The Hindu Business Line : The high and low of IT

Let us assume that about 40 per cent of the million-plus employees in the five best-known IT companies were recruited over the past three or four years. They had little or no IT skills to begin with. But with just six months of training, they were ready to go online.

Obviously the jobs done by those at the bottom of the pyramid are not very demanding.

On the other hand, given the huge demand for boys and girls who `take home' (on average) Rs 3 lakh a year (about $550 a month), the value added per employee must be sizeable.

Hard data on how much Indian companies gain by the `insourcing' of low-skill jobs (or how much outsourcing countries gain) is scarce.

But about a year ago, a March 2005 BBC report directly quoted the then Chief Operating Officer of HSBC, Alan Jebson, as saying that HSBC planned to "offshore another 12,000 jobs by March 2008, in addition to the 13,000 already offshored."

Evading a question on the employment prospects for British youngsters, Jebson stated that there "had been no significant adverse reaction from customers," and went on to add that "the bank saved about $20,000 on every job it moved." Had these jobs not been offshored, had they remained in their home countries, each employee would have earned Rs 3 lakh a year plus $20,000. That is about $26,700 a year, or four times as much as freshers get paid in India. This translates into a $8-billion `take home' for the top five IT companies in India, or $20,000 savings for each of the 4,00,000 employees who form the bottom of the pyramid for the top Indian IT companies.

Doubtless, Indian companies invest in infrastructure and real-estate and training, all of which eats up part of their reserves. Doubtless too, Jebson's comment possibly dwelt on BPO jobs, which are quite different from IT services jobs. However, his comment certainly gives a flavour of the value added in India.

They say there is no such thing as a free lunch. But this comes close. Thanks to a $0.40-hike in New York State's minimum hourly wage with effect from January 1, 2007, casual employees at McDonalds or Kentucky Fried Chicken counters rake in $7.15 per hour. A five-day, 40-hour week gives them $15,000 a year. Almost 2.5 times what a fresher gets paid in this part of the world.

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