Top software engineers in Bangalore are getting too expensive, complained Like.com CEO Munjal Shah in his personal blog in late April. Shah was explaining why he had decided to relocate his company's engineering staff from India back to Silicon Valley, a gambit dubbed "reverse offshoring" by the Financial Times.
Bangalore wages have just been growing like crazy. To give you an example, there is an employee of ours who took the first 5 years of his career to get from 1 percent to 10 percent of his equivalent U.S. counterpart. He then jumped from 10 percent to 20 percent of his U.S. counterpart in the next 1 year. During his time with us (less than 2 years) he jumped to 55 percent of the U.S. wage. In the next few months we would have had to move him to 75 percent just to "keep him at market."
Not so long ago, one used to hear that the 12-hour time difference between India and California was a competitive advantage -- that it enabled true 24-7 operational efficiency. When Silicon Valley programmers quit work, their counterparts in Chennai or Bangalore would just be getting started -- the sun never sets on a globally distributed start-up. But rising wages seem to have a way of erasing such boons.
The cost of having two offices, which are twelve time zones apart, is significant. People in both offices frequently had conference calls at 10 p.m. and midnight every night (as a result the office in the U.S. didn't get started until noon sometimes or people rolled in tired). We were all traveling constantly. Development and communication moved slower due to the distance and teams.
One hopes that beleaguered information technology professionals in the United States will cheer up on hearing the news that wage inflation is hitting the upper echelons in Bangalore. But if you really want a taste of how far India has come in just one generation, Shah's most recent blog post is even more revealing.
On my trip to India this week, I spent a day in Pune with my 84 year old Grandmother. She retold me a story I've heard before about my father Girish Shah. My grandfather Popatlal Hemani (our last name was changed to Shah by my Grandfather as was commonly done by refugees from the countryside then) was a tailor in Mumbai having fled Gujarat during WW2. He was deaf and largely poor. They lived in the then outskirts of Mumbai, in an area called Kandivali. Their home was a single room with a kitchen where all six of them lived.
My grandmother proudly said that my father was the bright and ambitious one. He scored at the top of his class and when it came time to go to college he got into IIT Mumbai (Powai). Ironically, life isn't always about skill. My father was actually #2 in his high school. At the time entrance into IIT was not by a national exam, but rather offered to the #1 student in each high school. In his case the #1 student decided not to go. To this day I don't know who that person was, but he literally changed the course of my father's life and mine. Every time I see kids running in the streets of Mumbai, I realize that for one person's decision that could have been me.
IIT was the first of two significant opportunities that changed my father's life. My father studied hard and then got a second rare opportunity. U.C. Berkeley offered him not just admission but a scholarship to come to the U.S. The story of his immigration is iconic for his era. He took a steamship from India through the Suez Canal with one suitcase and $50 dollars.