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Home > Business > PTI > Report

Salary hike, a threat to Indian BPO

April 20, 2005 16:19 IST

Wage inflation will continue to erode competitiveness of Indian business process outsourcing industry, according to the leading management consultant and research firm McKinsey & Co.

"The trend of wage inflation is really troubling. This will continue to erode Indian competitiveness. Historically, Indian wages have grown substantially faster than the US," McKinsey & Co Principal, Jayant Sinha said in Mumbai.

Speaking on the sidelines of 'Global Outsourcing Summit 2005' organised by Indo-American Chamber of Commerce, he said the wage inflation has been estimated at 10 to 15 per cent in last five years and the trend signals a moderate growth in wage inflation.

"With increased wage inflation, prices are going to rise. This will pose a threat to India, which is known as a destination of low-cost and high skilled talent pool," he said.

He said Indian companies should address wage inflation immediately and carefully as it would adversely affect competitiveness.

"Moreover, all major offshoring destinations, including India, are facing imminent talent shortage. Private-public partnership is necessary to bridge this emerging talent gap," Sinha said.

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