Indian Salaries Saw Highest Growth in A-Pac in 2006

Working in India could not have been better at any other time considering the salaries that the market is offering. Employees across industries in India saw their salaries increase between 11.9% and 16% (average 14.4% increase) in 2006 over the previous year, according to Hewitt Associate’s 11th annual Salary Increase Survey released a few days ago. This makes 2006 the fourth consecutive year in which salaries grew by double digits.

India’s salary increase was the highest in the Asia Pacific region. Not surprisingly, China came second to India; but at 8.3% average increase in 2006 over the previous year, its percentage increase still quite behind India.

While forecasts for 2007 are more or less along the same lines as 2006, the numbers for Singapore make one sit up. From an average salary increase of 4.6% in 2006, it is expected to see an increase of 8.9% this year. The Philippines, too, which is seeing increasing international investment, will see a much higher increase in 2007 (8.9%) than in 2006 (8.2%).

Average Salary Increases in Asia Pacific :

Country Year 2006 (%) 2007 (expected) (%)

India 14.4 14.5
China 8.3 8.2
Philippines 8.2 8.9
Korea 7.4 7.4
Thailand 6.5 6.6
Malaysia 6.2 5.9
Australia 4.8 4.4
Singapore 4.6 8.9
Taiwan 4.3 4.4
Hong Kong 4.0 3.9
Japan 2.6 2.7

While salary hikes may be good news for employees in India and other Asia Pacific countries, it may not be so for Western companies that have taken to increasingly source IT and business services from the Eastern hemisphere. Salaries comprise a large component of the total cost of offshoring incurred by customer companies.

Yet, a recent McKisney studies argues that rising wages in India do not impact the overall cost. It presents data to show that other costs — technology, infrastructure, staff productivity, shift utilization — if managed efficiently keep the fully loaded cost of offshoring low.

Yet, India’s offshore market is likely to maintain its low-cost labor advantage over countries such as the U.S.A. and U.K. for at least the next two decades, according to Everest Research Institute’s 2006 Global Sourcing Market Update.

source: GlobalservicesMedia, Everest Research Institute