India is getting too expensive- Why Apple walked away

OUTSOURCING IN INDIA is getting far too expensive, according to Businessweek.

The magazine was looking into why Apple packed in its India operation only a few months after it started, while the likes of IBM has been expanding its operations in the country.

A deep throat in Apple has revealed that the reason was entirely cost driven. India turned out to be a lot more expensive than the bean-counters had thought.

There is a skill shortage and the turnover among staff is too high. Apple felt it "can do [such work] more efficiently elsewhere," the deep throat gagged.

McKinsey Global Institute said that India's economy grew by 9.3 percent last year and its tech business generated some $17.3 billion in revenues and employed nearly 700,000 people. However global investors are leaving the country in droves over concerns that the country's wage bills are getting too high.

Entry-level pay at tech and outsourcing companies climbed by as much as 13 percent a year from 2000 to 2004, while salaries for midlevel managers jumped 30 percent a year during the same period.

With those sort of figures, those looking for cut-price programmers and call centres are starting to look further East, where the cost of such employees will remain low for a much longer time. It still does not explain why some of the bigger companies, like IBM and Microsoft are still spending a fortune in India.

Courtesy Nick Farell and BW