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Tech Companies Cool on Indian Outsourcing

Rising labor costs make hiring at home more attractive

By Sam Gale Rosen,  Newser Staff

Posted Jul 3, 2007 10:12 AM CDT

(Newser) – India, the destination of choice for American tech companies looking for sophisticated but cheap labor, is beginning to lose its appeal, the Wall Street Journal reports. Rising pay scales are making it  too expensive to justify the complications of globalizing. Now some are outsourcing their outsourcing to slower climes like Vietnam and even Poland.

Small firms have been the first to turn away from the subcontinent; shifting hiring back  to the US. But the behemoths are slowly following—Intel is putting the brakes on growth at its Bangalore outpost. "The wage inflation rate for engineers in India is four times what it is here," Intel's CEO says.

Call center employees at MphasiS and 24/7 Customer in Bangalore, India, receive one to three weeks of training before they begin taking calls. In addition to their technical training, they're coached
Call center employees at MphasiS and 24/7 Customer in Bangalore, India, receive one to three weeks of training before they begin taking calls. In addition to their technical training, they're coached   (KRT Photos)
At 1 a.m. local time in Bangalore, India, -- peak workday hours in the United States -- the noise inside 24/7 Customer call center crescendos to a climax with the noise of nearly 1,300 phone conversat
At 1 a.m. local time in Bangalore, India, -- peak workday hours in the United States -- the noise inside 24/7 Customer call center crescendos to a climax with the noise of nearly 1,300 phone conversat   (KRT Photos)
Most call center employees are not allowed to use their real names, let alone reveal their Indian locations to callers from the United States. If asked, the refrain over the phone headset is usually
Most call center employees are not allowed to use their real names, let alone reveal their Indian locations to callers from the United States. If asked, the refrain over the phone headset is usually "   (KRT Photos)
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