The Offshore Technology Labor Market Tightens

It's become clear that offshore outsourcing is a good idea for companies. When done correctly, it will significantly lower costs and improve the quality of service.

The market for these offshore services is like anything. Once the value is recognized, suddenly everyone wants a part of it. The result has been a rush to hire the most talented minds.

For instance, Oracle has announced plans to hire an additional 1,500 workers in India. This will add to the group of 2,500 that they already employ.

The average engineer in India with 2 years of experience will command about $533 dollars per month. This translates roughly into 7 thousand dollars per year.

If a company like Oracle can expect the same productivity from one of it's Indian employees that it gets from a North American, it will not be concerned about paying a wage that is higher than expected for an Indian engineer. The end result is that Indian engineers hired by North American companies will be paid salaries that are on average 30% higher.

This has resulted on margin pressure for Indian outsourcing companies. An early example is Wipro, which announced that the rapid growth of the past few years has slowed dramatically.

As the practices of offshore outsourcing become more established, the wages of offshore engineers should continue to rise. Businesses will look to this outsourced services as commodities. They will look to where they can find a certain level of quality and quantity at a given price.

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