A study by Mercer Human Resource Consulting showed compensation for IT professionals varies markedly around the world, and may shed more light on the growth of offshore outsourcing.
The survey indicated pay is generally higher
in Western Europe and North American than in Asia and Eastern Europe. Salaries for technology workers are the most attractive in Switzerland, followed by Germany, Japan, Hong Kong, the U.S. and Denmark. Remuneration is lowest in the Philippines, followed by Vietnam, Bulgaria, Malaysia, Indonesia and India.
Mercer measured pay differences of IT jobs that were grouped into four levels of expertise: team leader/senior professional, supervisor/experienced professional, manager/specialist and senior manager/expert.
Iain Morris, a principal with Mercer in Toronto, said Canada’s position across the four categories ranks among the top 10 highest-paying countries.
Canada scored sixth in the team leader/senior professional level, with IT workers earning gross pay of $49,700. It ranked eighth in the division of supervisor/experienced professional, with technology professionals making $64,000. Canadian IT managers and specialists earn $82,400, making them eighth among the highest-paid countries in the tech world. And senior managers and other IT experts who pulled in $106,200 also earned Canada the No. 8 spot.
“”Canada’s relatively low. It’s in the lower half of the top 10,”” Morris said. “”I think that there are some significant advantages of looking at Canada —— Canada being cheaper, similar time zones, culturally similar. From a management structure perspective, you could use similar processes as you would in the U.S. So there’s some comfort there.””
In contrast, companies mulling the option of outsourcing to a country that gives scant rewards to IT professionals, such as Venezeula or Brazil, must think about issues like infrastructure that may not be expandable as firms considering offshore outsourcing are accustomed, said Morris.
“”Some things I worry about is if everybody, including the U.S. and Europe, were to offshore into — and offshore fairly quickly and intensely — into some of the low-paying locations. You might find that very quickly you erode that competitive advantage, and demand just drives up compensation levels in that marketplace.””
Morris explained that years ago, an American insurance company processed its claims in Ireland because the country was relatively cheap with an abundant, educated workforce. He said as the Irish economy became more robust, cost advantages for the insurer disappeared.
Looking at the team leader/senior professional category in the Mercer survey, Indian salaries are about 80 per cent lower than those of Canada, “”so presumably it’s going to take some time for something like that to erode.””
RIS Resource Information Systems Inc. of Calgary, which handles applications support and maintenance for U.S. firms and also contracts out similar projects to its office in Romania, has already noticed salaries rising in popular outsourcing destinations like India.
Peter Thompson, Toronto-based president and CEO at RIS, said the cost advantages of offshore outsourcing is a short-lived phenomenon. He predicted minor differences in global IT salaries in five years or 10 years, resulting in some of this work shifting back to the original countries like Canada or the U.S.
Thompson explained RIS chose Romania over India primarily because “”it’s just one day’s travel versus two days’ travel to get there.”” Moreover, the country has a good educational system and promotes its IT sector by not requiring workers to pay income tax, he said.
Julie Kaufman, an analyst at IDC Canada in Toronto, said Canadian companies are interested in offshore outsourcing of programming work but shy away from relinquishing the responsibility of management positions.
She said although some companies are more comfortable keeping management work close to home because they can quickly reach the right people if problems arise, this trend will gradually change as Canadian firms understand more about outsourcing and are willing to experiment. To a certain extent, Kaufman said, it’s also cheaper to outsource programming jobs than management work.