"WE speak English, work for less," replies Dr Arun Mehta, when asked why the number of Indian software companies has risen from 7 to 130 over the last five years. Dr Mehta, managing director of Indata Private Ltd, a New Delhi company which specialises in software for factory automation, says 75 per cent of Indian companies are export oriented, with a substantial percentage of these acting as subcontractors for foreign software firms. Indian programmers do work for less, with the average salary being anything from 10,000 to 50,000 Rand (£200-£1,000 approx) per month, in Dr Mehta's opinion.
"Corporate America is getting a lot of work done on foreign shores - in India, China, Singapore, Hong Kong, Taiwan Brazil, Mexico and Australia - but not by Americans," the New York Times reported last year.
"Many fear that the growing tendency of corporations to farm out tasks to developing countries," it continued, "is widening the gap even further between the rich and everybody else in America society by eliminating some categories of high skill, high wage jobs that make up the heart of the middle class."
You might call it the "Global Village Effect" - as the world - gets smaller and it becomes ever easier for companies to search out the cheapest place to get particular work done. The global village will have little mercy for those who cannot deliver at the right price - it might better be called a global jungle; survival of the fittest.
Eastern Europe has many talented software people who are willing to work for much less than their Western European counterparts. Martin Adamec, marketing director with Slovakian information technology company Rasax, says Slovakian programmers will work for "approximately 15 to 20 times less than in Germany".
Adamec also feels that programmers from traditionally less developed countries are often sharper and better honed than programmers in the West. They have less of the tools which make programming easier and standardised and thus they have to rely more on their ingenuity.
Historically, Ireland has positioned itself as a gateway to the EU, as well as a country which delivered a well educated, competitive workforce. So, how will the global village affect Ireland?
Forbairt's national software director, Barry Murphy, says that: "The kind of companies who come to Ireland are looking for a base in Europe. A lot of them are not looking to Ireland as a development centre. Some do, but that's not why Microsoft or Lotus or most of the others are here, "What could happen," he continues, "is that indigenous Irish software companies could become outsourcers if they can't get the people here. The shortage of people is really hitting home at the moment . . . The other thing that the shortage of people is inevitably having an effect on is salaries. We are beginning to perhaps price ourselves too highly."
It is sometimes said that the Internet will help "leapfrog" developing countries into the fast lane of software and other development. Two main reasons are given for this. Firstly, the Internet allows people from developing countries access to information and resources which are not available at home. Secondly, the Internet - although lack of bandwidth is a limiting factor - allows for much better communication and delivery of work between customer and client, (particularly when the work is digitally based).
"The Internet is a very powerful communication medium which can help to sell our programmers' capabilities abroad," Martin Adamec says. "Thanks to the Internet, we are in contact with one Scottish company and we are preparing a sub contract - `frame' agreement regarding W3 development."
"Sure, the Internet will help, but only after we have decent telecom for the masses," Dr Mehta says. (His position is not suprising since a recent International Telecommunications Union survey found that India came last out of 39 countries on the number of telephone lines, TV sets and PCs per inhabitant.) Also, many developing countries are dominated by telephone monopolies and severe government communications restrictions, which act as dampers on Internet growth.
The trend to find the cheapest place to outsource work is likely to continue and, with time, the revenues generated and experience gained by this type of work may help developing nations become substantial producers of original software. In the meantime, the middle class in developed countries will continue to, be squeezed as the razor sharp competition in the global village intensifies.
. Gerry McGovern: gerry.nua.ie