Economist.com | Investment banks and outsourcing

Why hire Indian programmers when Americans cost less? … For a start, they are cheap. Citigroup pays them $17 an hour, which works out at about half what the bank would have to pay programmers in India. Now let us see … $17 x 8 = $136 per day or $4080 per month or Rs 183,600 (INR) per month … now are my calculations wrong or do Indian programmers really get paid so much? My market information says that on an average a fresh Indian college graduate (“Indian programmer”) gets less than 50% of the said amount. Now this shows that Indian programmers are still cheap and have strong analytical skills.

2 Replies to “Economist.com | Investment banks and outsourcing

  1. Hi Rajeev,
    The Economist data is correct. We just have to remember that US companies don’t directly pay Indian programmers and do that through the Infosys’ and Wipro’s, which consume a huge amount of the billing as profits, letting percolate only a li’l figure as salary.
    As I know, Infosys bills about 25$ for a developer. ML’s and PM’s are charged at $40 or above. Weighted average would result in the economist figure.

  2. Yeah I agree with you on that. What will happen is that Indian companies will have to cut their profit margins, which at present are very high or share their profits with the outsourcer. My point of view is that time has not yet come to write-off the outsourcing business model.

    Besides the point but I can safely mention here that some of the Indian companies have also started quoting below $10 per hour. Can anyone beat that?

    And congratulations to you on getting a summer job.

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