Local Employees, Local Pay?
William O’ Dell, vice president for human resources at LeBert Graphics (LG), a fast growing software development firm headquartered in Boston’s Route 128 technology belt, was visiting the firm’s first overseas subsidiary, LeBert Graphics Bangalore Ltd. (LGB). The visit had been going well, but a recent lunch with his good friend Ashok Rao had left him troubled. Rao was one of many Indian expatriates who had migrated to the United States in the 1980s. He had been with LG for a number of years and had recently accepted an assignment to return to his hometown to head the firm’s new development lab. O’Dell was thankful to have him there, not just because of his development skills, but because he hoped Rao would serve as a cultural broker between the headquarters and the local employees.
During lunch, Rao noted how the city had changed. Rao had first decided not to return to Bangalore after college in the United States because of the lack of opportunities here Now the city was booming, and computer software was the driving force. Neighbors in the Technology Park where LG was located included Siemens Components and Hitachi Asia. The nature of the industry had changed too. Initially, foreign firms had employed Indian workers for basic programming. Although cheap, these employees did not always have the training or skill levels seen in their American counterparts. There were still large pools of these competent, but not exceptional employees. However, while recruiting for the new operations, he found many of the applicants had technical skills that would equal those of any of the Boston staff. These were the employees they needed for the software development operations.
The labor market had changed in other ways too. Today, the best of these software engineers had more options. Because of a worldwide shortage, a host of firms were looking for skilled engineers. An engineer could work for the local operations of a...
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