Infosys chairman N R Narayana Murthy is one of businessmen that I admire most. When he says something, I always take it seriously as he is a man of substance. In the last few days, a lot has been said in the media about the salary hike of Indian IT workers. I have covered this topic in my two blogs too. Many people like me are worried about the matter that increasing salary would endanger the future of outsourcing in India. For, it is because of the down to earth salary level of Indian workers, US companies became interested to outsource their works to India. However, Murthy thinks that there is nothing to worry about the increase in salary of Indian workers. In an interview with PTI, he expressed this view. He gave two reasons for his opinion:
- Continuous devaluation of Indian Rupee against US dollar means that the effect of increasing salary in India is not that strongly felt in USA.
- Indian companies are becoming more matured and are delivering better service and adding more value. Thus, the US companies would not mind about the increasing salary as they are getting better service from Indian companies.
I stated in the beginning of this entry that I respect N R Narayana Murthy a lot and I agree with his two points too. However, I have just one thing to say. The rate of increase in salary is a bit higher than the rate of devaluation of Indian Rupee against US dollar. Secondly, DiamondCluster International in its “2006 Global IT Outsourcing Study” mentioned that many Indian companies are failing to live up to the expectation of US companies in terms of quality of service. Of course, there is no doubt that Mr. Murthy's own company, Infosys is doing great and it is getting the best talented workers in India. However, for smaller Indian companies, the picture is not so rosy. Getting skilled workers at a cheap salary is becoming more and more difficult for them. More than the salary hike, finding fresh skilled workers is becoming a major challenge for the Indian companies as the IT industry is on the point of getting oversaturated in India.
In the end, I agree with Mr. Murthy that salary hike is not a big problem yet for outsourcing industry but I feel that shortage of new skilled workers is going to be a major headache for India very soon.
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