Escalating offshore salaries – what’s the problem?

Yet another bug-bear of the anti-globalization movement is that costs are escalating so fast that in a short space of time, the costs will catch up with the west and therefore it’s not worth undertaking in the first place. There are two points to consider here:

1) So what? Globalization is about more than cost; the fact is that there are not enough “smarts” in the west to fuel services companies’ growth ambitions. No matter what governments say, there is an acute shortage of skills across almost all high end knowledge based sectors so the reality is that successful companies will need to scour the globe for the best talent if they are to thrive and survive.

2) Do the numbers. Take a smart, experienced and capable person with around 6 years of relevant experience on a great salary of say $20k per annum. Compound that up 20% a year for the next 5 years and what have you got? $50k per year. I reckon that person has got to be worth at least $50k pa in 2011, particularly when you consider what a high quality individual with 11 years experience is going to cost you in the west! Assuming 5% wage inflation in the west, and a starting salary of $80k, the cost at the end of 2011 will be $102k

So next time some one talks about this as a reason not to, get the calculator out and do a simple compound interest calculation!