To: TigerPaw who wrote (69496 ) 6/2/2006 3:23:14 AM From: stockman_scott Respond to of 362466 IT-outsourcing wages in Asia remain low but are rising By Riva Richmond Last Update: 6:08 PM ET Jun 1, 2006 NEW YORK (MarketWatch) -- Information-technology workers in India and other Asian countries continue to offer outsourcers the least expensive skilled labor in the world. But rising demand is pushing up wages there, potentially enhancing the allure of destinations in Eastern Europe and elsewhere, a study by management consulting firm neoIT shows. The success of outsourcing industries in Asian nations, including India, China and the Philippines, has led to a worker crunch and salaries that are rising at a pace that outstrips other regions, according to the San Ramon, Calif., firm. "Until recently, it may have been enough for organizations to look at India, its service maturity, supplier competency and cost-saving potential and say: 'To India,'" neoIT says in its report. "However, disproportionate salary increases will certainly impact firms' outsourcing decisions as well as the competitiveness of these offshore/nearshore destinations." In India, IT workers' salaries in 2005 were near the bottom of the barrel, averaging at $8,485, or just 12% of equivalent workers in the U.S. But they rose 10% to 15% during 2004, and neoIT predicts they will rise 8.7% a year through 2010, driven by increasing industry maturity, competition and project complexity and by multinational IT-services firms' moves to expand their India operations. Last week, Computer Sciences Corp. (CSC) said it would shift about 2,000 positions to India, mostly from Europe, as it expands its Indian workforce to 8,000 by March 2007. Accenture Ltd. (ACN) has also been expanding aggressively in India, and Electronic Data Systems Corp. (EDS) is seeking a majority stake in Indian firm MphasiS BFL Ltd. India's projected wage-growth pace is the fastest among the 20 countries in neoIT's study, which used survey data from IT-services firms and additional neoIT research to assess wage differentials among both IT and business-process outsourcing workers. Next in line were Vietnam at 7.3% and China, Russia and Costa Rica at 7.2% and the Philippines at 6.8%. By contrast, neoIT predicts 3.6% wage growth each year for the U.S. and in the 4% to 6% range for Hungary, Poland, Slovakia, Romania, Mexico and Brazil. Because wages are so low in Asia, wages there should remain lower than those in Eastern Europe and Latin America, despite the faster pace, neoIT says. For example, while the average salary was $8,485 in India in 2005 and is projected to rise to $12,877 in 2010, Romania it was $13,708 in 2005 and is seen rising to $17,329 in 2010. Nevertheless, a narrowing wage gap could make countries outside Asia more attractive destinations, particularly as organizations give increasing weight advantages other than cost in different countries. For instance, Eastern European providers may offer better language skills and cultural affinities that are attractive to outsourcers in Western Europe.