Soaring salaries in India threatening Gulf IT firms

India's booming economy making it more difficult to recruit and retain employees

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By  Claire Ferris-Lay Published  October 19, 2008

Regional IT companies are being threatened by rising salaries in India as the country's booming economy lures expatriates back home, recruiters have told Arabian Business.

IT companies in the Gulf have traditionally hired employees from India, but recruiters said rising salaries are making it more difficult to convince Indians to come and work in the region.

They said regional companies are having to offer much more attractive salary packages in order to hire and retain staff.

“IT employees [from India] have got a lot more options available to them now,” said Bobby Hussain, an IT consultant at Charter House recruitment agency in Dubai.

“Many have been in this region for some now so are settled and don’t want to go back but those coming from India in the first instance are reassessing their decisions and deciding [not to relocate] because they do have a lot of opportunities over there at the moment.”

India’s $1.2 trillion economy is the world’s second fastest-growing after China. Despite a slowdown due to increased inflation, its economy is expected to grow 8 percent in the year to March while gross domestic product (GDP) is predicted to increase 7.9 percent in 2008-9.

Indian salaries have increased and are encouraging more would-be expats to stay at home with their families. Indian wages have increased 14.9 percent on average this year, compared to an average pay increase of 11.4 percent for private sector companies across the GCC.

The county’s rapidly growing information technology sector will see its software and BPO segment grow at 16 percent annually and by 2012 is expected to be worth $132bn, according to the International Data Corporation (IDC).

“There is a huge brain drain in India and to try and get those highly talented people back [the country] is realising it will have to pay comparable to the West, so salaries in India are going up," said Sunny Dehiri, head of IT at Hays recruitment agency in Dubai.

"To a certain extent that has also happened here with expats that have come over from India."

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