Apple walks away from India
It says the decision was cost-driven. “India isn’t as inexpensive as it used to be,” the source says. “The turnover is high, and the competition for good people is strong.” Apple feels it “can do [such work] more efficiently elsewhere.”
The shutdown highlights concerns about the sustainability of India’s fast-track economy. True, India grew 9.3% last quarter and is still home to the world’s largest and fastest-growing offshore outsourcing sector, which last year generated some $17.3 billion in revenues and employed nearly 700,000 people, according to the McKinsey Global Institute. Yet India’s benchmark Sensitive index, or Sensex, has dropped by 20% in the past month as global investors have fled emerging-market stocks. And the outsourcing sector is now plagued by concerns about rising wages. Entry-level pay at tech and outsourcing companies climbed by as much as 13% annually from 2000 to 2004, while salaries for midlevel managers jumped 30% a year during the same period, to a median of $31,131, according to McKinsey and Nasscom, India’s software industry association.