Even though the engineering salaries in the services sector are $22000 on average in India, they provide an upper middle class quality of life here. The reason for this being the abysmally small salaries given to the lowest rung of the industry in manufacturing - who cannot even afford quality housing and health care - which is why we see such abundant slums in India and none in the US. An imposition of a minimum wage program across India ( and China as well though I am not sure of how things work there ) will bring up the quality of life here and subsequently the need for higher salaries in the services sector might arise as well, so as to afford the same relative quality of life as compared to the lowest rung. Until such a program is imposed, we wont see any further rise in salaries in the East.
Meanwhile, if manufacturing is to thrive in the West, it has to be based on core competencies and not just cost differentials. This is where today America needs to desperately invest in next generation of infrastructure such as Trans-American high speed rail powered by low cost alternative fuels like Hydrogen Fuel Cells which will help cut the manufacturing costs by as much as 50% ( 20% by the fact that Hydrogen Fuel Cells are 20% more efficient than diesel or coal and the remaining efficiencies arising out of lower cost and small transit times for raw materials and finished goods )
The industrial revolution started in the West and not the enslaved territories of the commonwealth ( like India ) just because of this reason. If costs had been the driving factor, England would have set up all of its factories in India - whereas what it did was took our raw material and manufactured in the England based on their core competencies in Manufacturing.
Read more about my reasoning and a plan to re-energize manufacturing in the US on my blog at http://ontechandpolitics.blogspot.com
Interresting article even if I think it is a bit biaised as we don't exactly know what we compare with. As already said what is important, more than the wage is the money in your pocket once you paid all the charges you have to live decently. If we used this metric I am sure that there is gap but not so high and even in the other dicrection in some areas.
On the other hand as low cost asian countries have been used as low cost subcontractors, management of those companies only looked at the bttom line and then only care about the labor cost so in this sens pure salary comparison has a meaning.
I strongly hope that salary will raise rapidly in these countries as it will be a way to make inshoring of work in Europe and US. Every body agrees that having local teams with people closed each other is always easier to manage with a higher ouptut and efficiency. Always moving to a low cost area is just non sustainable strategy which in the long run run can just be a disaster, looking at the mess in Boeing now is just a concrete example of the problems fiancial management can create when they substitute to engineers to define how engineering work has to be done.
I personally just believe we are at the beginning of the story as global warming, climate change, raw resources shortage with all the consequences we will see in the coming years will drastically reshuffle the cards.
Equal pay for one type of work with the same quality should be a universal rule. The pay here I mean is to maintain the same living quality in a given society, not in dollar and cent. Although the principle I believe is simple, to come out a good system is a real challenge among different cultures.
One major reason of outsourcing is for cost cutting. It is the management to try take advantages of lower pay working people. The motivation is deadly wrong. But some major companies in the States are proud of their cost cutting strategies. And it is discrimination, period.
On the other hand with the aforementioned pay system, companies in the developed countries may have real cost reduction advantages from the accounting perspective.
Cost of living and relative purchasing power are not important here. When the capital is in Dollars or Euros and the board/investors/executives are trying to figure out how to make their organization more efficient it's only the absolute cost that's relevant. Most of the organization's cost go to salaries. And when the ratio is 5 to 1 even a cynical engineer would have to believe that outsourcing will lead to an efficiency (output/$$$) gain for the organization. I have, literally, overheard an executive say to his Director of Engineering, "There is no problem that five more developers in India can't fix." (Insert cartoon of fat-cat smoking $100 bills here) It bodes poorly for a large part of the technology work that is (was) done in the west.
It's not all bad. The executives will still need to have a fair amount of support at their disposal. This means that Sales, Product Management, Engineering Management, and high-risk development will be located in the west. Ultimately this favors engineers with significant experience and starves the cultivation of new talent. Only with hesitation would recommend my children to pursue EE or CS degrees.
GeniusEE: Hey China/India - if you don't keep your wages down, we'll outsource your jobs to Vietnam and NigeriaNo Vietnam or Nigeria can come close to competing as long as the Chinese can peg the exchange of their currency ridiculously low even after holding onto a trillion dollars of reserves, courtesy Walmart. It is a fact that other third world countries are also complaining about China's beggar-thy-neighbor policy.
I think if we find a way to bridge the gap, push eastern engineers upward, and in general show eastern engineers not to let the bean counters under value them, this rift will be beneficial to all of us. I am just a new guy here so I am not trying to sell anything but I am starting a blog on this topic and would love input from anyone willing to share: http://becausemyfriendhasone.blogspot.com/
As you can see it's clearly a work in progress. Feel free to email me with suggestions at firstname.lastname@example.org. Hope to hear from some thoughtful engineers.
ps. I am not trying to sell anything I really want to just get more opinions from engineers world wide and start a conversation.
Perhaps I am one of the few engineers who have also an interest in history. The Roman empire has risen because of the might , discipline and profesionalism of the Roman military.
One of the main causes of the fall of the Roman empire was the fact , that at the end most of the Roman army, was composed of foreign mercenaries.
Originaly the West has prospered because of its technological cutting edge and superiority in R&D and industrial production over the rest of the world.
Today, many projects are outsourced to the East. Technological universities of the East will surpass the universities of the West.
Finally western hitech company (those who are outsourcing today) will not be needed any more by the East, because the technological superiority will be there.
In this article we are comparing apples to oranges. Before starting on salary consideration we need to see the cultural barrier, cost of living, social attachment, efficiency of work, taking responsibility, number of hours put for work. I know that India is a hub for outsourcing, but the people are so hard working. People sacrifice their family time for work. I agree that amount paid is less in $ but it is very very good salary in local currency. It is same as engineers earning more in LA and NY, where as when same engineer moves to TX, CO the salary will be down by 20%-30%.
As long as population in China, India keep increasing, and people are ready to work for any money in a country where average per capita income is less than $4000, there won't be any crease in wages in these poor countries.
However at the same time, as the market is in West, consumer there are ready to pay much more for the technology (As opposed to East consumers) it makes sense for the companies to employee the people who understand the market, and thus pay them higher for the new technology/innovation.
Once a innovation becomes commodity the work would surely be transferred to the East to keep the cost low. and the increasing population in these countries will further drive the cost low.!
The real comparison should be done with respect to the Economy of the country or PER Capita Income. China and India have combined 40% of world population with less than 5% of consumer willing to pay for the expensive technology.
I have worked in East for about 5 years before i moved to west. I OPENLY confess that engineers in East want to become manager as soon as they get into Job, i dont know why.. i was also like that..before i came to NA.
I think its unfair to compare West vs East salary.. really there is no comparison...
Only 10% of East engineers will be as good as NA engineer.
Rest of them,,i believe are liability to organizations.... thats my personal opinion....
so please excuse me if i sound too harsh...
I also feel that... i have become more efficient over here... my output is twice in the same ammount of time that i put into work...
In the last ,, salary comparison between East and West is rubbish