India loses appeal as labour costs rise

Stan Beer
Wednesday, 27 September 2006 17:56

IT Industry - Market

Jim Sanderson, vice president and chairman of enterprise applications vendor, Lawson Software, says India has become a too high cost location to set up an offshore development center. That's why Lawson chose the Philippines.

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Lawson, a US$750 million a year company, which develops applications for the services and manufacturing sectors, has set up a software development center in Manila which the company intends to build up to 400 people.

“After having partnered with a two companies in India, we have two or three years experience working remotely off shore with partners,” says Sanderson.

“Now we want to expand that activity in a low cost, well skilled environment and we selected the Philippines to build that. We hired our first three or four people in January and over the last nine months we’ve brought in 120 people, with the intention of growing that up to 400 or more over the next 18 months.”

Having had experience in India for some years, some might find it touch surprising that Lawson decided to set up operations in Manila rather than a place like Bangalore or Hyderabad.

“There are some challenges in India,” says Sanderson. “One of them is cost escalation. Costs are rising 15% plus.”