I came across this article in one of the e-mail newsletters I subscribe to. It’s highly relevant to my current role because we use a lot of offshore staff for our work through companies like Tata Consultancy Services (TCS).
The rise in salaries and the springing up of private schools for training people in IT is just what basic economic theory would predict. The quality concerns are predictable as well. Before I joined APS, I asked some consulting colleagues how they would rate the various Indian IT firms. They had strong opinions on which firms were best. A lot depended on where they recruited and how experienced their hires typically were.
One area the post didn’t address that is quite important is turnover. Because salaries in India are going up, that makes it challenging for firms to retain talent for any length of time. This can certainly impact quality for companies like mine that use one or two offshore firms exclusive because we just don’t know who they’re backfilling with when they lose talent to other companies.
It’s certainly possible that India could start losing IT work to China. But I suspect that eastern Europe and some of the former Soviet republics are just as likely to get some of that work. Philip G. Armour’s column in the latest issue of Communications of the ACM talks about a technology firm in the midwest that’s been quite successful with an offshore team in the Ukraine.