the situation is conspiring to allow the Indian EE's labor to be exploited
I guess it depends on what you mean by "exploited". There is certainly a big disparity in the cost of living in USA vs. India, and the wage differential partially reflects that [subsistence wage differential], but also reflects differences in the supply and demand for labor in these different labor pools. With the wage arbitrage currently taking place, however, the 10:1 salary differential might well narrow to say 5:1 or less within a few years.
Exploit is a loaded term. It can mean to utilize or it can mean to take unfair advantage.
Here is an excerpt from today's WSJ article describing IBM's latest push into Calcutta, which has not previously been an important IT destination in India. It demonstrates that even the communist government of West Bengal state does not seem to mind this type of "exploitation".
---snip---
The planned staff increase in Calcutta will make the city IBM's second-largest center in India in terms of employees, after Bangalore, said G.D. Gautama, a senior official in the Information Technology Department of the state of West Bengal.
"IBM saw the value in the city, and particularly in its talent pool," said Mr. Gautama. "They are hiring in a big way." The company's growth plans were confirmed by Manabendra Mukherjee, a minister in the state government in charge of IT.
IBM and Accenture are ramping up their work forces in India partly in an attempt to match cost advantages enjoyed by their smaller Indian rivals such as Infosys Technologies Ltd. and Wipro Ltd. Those companies were the first to embrace the idea that software, like manufactured goods, can be made across the globe in whatever location is most cost-effective -- in their case, in India.
West Bengal's officials are featuring IBM's expansion plans in a brochure produced to lure investors to the state. Calcutta is an unusual choice as a base. Until recently, the city best known as the home to the late Mother Teresa wasn't a hot destination for software companies, while West Bengal was better known for its long-serving communist government and frequent labor strikes.
That is changing rapidly, however, as more companies move to exploit Calcutta's large pool of engineers, a low rate of staff turnover and cheaper costs compared with other Indian cities. After a late start, the state government is actively wooing technology companies and discouraging unions from striking.
Real-estate developers are among those welcoming the change. "Though it's a [communist] government, the thinking now is to encourage industry," said Santosh Rungta, chairman of Rungta Group, a local developer.
Mr. Rungta said IBM has taken a lease for one tower of a technology park that his firm is building. The eight-story tower, with about 100,000 square feet of space, should be ready by June, he said. IBM also inherited a facility in the city when it took over the consulting arm of PricewaterhouseCoopers.
Mr. Gautama said IBM soon will be the largest IT company in Calcutta -- now officially known as Kolkata -- in terms of staff, followed by India's Tata Consultancy Services Ltd.
Other companies that have set up software centers in the city include Cognizant Technology Solutions Corp. of New York and SkyTECH Solutions Ltd., a joint venture in which UAL Corp.'s United Airlines holds a 50% stake.
---END
online.wsj.com "IBM is Hiring in Calcutta, The City Says" 3/12/04
___________
N.B.: How ironic that formerly hardline communist regimes are beginning to embrace the benefits of capitalism precisely at the same time that the former free-market capitalists are starting to shriek for protection. <g>
Sam |
