The reason people are comparing US and Indian employees is because the doubling of IBM's India workforce since 2007 seems to be, in many ways, a result of labor arbitrage, as the linked article is arguing. You can slice things any way you want, but the fact is that this is a problem for the average American worker. In other words, it's something that readers of the NYT would care about.
Do you know that Indian GDP has grown significantly from 2007? Could it be that the market in Asia has grown and hence IBM wants a larger presense in India. And that since the labor is relatively cheaper they can afford more people over there than in USA? Why do you think that by staying in US IBM could have competed with other companies in India fighting for the Indian/Asian market?
Americans are not aware of cost of living in places like Bangalore. The India real estate is expensive for the folks living in Silicon Valley. It is cheaper to buy real estate in USA compared to India.
The same is true in china, but that has more to do with real estate bubbles than fundamentals. Rents are still very cheap. Is the same true in Indian cities?
Rents go up high too. Can't say how well they correlate to prices for buying outright (as your other question asks), but they are high, IME. Also, some property owners raise the rent each year. Talking about residential rents here, but I think commercial ones raise it each year too.
In Bangalore, sale price/monthly rent ratio in an ok neighborhood would be around 200. In a pretty good neighborhood this go up to to 300-400. Mumbai is more expensive than this. Nobody buys property in India and makes a killing off the rents -- its mainly the price appreciation (inflation is around 6-7%).
In countries of > 1 billion people who are racing towards development, the real estate bubble just goes on and on. Even in smaller cities, real estate is seen as a very profitable investment as even more people make the rural to urban transition, jacking up demand to stratospheric levels.
Population of Bay area is about ~7 million. Not even 100 million. The real estate bubble is going on for 50+ years here. So, it is nothing to do with population. Today what we call as growth is just a bubble.
Bubbles always last longer than you'd think, but at some point they all end. Absent some kind of crazy government intervention, prices are ultimately supported by rent.
In china, people are banking on urbanization: because poor farmers are really going to be able to afford a small apartment in the city for $1 million. Really.
Even the arbitrage is going to start failing. The housing is insanely expensive in India especially relative to the salaries. At some point most of the people who can leave will leave, because its hard to live there with the salaries they are are getting. You can make more in other countries and the housing difference would not even be that much different.
I'd say worse. IBM employees in India get paid around 500,000 rupees in India. A non-cramped 2 bedroom apartment in a decent area in the big cities (Mumbai, Bangalore, Delhi ) will set you back 10,000,000 rupees easily.
That is 20 times their salary. I'd say that's a higher multiplier per unit salary, than for the US.
Also note that living just outside the city (as people in the US do) isn't always an option, unless you are up for a 2+2 hour commute daily.
The 500,000 you mentioned doesn't seem correct to me for IBM. It is the lowest in the IT sector targeted to freshers from substandard colleges. In most first and second tier college, the average for IT is 15,00,000 to 25,00,000 at the time of joining.
I am studying in college that has is not known by most people in India, and the official average here is around 18 LPA. I have the stats from the placement unit of our college. For IITB and BITS Pilani, I can confirm from friends it's around 27 LPA. This is one public stat I can find: http://www.selaqui.org/iit-jee/placement.php. Average is 24.67 LPA for CS, and it's from 2011-12. I don't know why you reacted with so much disbelief, when every one and every newspaper tells that average for IT placement is very good.
I reacted with such disbelief because I know many people that work for big consultancies such as Capgemini, Cognizant and Infosys, and even in tier 1 and 2 cities with 10+ years' experience they don't make that much. Hell, many consultancies bill their EU and US clients less than those figures!
I also hire directly for our own office in Mumbai from time-to-time, so I know that market rates are.
Just look at any jobs board - even for experienced devs, its rare to find such high paying jobs, e.g.
Companies such as Wipro, TCS, Cognizant and Infosys are considered lowest in this sector. No kidding, they pick up 1000s in a single day from a single college. e.g. see http://www.srmuniv.ac.in/placement/statistics_2015.html
> SRM University sets new placement record of 6064 on Day 1
> The highest offer was from Wipro 1641, followed by TCS 1611, Cognizant 1506 and Infosys 1306.
You can imagine the quality of interview when they have interviewed at least 1500 students on a single day.
That is because you are looking at a cherry picked data to make your point. From the link:
The department-wise average and highest salaries are shown below. The overall average and highest salaries stand at 8.98 LPA and 68.5 LPA respectively.
So the average salary is 8.98 lakh. Unlike what you might like to believe there are many non-IT people working in IT, specially in places like IBM. So their salary will be even lower than 8.98 lakhs.
Of course.. It's not cherry picking. I said IT sector is doing pretty well in India. I never claimed anything other than that. Most majors have hard time finding any job in their sector.
And the point I am trying to make is - It is not the spring you believe it to be. Let's take a look at actual IBM India salary, should we? Here's the data from glassdoor:
https://www.glassdoor.co.in/Salary/IBM-Salaries-E354.htm
Most freshers get near to Associate Systems Engineer. The salary range is between 3.7 lakhs to 8.65 lakhs. This is farcry from what you believe it is. Yes, there are colleges whose salaries are pushed to the limit thanks to the startups but majority are not as well of as you might think.
> And the point I am trying to make is - It is not the spring you believe it to be. Let's take a look at actual IBM India salary, should we? Here's the data from glassdoor: https://www.glassdoor.co.in/Salary/IBM-Salaries-E354.htm
Yeah, I concede. For some reason, I had the belief that IBM is one of the better paying company in India, but it pays on the level of inferior consultancies.
The numbers you mentioned are towards top end of industry. Most people I know with 5-10 yrs of experience make less than 10,00,000 in any of the major IT company.
That is an exaggeration, or your standards are much much higher than mine. I live in a good area that attracts bankers and minor celebrities. Flats of the type you describe are 500-600K. Still expensive...
I've heard a lot of my foreign born collegues do that. After they've reached a certain seniority, they decide to go back to their country of birth while keeping similar compensation, essentially making them very rich in their home country. I've only seen this work for Indian and Chinese born nationals though, where the home country has good relations with the US (as opposed to, say Iraninans, who don't have the option of going back).
Collect a U. S. salary while shipping the actual work to a less expensive worker elsewhere. Just like companies do, only on an individual basis. I believe it has actually been done (then the person got caught and fired, IIRC).
> "As it turns out, Bob had simply outsourced his own job to a Chinese consulting firm. Bob spent less than one-fifth of his six-figure salary for a Chinese firm to do his job for him."
