[ralto]

Originally Posted by NetfreakBombay

Operating margin of companies is around 25 - 30%.

https://www.bloombergquint.com/quart...s-sequentially

That was insightful. Not as lucrative as one might think, from a business point of view, provided this is true for most companies, which I believe it is.

[Jaguar]

Originally Posted by ralto

as much as I have seen, the billable hours/costs have remained the same for the clients whereas the salary expense has significantly increased. I just hope this is not a disaster in making. Remember, lot many countries have jumped in and are capable of offering similar (or even better) services at even more competitive prices.

There will always be someone who is willing to do the job at a cheaper rate. The better option is to improve our quality and value proposition. The cost advantage will always be there as long as we are a developing nation.

[ralto]

Originally Posted by Jaguar

The better option is to improve our quality and value proposition.

Indeed. 100% agreed. Just need to ensure that the rate of improvement, on quality and value proposition, is higher than the counterparts. Because they aren't too slow either.

I wonder though, in the near future, will companies be able to charge more from the clients owing to the rise in the salary and other expenses, or will they have to absorb the cost. The reason being if they continue to absorb the costs, they will eventually be recovered from somewhere, right?

[dailydriver]

Engineer in India should be paid the same as an Engineer in the US

- Phil Libin

If you're an engineer working in India and you have a level of performance and productivity that's the same as an engineer working in Mountain View, you should be getting the same amount of money

Link

[alphahere]

Originally Posted by dailydriver

Engineer in India should be paid the same as an Engineer in the US

- Phil Libin

To all those who have vehemently opposed my view.. The above is all I'm trying to point out. Thanks for this!

Originally Posted by ralto

Hi Sir,
Unfortunately, this is not how it works.

Unfortunately, IT IS how it works because I am sitting in the middle of this seeing it every hour of my working life. I am not a person who is running or managing a company. I am an EMPLOYEE and my facts are based on what is relevant to my finances, not the company's.

Originally Posted by One

You may not want to use the term "Profit" in the message because it is Financially and technically incorrect. .

As mentioned above, I do not intend to produce an Annual Report through my figures. If that was the intention I should have used the terms Gross/Net Profit or something of that sort. Please read it in plain English; understand the substance from an EMPLOYEE's perspective if possible; else let it slide.

Originally Posted by Samurai

Ok, so these are all zero cost employers. What about those with costs?

Please refer above. If you still think I have communicated misinformation, please feel free to remove/edit the post. I still stand by my view that what I have depicted above is a correct picture. Nowhere have I mentioned that I am talking about running a company. It is purely what an EMPLOYEE will look at. Regardless of whether Yourself or Myself or anyone else works in India or elsewhere all these overheads will exist, no matter what.

[dragonfire]

Originally Posted by dailydriver

Engineer in India should be paid the same as an Engineer in the US
- Phil Libin

Is that a theorem, postulate, rule, law...?

Its one guy's wishful thinking. Unfortunately free markets don't operate that way. I will get paid based on what me and my employer agree upon. It's that simple.

[C300]

Originally Posted by Jaguar

There will always be someone who is willing to do the job at a cheaper rate. The better option is to improve our quality and value proposition. The cost advantage will always be there as long as we are a developing nation.

+1

Originally Posted by ralto

The reason being if they continue to absorb the costs, they will eventually be recovered from somewhere, right?

Thats the reason companies are moving towards Managed Services contracts. These are mostly FP/Outcome Based contracts where revenue accrued is de-coupled from staffing. Most of the big deals these days are Outcome Based where customer has no/minimal visibility of staffing.

[m8002?]

Originally Posted by dailydriver

Engineer in India should be paid the same as an Engineer in the US

- Phil Libin

Link

Why restrict this to IT Engineers alone? Shouldnt the McD employee in India be paid the same as the McD employee in UK/US? What about the Ford employee in India? Paid the same salary and Pension paid by Ford in US. And I am really hoping you guys are paying your house maids the same pay that is paid in US/UK.

Originally Posted by alphahere

To all those who have vehemently opposed my view.. The above is all I'm trying to point out. Thanks for this!

