India loses the charm of cheap labour

Discussion in 'Economy & Infrastructure' started by Blackwater, Jul 8, 2011.

  1. Blackwater

    Blackwater Veteran Member Veteran Member

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    The recent move by UK- based telecom outsourcer New Call Telecom to move its call centre from Mumbai to the UK is another sign of India's advantage of cheap labour losing its allure.

    New Call Telecom, which started the call centre in Mumbai three years ago, said that it chose to shift base to Lancashire as it feels that labour is cheaper in that country than in India. The shift will create around 25 jobs in the UK with the figure rising to about 100 in a couple of years.

    The move by New Call Telecom, which provides broadband and telecom services, is not the first such. Two years ago, British Telecom shifted 2,000 call centre jobs from India back to the UK. This is a far cry from the days when companies from countries such as the UK and the US outsourced jobs to offshore locations in India as they had to pay staff less here. However, with salaries in India rising fast, some companies are finding it difficult to maintain profit margins.

    Salaries in India Inc are set to rise by 12.9 per cent on average in 2011, according to a report by global human resource firm Aon Hewitt.

    "Inflationary pressures and high attrition rates are major challenges for the Indian outsourcing industry. Indian companies are responding to these by starting their operations in Tier- II and Tier- III locations and by introducing employee engagement practices," said P. Vijayakumar of the Center for Social and Organisational Leadership ( CSOL) at the Tata Institute of Social Sciences ( TISS).

    "The cost advantage depends basically on the effect of exchange rates and whether we are in a position to provide the skilled personnel needed by the industry," explained Vijayakumar.

    The cost of renting space for business has also increased to the extent that it is now as costly in India as in the UK or some other nations, according to media reports.

    Nigel Eastwood, New Call's chief executive officer ( CEO) told Daily Mail that, "Salaries in India aren't that cheap any more. Add to that the costs of us flying out there, hotels and software, and the costs are at an absolute parity." However, Amit Nivsarkar, vicepresident, Nasscom, said, "This is not any general trend that we have seen. The company policies to relocate may be behind such instances. Salaries at the entry- level are not issues in such cases as they haven't increased for the past three years." It is, however, not only firms from the UK and the US but also Indian IT companies that are hiring people in other countries in search of cheap workforce.


    India loses the charm of cheap labour - Yahoo! India Finance
     
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  3. Blackwater

    Blackwater Veteran Member Veteran Member

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    It's true India is not cheap as it used to be. I still remember when i go to India for holidays 10 yrs back. I used to buy cloths , shoes and stitched coat- pant(suit). Now I feel all these stuff is cheaper in Europe than in India. Even price of 4 star hotel is cheaper in Europe than in India
     
  4. nrj

    nrj Stars and Ambassadors Stars and Ambassadors

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    Ofcourse not everyone can cope up with average salary hike of +13% which is common in India. An Indian employee's quality of life only gets better hence its requires added benefits to keep him/her on the hook.
     
  5. nrj

    nrj Stars and Ambassadors Stars and Ambassadors

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  6. Energon

    Energon DFI stars Stars and Ambassadors

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    Given the economic ground realities India is technically and should remain a cheap labor bonanza for decades to come. However the problem of rising income and inflation isn't occurring in a vacuum, but rather it is largely a byproduct of the inability of the public sector to keep up with the rate of growth. The sheer inconvenience and wastage caused by derelict or non existent infrastructure is driving costs up and exciting inflation rates. Were there to be an abundance of roads, rail, internet connectivity, and education infrastructure enabling the population to pursue it's true potential the comparative cost advantage could be exploited to far greater effect.
     
  7. Tshering22

    Tshering22 Sikkimese Saber Senior Member

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    The money is only rising for corrupt and jugaad people in the top. The working middle class and new entrants are still trampled with meagre salaries while working for these types of companies. The reason why there's inflation is because the b@[email protected] in the government have taken so much black money from Indian economy, causing the costs to balloon affecting the actual circulation pattern.
     

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