Development Informatics Group (DIG)
Software Industries and Development
Hiring Indian Software Labour: Cost Breakdown and Comparison
Cost Breakdown
| Charge Element | Onsite Work at Client Site (US$) | Offshore Work Done in India (US$) |
|---|---|---|
| Overseas allowance | 1,900 | n.a. |
| Overseas rent | 1,700 | n.a. |
| Overseas local travel | 300 | n.a. |
| Overseas travel, insurance and visas | 450 | n.a. |
| Overseas tax | Variable | n.a. |
| Local hardware use | n.a. | 550 |
| Basic Indian salary | 900 | 900 |
| Indian salary extras | 400 | 400 |
| Administrative and financial overheads | 650 | 650 |
| Training overheads | 300 | 300 |
| Building and utilities overheads | 200 | 200 |
| Additional offshore overheads | n.a. | 400 |
| Profit | 1,200 | 1,200 |
| Total | 8,000 + tax | 4,600 |
Source: Interviews and company literature
Note: Figures are averages for a software developer with 1-2 years' experience. There is a wide variation from these averages within firms.
Note: Additional offshore overheads are the additional administrative, managerial, communications and other costs which, for onsite work, would be the client's or agency's responsibility, or would not exist.
Note: Wages paid at Indian rates make up only 55% of offshore costs and 25% of onsite costs. This explains why, while Indian software wages may be as little as one-eighth the size of those in the US, overall Indian software charges are much closer than this to American ones.
Note: Further analysis and discussion can be found in Chapter 3 of the book India's Software Industry .
Cost Comparison
| Role | Switzerland | USA | Canada | UK | Ireland | Greece | India |
|---|---|---|---|---|---|---|---|
| Project Leader | $74,000 | $54,000 | $39,000 | $39,000 | $43,000 | $24,000 | $23,000 |
| Business Analyst | $74,000 | $38,000 | $36,000 | $37,000 | $36,000 | $28,000 | $21,000 |
| Systems Analyst | $74,000 | $48,000 | $32,000 | $34,000 | $36,000 | $15,000 | $14,000 |
| Systems Designer | $67,000 | $55,000 | $36,000 | $34,000 | $31,000 | $15,000 | $11,000 |
| Development Programmer | $56,000 | $41,000 | $29,000 | $29,000 | $21,000 | $13,000 | $8,000 |
| Support Programmer | $56,000 | $37,000 | $26,000 | $25,000 | $21,000 | $15,000 | $8,000 |
| Network Analyst / Designer | $67,000 | $49,000 | $32,000 | $31,000 | $26,000 | $15,000 | $14,000 |
| Quality Assurance Specialist | $71,000 | $50,000 | $28,000 | $33,000 | $29,000 | $15,000 | $14,000 |
| Database Data Analyst | $67,000 | $50,000 | $32,000 | $22,000 | $29,000 | $24,000 | $17,000 |
| Metrics/Process Specialist | $74,000 | $48,000 | $29,000 | $31,000 | - | $15,000 | $17,000 |
| Documentation/Training Staff | $59,000 | $36,000 | $26,000 | $21,000 | - | $15,000 | $8,000 |
| Test Engineer | $59,000 | $47,000 | $25,000 | $24,000 | - | $13,000 | $8,000 |
Source: adapted from H.A. Rubin et al. (1996) Worldwide Benchmark Project, Rubin Systems: Pound Ridge, NY.
Note: Figures are averages for 1995. They are likely to rise c.5-10% per annum, with rates being slightly higher in lower-wage economies.
[This page is managed by Dr. Richard Heeks ]