Does it make sense to offshore to India?

by alec on May 29, 2007

Infoworld published a piece this morning about how the economics of offshoring to India are becoming less enticing than they used to be.  Particularly interesting were Riya CEO Munjal Shah's comments.

Offshoring to India has been a good choice for Silicon Valley companies for years, because Silicon Valley wages have always been exceedingly high.  But outside the Valley, that choice has been much less compelling.  We certainly looked hard at Indian development teams a while ago, but the economics for a Canadian company to offshore really don't make sense.  Wages in Ottawa are already just 70% of Silicon Valley, because the cost of living here is dramatically lower.  With the generous tax incentives offered by the Government, net wages are in the range of 50% of the Valley.  So why outsource?

And in fact, there's a burgeoning "near-sourcing" industry in the Ottawa Valley as local companies market themselves as price competitive with South East Asia, but in the same time zone. 

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