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Salary hike forces Outsourcing Companies quit India!

India, the land of cheap labor is no more a safe heaven for profit citing companies.

A decade ago, companies from US and UK, invest so much in India  in form of Call centers, Bpo’s and IT services because India was the only place in the world that offered cheap labor.

For Indians, the salary was huge and for the overseas companies the salary was very low when compared to their home town.

It was kind of Win-Win  situation for both of them. But not any more.

New Call Telecom, which started the call centre in Mumbai three years ago, said that it chose to shift base to Lancashire as it feels that labour is cheaper in that country than in India.

The move by New Call Telecom, will help to create 25 jobs in UK. Sounds interesting.

Some may wonder, whow! wait a min!, why is this sudden withdrawal?

As the companies pointed out “Indian Cheap labor is no more”, the salaries in India are about to raise more than 12 percent in this academic year 2011.

The report of salary hike is maintained by Aon Hewitt, global human resource firm

Nigel Eastwood, New Call’s chief executive officer ( CEO) told Daily Mail that, “Salaries in India aren’t that cheap any more. Add to that the costs of us flying out there, hotels and software, and the costs are at an absolute parity.” However, Amit Nivsarkar, vicepresident, Nasscom, said, “This is not any general trend that we have seen. The company policies to relocate may be behind such instances. Salaries at the entry- level are not issues in such cases as they haven’t increased for the past three years.” It is, however, not only firms from the UK and the US but also Indian IT companies that are hiring people in other countries in search of cheap workforce.

“Labour and realty rates vary from place to place even in India,” said Viral Thakker, executive director at KPMG India, a business advisory firm.

I feel, this was long coming. Other Companies are sure to opt out sooner than later. But that may not impact the Indian market.  Although some medium level overseas companies are leaving India, the Giants are still preferring India.

Are you an Employee? Whats your stand on this? Share with us via comments!

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  • Neha

    Due to IT and ITES , No doubt Indian youths are earning high and spending 2/3 times more for cheaper food, cloths and flats etc.This trend is not good for those who are from non IT&ITES.
    Infrastructure and Other expenses are too much high in IT&ITES.Sure only tier II, tier III cities will help
    for cost cutting.

    • Jay

      hi neha.. not only IT and ITES spending 2/3 times more for cheaper food, cloths and flats. BPO associates also still suffer a lot…
      There s not even a day shift.. for the associates..

  • jiji

    The salaries have to rise because the cost of living is also increasing year by year. The construction costs has hiked, the land rates are unimaginable, building a house still remains a dream for many.. Even the agri products are costly, in many places (like ours) we are buying water for money.. soon we may have to buy oxygen for money ! Either govt. has to bring some rules such that people are contended with what they own and take lesser salaries or the salaries has to keep rising !!