BANGALORE, India, June 25, 2006 (AFP) – Soaring salaries and poor quality of manpower are prompting foreign firms to shut their outsourcing operations in India although there is no cause for alarm yet, officials and analysts say. US-based Apple Computer and software maker Pervasive have been joined by Powergen, a British subsidiary of German energy supplier E.ON, in announcing the closure of their centres in India’s technology hub of Bangalore.
“The potential cost savings of an offshore development operation can be mathematically compelling,” said John Farr, president and chief executive officer of Pervasive Software.
“However, we have found that the complexity of managing such an operation and the increasing costs of labour, employee turnover, training and facilities in such a hot market as Bangalore makes it challenging to realise those savings,” Farr said.
The National Association for Software and Service Companies (NASSCOM), India’s premier software body, said salaries of freshers had shot up between 11 percent and 15 percent in the past few years while wages for senior managerial positions had risen by a whopping 30 percent.
Analysts said labour arbitrage for India existed only at the entry-level where enginee