Wednesday, August 18, 2010

FT.com: Indian and American Call Center Wages Now Reaching Equilibrium

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Ahhh, watching global wage arbitrage at work is so fascinating.  In a few decades we'll be talking about the "global wage" for most jobs, as borders increasingly mean nothing.  It appears after years of Indians enjoying 10-20% wage inflation in business process outsourcing [Jan 28, 2008: India Facing a Shortage of.... Workers??], one of the lowest apples on the totem pole - call center operators - have now reached equilibrium in wages with Americans. Considering the cost of living differences between the 2 countries - that is nothing to celebrate for Americans.

Ironically, this is happening just as NBC is launching a sitcom on Indian call center outsourcing this fall (seriously) - maybe a "magazine cover indicator" of sorts.






Let us now rejoice as hopefully in the coming decade a flood of $8-$9 jobs returns to Cramerica!.    [Sep 4, 2009: Job Seekers Across America Willing to Take Substantial Pay Cuts]   Perhaps soon we will read of angry Indian call center employees peeved that those foreigners (Americans) are taking their jobs.  Which can lead to the next step of the global race to the bottom - global employees undercutting each other, willing to take even lower wages to keep the work in house.   Gosh if only that domestic minimum wage law was not in the way.

Via FT.com:

  • Call centre workers are becoming as cheap to hire in the US as they are in India, according to the head of the country’s largest business process outsourcing company.  High unemployment levels have driven down wages for some low-skilled outsourcing services in some parts of the US, particularly among the Hispanic population.
  • At the same time, wages in India’s outsourcing sector have risen by 10 per cent this year and senior outsourcing managers based in the country command salaries above global averages.
  • We need to be very aware [of what’s available] as people [in the US] are open to working at home and working at lower salaries than they were used to,” said Mr Bhasin. “We can hire some seasoned executives with experience in the US for less money.”
  • Wipro, the Bangalore-based IT outsourcing company, started to recruit workers in Europe, the Middle East and Africa during the global economic downturn. Suresh Vaswani, joint chief executive of Wipro Technologies, forecasts that half of his company’s overseas workforce will be non-Indians in two years, from the current 39 per cent.
  • India is still expected to retain the overall cost advantage, particularly in more sophisticated software outsourcing.  (give it about 5-10 years... )
  • The move to expand operations in the US also comes as protectionist rhetoric against outsourcers rises in Washington. Last week, Charles Schumer, a US senator, described Indian IT outsourcing companies unflatteringly as “chop shops”, a term referring to places where stolen cars are dismantled for their parts. (watch what he does i.e. which lobbyists line his pockets, not what he says)
  • Mr Bhasin said Indian outsourcers needed to be more sympathetic to the deep economic woes in the US, not least because US business had helped India’s outsourcing industry “piggy-back” on its success. (go team U.S. multinationals!)

[Jan 4, 2010: As Indian Firm Hires 1300 Americans in Ohio, Governor Rejoices]  
[Aug 15, 2008: Cost Cutting in New York's Financial firms, but a Boom in India]

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