Bhoo wears the thinking cap!

As if that is possible!

Wage inflation sinks start-up?

Posted by bhoo on June 8, 2007

Here is a very nice article in infoworld about wage inflation in India sinking a start-up operation.  I can easily see what has happened here.  It is no secret!  The management bandwidth needed to run a captive operation in India is daunting!

With due respects, Carmen as well as Munjal have found the right problems and have quoted the right solutions that lets the offshoring industry thrive – “Unlike IBM or Infosys, a startup doesn’t have the resources to train the brand-new graduates who would work for smaller salaries” – That is absolutely right, and that is why start-ups should go to companies that are focused on servicing Small and Medium players just like Riya. 

Companies like Aspire Systems, which is in the 300-1000 people size, have all the infrastructure to train fresh engineers like Infosys or IBM, and are able to service smaller requirements like 30 people or so, and provide cost advantages for companies just like Riya.

We find this all the time – the temptation for all captive centers to hire the best of the best – in terms of fresh engineers or experienced engineers.  That makes the cost very high.  The ideal is a mix of people – and a structure to get the best of a mix of people – some with very high experience levels and some with lower experience levels. 

I really believe that someone like Aspire could have easily made a success for Riya even in this environment of raising wages and lowering exchange rates.

The ideal option is to outsource this to a player like Aspire Systems.  There are 100+ companies in India who are between 300 and 1000 people in size in India, and one of them will be happily be a vendor for Riya providing the value!

 I will be happy to talk more about this problem and how this problem can be addressed, and IS addressed by several offshoring companies.


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