You seem to be looking at things from an employee view and respect you for it. But there are others here telling you that is not the only point of view and not the only expense. But you seem to be adamant and keep repeating the same stuff instead of learning from them.

So rather than claiming these, the best would be show the experienced businessmen and managers here how you run a 100 employee company(with office, bench strength, equipment, admin, finance ) and you show your P&L the way you have put it.

[ralto]

Originally Posted by dailydriver

Engineer in India should be paid the same as an Engineer in the US
- Phil Libin

Originally Posted by m8002?

Why restrict this to IT Engineers alone?

To what Mr. Phil is saying here, it makes sense for him to make this statement because it benefits him. For an employer, it is cheapest to hire me in India, but still cheap enough to hire me in the US, if I move there, compared to any local US citizen. So why wouldn't he make this statement. Doesn't necessarily mean that the statement is wise or true.

[hserus]

Originally Posted by m8002?

You seem to be looking at things from an employee view and respect you for it. But there are others here telling you that is not the only point of view and not the only expense. But you seem to be adamant and keep repeating the same stuff instead of learning from them.

So rather than claiming these, the best would be show the experienced businessmen and managers here how you run a 100 employee company(with office, bench strength, equipment, admin, finance ) and you show your P&L the way you have put it.

My experience is that of someone who has worked for companies that outsource to the major Indian IT vendors (and none of it constitutes my speaking for any of my current and former employers) .. m8002 and others are right on the money here.

[Engine_Roars]

Engineers or for that matter any professional can never be paid what someone of the same profession is being paid in US. Simple reason - competition & population.

For each employed engineer - we have 100s of unemployed waiting to get a chance to do the same work in half the cost or may be lesser. Same can be applied to any profession.

Population is our strength & it is our weakness too. We have been able to become such a huge contributor in global information technology scene is because we can provide cheap solutions with the same or better quality. I for one don't want us to compete with US in terms of salary except for may be some niche skills, our country needs the outsourced work.

[ralto]

Originally Posted by Engine_Roars

I for one don't want us to compete with US in terms of salary except for may be some niche skills, our country needs the outsourced work.

Agreed. Neither on the salaries front and nor should the rupee become too strong. Politicians may make any number of promises but the truth is even they know that if the rupee becomes stronger, we as a nation are on a downward spiral.

[msdivy]

Originally Posted by dailydriver

Engineer in India should be paid the same as an Engineer in the US
- Phil Libin

Caveat: Only if both do the same work and are at/on the same location (local or remote). Eg: A person in the US & a person in India work on a project in Australia. This isn't true if they work for different markets, ie US person for the US market and Indian person doing the same work for the Indian market.

Originally Posted by dragonfire

Is that a theorem, postulate, rule, law...?

I feel it is more of a philosophy. Heck, even if 2 people are from same college, country & similar experience, they won't get paid the same.

[NetfreakBombay]

Originally Posted by Jaguar

There will always be someone who is willing to do the job at a cheaper rate.

Willingness is one parameter, ability is another. Given the state of the market, Indian salaries are already 1/4 th of the US Bay area salaries and more than mid-west salaries.

My own experience... I work in a team is is already global since product sells in multiple markets. If a developer can do the job, location is seldom a constraint.

EDIT : This applies to a segment of developers. Does not apply to IT Services.

[akshaymahajan]

In the US, salaries do vary by state even if its for the same role and for the same skill level. Some people enjoy the hustle of SFO and NYC and some want to stay in say Austin. Based on living expenses, salaries vary. But that's maybe a ~20-30% difference overall.

With SFO salaries in BLR, I think one would live a very different life as they would in SFO.

So the cost of living index will always be a factor in renumeration.

If not, and everyone decides to go for a completely remote model, there should be a dynamic shift in the index. There will be a correction in say rentals and property prices and things will normalise a little bit.

But that's a little bit theoretical. Silicon Valley became Silicon Valley because having everyone in one place had some advantages.

However, like someone said, there is a supply and demand problem. There are people who will work for lesser than someone else would do the same work for - every has their reasons. And companies like their margins. For a very small percentage of the roles which requires specializations, this may not hold true but its a very small percentage. Of all the people who say they work in AI/ML, people with that sort of ability would still be very small.