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Wage costs in China higher than in India: Study
(FT.com)
Updated: 2005-11-15 11:46
Multinational companies establishing low-cost operations in Asia face higher
wage costs in China than in India, according to a study of more than 600
companies in the two countries.
Some senior managers and professionals in China earn more than double the
rates paid to Indian managers, the study, by Mercer Human Resource Consulting,
concluded. However, it said increased demand for highly skilled Indian workers
was threatening to mop up much of the available local supply and force up pay
rates.
"Although wage costs are lower in India, there is a high demand for skilled
workers there, particularly at the executive level," said Mark Sullivan,
worldwide partner at Mercer. "If demand continues to outweigh supply then we can
expect wages to increase substantially over the next few years."
Average pay rates have risen 11.5 per cent in India in the past five years
compared with 7.5 per cent in China.
India had "an enviable pool of high quality, talented professionals" and the
largest population of English speakers outside the US, while China had attracted
foreign manufacturers with its production facilities and low-cost labour. China
was now "acclaimed as the world's preferred manufacturing hub . . . companies
are increasingly looking to outsource their back-office operations to these
countries to reduce overheads".
Annual salaries of Indian project managers averaged $10,039 (?,600, ￡5,780)
compared with $23,409 in China. The pay of Chinese financial analysts, at
$13,194, also outstripped Indian salaries of $8,408 for the same job.
Living costs in Chinese cities were much higher than in India and
"compensation levels of over 100 per cent of Indian pay levels" were abundant in
Beijing, "particularly for senior level marketing, IT, human resources and
logistics positions".
Chinese pay was higher for 95 per cent of the 42 jobs considered in the
study. But pay differentials were "less stark at lower levels". Indian skilled
production workers earned $2,334 a year and customer care assistants $2,418,
compared with $1,853 and $1,601 respectively in India.
Mercer said wage costs were only one factor that needed to be considered when
deciding where to outsource operations. Companies also needed to "to weigh up
other operational costs, as well as factors such as proximity to markets to
determine the most cost-effective option".
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