Market trends

This year, as I travel to conduct research on global software trends, I can see the evident of the financial crisis in almost every country with laid-off workers and software companies go out of business. However, it seems that software industries in India and China are still thriving, maybe a little slower than previous years. Here are some interesting facts:

The financial crisis has impacted the salary of software people in China and India where the average raise for 2009 is only about 3.5% to 4.0% as compared to 8% to 10% in the last few years. The average monthly salary for newly graduated programmer in India is about $ 1200 to $ 1500 and China is about $ 700 to $ 900. Students graduated with a degree in software engineering made more than computer science, about $80 to $ 120 more. The salary of experienced people varies a lot and difficult to collect because many do not want to disclose how much they made as they keep switching jobs to get better raises. The average software people in India change jobs every sixteen months but China is little less, typically every twenty to thirty months. On the average, software workers receive annual bonuses of 3-5% of their annual salaries, senior technical and manager bonuses can go between 5% -15%, and for senior manager (Director and VP) could go higher than 15%.

Even with the economy downturn, many software companies are still reporting losing workers to competitors as people keep switching jobs to get increase in salaries. However number of people changing job is less than the last few years. In India the turnover is about 23% as compared to 35% few years ago and China is about 10% as compared to 22%. There are reported cases of experienced software people getting more than one job offer at a time as the competition still heat up with larger companies hiring people from smaller ones. Because of the financial crisis, many smaller companies are having difficult in maintaining the business as customers reduce works and limit spending. As a result, smaller companies became targets for acquisition by larger companies. Financially strong companies in both India and China are acquiring smaller companies at the rate of five companies per month as larger companies are increasing their staffs to hundreds or thousands in the past six months. Despite the crisis, what I am seeing is good competition for top talents, which is really a business as usual -- and business as it should be.

Another interesting factor is most outsourcing companies do not advertise about lower labor rate anymore as the market has completely changed to knowledge and skills. Most people would predict in the financial crisis, companies would reduce price to compete with each other but I did not see that happen. Most companies are advertising more on the knowledge and skills that they have. For example, Wipro advertised that the company has thousand of people competent in “Oracle business technology” more than anyone in India. Infosys advertises on the percentage of their workforce have advanced degreed and domain specialties.

As I met with university officials, they told me that “The best graduated students can still get top salary. Good students can find jobs but probably aren't going to get multiple offers. The average students are going to struggle a little bit to find jobs but eventually they will all get jobs because many companies are slow to hire as they are still watching the market. This year, many top students are still being recruited by foreign companies and over 200,000 software people are applying for the H1B visa program to work in the U.S, even the allocation is still limited to about 80,000. Top U.S software companies are still hiring Indian software engineers but the hiring is slower then previous years.

My friend, Prasad Agarwal, a senior manager at Wipro told me that Indian companies are now looking to increase business in Africa and the Asia-Pacific region to offset the slowdown in business spending in the US and Europe. He said: “For so many years, we are focusing on the U.S and European market and ignored Africa and South East Asia since they are small markets but today every dollar count. We know that it is difficult to compete with China in Japan and S. Korea markets but other countries are still open opportunities. You will see that beginning this year, companies like Satyam, Tata Consultancy Services, Infosys and Wipro will be in every country in Africa and S. East Asia, especially country where economies are still growing and have strong needs for information technology. We have been watching these countries and in the past few years, businesses in Africa and South East Asia region are still on the rise so we must expand our business and capture the markets before others come in”.

According to his information, Satyam already earned one sixth of its total revenue from these regions as they are moving quickly to acquire local companies or offering higher salaries to top people from local companies, and eventually capture the market. Prasad said: “You can see that before we came, the country may have hundred of small software companies provide services to the local market but they are no match for us, we are bigger, financially stronger and we know how to do business globally. For many years, we ignored these small countries but with globalization, everything changes as we must expand our business. For example, Australia is a growth market for Satyam where our revenues increase 80% in the past few months. Few years ago, Australia had over 300 software companies but today it has about approximately 65, as most of their top people are now working for us. Hiring local people has helped us to win more government contracts and that is a winning strategy. As many of ours competitors wait for better time until the economy improves, we do not wait but expanding our market aggressively. The world is our domain, the world is our market and that is globalization.”
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Prof. John Vu
Carnegie Mellon University