Wage inflation threatens outsourcing

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Wage inflation threatens outsourcing

Karl Flinders

Higher wages for Indian IT workers is the single greatest threat to global outsourcing, according to a poll of 325 Fortune 1000 IT executives.

Business process outsourcing (BPO) firm Syntel carried out the online poll which asked respondents to select one of five threats to the proliferation of the outsourcing trend.

The five options were: wage inflation, quality concerns, possible outsourcing legislation, perceived security risks and middle management resistance.

According to the report wages in Indian outsourcing operations are growing at 15% a year and 33% of respondents cited this as the single biggest threat.

But Syntel claimed that these fears are unjustified. “These inflationary rates are very manageable levels. In addition, client corporations understand that to attract and retain top talent for their projects through outsourced vendor partners, they need to share some of the burden of wage inflation through pricing increases.”

Other results showed quality concerns as the number one threat for 27% of respondents, possible outsourcing legislation 21%, perceived security risk 10% and middle management resistance 9%.

Syntel's view on the results >>

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