The Hindu Business Line : The stick for India

The Indian delegation that visited a few dedicated foundry manufacturers and fabless design companies in Taipei recently did not have it all smooth. Amidst the numerous voices that showered praise on Indian software prowess (we could even make out a sense of awe when they addressed us), there were a few that voiced protest.

In one instance, a fabless manufacturer poured his heart out on the issue of salary hikes and the poor quality of engineers that sometimes visited client sites.

His company has a development centre in India. You could make out the despair in his voice when he said, "The Indian centre is less than two years old. Last year, our employees there wanted a 30 per cent hike in salaries on average. We gave it to them. This year, they want the same 30 per cent hike! How is it affordable?"

He went on to add, "I had a bad experience with a US company earlier. The project had to be aborted."

We inferred that he was hence looking out to outsource development to Indian vendors and get the pains - of managing a workforce - off his back. On being told that the cost of an Indian software engineer visiting a client site in Taiwan from India could be around $40,000 to $50,000, he pointed out that that might be cheap for a US or European company. "But, for an Asian company to outsource to India, that figure is far too high."

"A project manager with several years of experience might be good. But we also have much younger, even fresh graduates, visiting us as part of teams. They get to learn at our expense. If you charge such amounts for this quality of engineers, it's not fair."

The next day, we got an earful from a fabless chip maker. "You still have to get your taxes and tariff structures right." Sure, we had heard this at different fora. But what touched a chord was that this seemed to be the one obstacle between India and investments from this sector. The lack of a market is a thing of the past. Administrative issues alone need to be dealt with now. He said, "It's such a complex thing in India, these tax structures. We don't understand it. So we ask our Indian folks. And they don't understand it either."

So we asked him, "Is that the only obstacle? If the Government set it right, would you invest in a manufacturing unit?"

The answer was not a direct `Yes'. But comfortingly, he said, "Foxconn is already there in Chennai. Once Foxconn comes, it's only a matter of time before the others follow suit."