As the dollar slips and other currencies gain ground, it’s time to exercise caution outsourcing IT functions to India or other countries.
India’s been successful keeping a lid on wages and other costs for U.S. companies using the country’s cheap, well-educated labor pool to manage IT tasks in recent years. But the gravy train may be grinding to a halt.
While hourly rates have increased only minimally, important price increases are often embedded elsewhere in contracts, so it’ll be wise to scrutinize new terms when contract renewal time rolls around.
“Embedded” price hikes show up in:
- redefining what constitutes a workweek
- relying more heavily on inflation clauses and higher-cost-of-living adjustments
- including clauses allowing for currency inflation, and
- charging more for travel and “substantially more” for on-site rates, which tend to get less scrutiny than the offshore rates.
That last item can add up even when the worker ratio is 80% offshore to 20% onshore. Staff members sent by a provider to a customer site already command higher pay than the provider’s offshore workers.
Outsourcing firms are also becoming more conscious of not giving away free hours, as they may have done in the past. Managers are closely tracking hours teams spend on client work and asking for extra money.
And it’s not just Indian providers doing this. Other offshore firms are doing the same.
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