Outsourcing the Outsourced

In an earlier rant, I explained my believe that the current technology situation in India, with Indian techies frequently changing jobs and driving salaries up, was due for a tech-bubble-like correction. It turns out I was right on the money, with things happening a lot faster than I thought.

An article in Tuesday’s The Economic Times states:

IT companies, the building blocks of new India, are facing a conundrum. They are flying high and in their very success is lying the seeds of their problem. The culprits: Their own star performers, the IT pros whose constant job hopping is on the one hand leading to a constant attrition of trained people and on the other hand driving up the salaries.
Turnover in India’s major tech centers (Bangalore, Mumbai , New Delhi and Hyderabad) is ridiculously high right now – up to 50-75% a year. Salaries have been going up 15% per year as well. Call me crazy, but this cannot be sustained for much longer.

Like I said in my earlier post, when India becomes too expensive to outsource to, China is the next place we’ll go (and Southeast Asia and Eastern Europe after that). In fact, India is already beginning to outsource some of its work to Chinese companies in an attempt to keep costs down. Ah, the circle of life!