing to get dirty doing it.
I’m a mechanic, but for computers rather than automobiles. And I am thankful every day that the market values my skills at a reasonable living wage.
Let the damn Bangalore Bubble burst already, and let’s get on with wrangling systems rather than fighting incompetent, unmotivated co-workers. I want to work with more of the competent, reliable types who are willing to ride out the bad times for the love of the job, and not the hordes of useless sysadmin wannabes who are only interested in their next 15% pay raise.