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 or senior professional; supervisor or experienced professional; manager or specialist; and, senior manager or expert.
Iain Morris, a principal with Mercer in Toronto, says 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,”” Morris says. “”It’s in the lower half of the top 10. I think there are some significant advantages of looking at Canada — it being cheaper, similar time zones, culturally similar (to the U.S.).””
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 such as infrastructure, which may not be as expandable as firms considering offshore outsourcing are accustomed, says Morris.
“”Some things I worry about is if everybody, including the U.S. and Europe, were to offshore 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 says years ago, a U.S. insurance company processed its claims in Ireland because the country was relatively cheap with an abundant, educated workforce. As the Irish economy became more robust, he says, cost advantages 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 (such as) 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 such as India.
Peter Thompson, Toronto-based president and CEO at RIS, says the cost advantages of offshore outsourcing is a short-lived phenomenon. He predicts minor differences in global IT salaries in five years or 10 years, resulting in some of this work shifting back to the original countries.
Thompson says RIS chose Romania over India primarily because “”it’s one day’s travel versus two 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 says.