bangalore
salaries, conditions that made up for the difference. Some forward thinking firms, Infosys Technologies and Baysoft, for example, are offering their employees a chance to buy into the company and share the profits. Nevertheless, the software industry pays far better than any other industry in Bangalore. A software professional in the industry can expect to be paid on average between Rs.10, 000 ($286) and Rs.20,000 ($571) per month depending on experience.
Some industry people feel that the wages do not reflect productivity (Mehta, 1996, p. 27). In some situations, due to the lack of experienced personnel, 70 per cent of the revenue comes from as little as 30 per cent of the staff. Others feel that the wages reflect the demand for Indian software skills and will fall as and when the demand declines. The danger for most firms is that if the wages continue to rise unabated, and there isn't a commensurate increase in productivity or an appropriate shift to a higher level of value-added activities, India will lose business to other countries where wages are lower.
Apart from putting pressure on new entrants to the industry, who are unable to offer competitive salaries, the industry is affecting the local labour market. The starting salary of a "first class graduate" is about Rs. 12,000 (or $343) a month in the software industry, compared with the per capita income of urban Bangalore which is Rs. 10,546 (or $300) a year (TECSOK, and Financial Times, 1995a). It is clear that the salary structure of the software industry exceeds other sectors of the city's economy. A software engineer in other industries in Bangalore cannot expect to earn more than half of what he would make in the software industry. This has meant that other businesses are losing good people to the software industry.
Other industries, particularly those that are not export-oriented, are unable to keep up with the salary increases in the software sector. Bangalore has traditionally had a very large middle class, with more than 55 per cent of the working population employed in technical or skilled jobs (Sharma, 1994, p.87). The software industry represents the higher end of the middle class. Interestingly enough high salaries in the software industry apply to non-professional people as well. Apparently even a janitor in the software industry is paid much more than a janitor in other sectors (interviews).
The quality of the jobs created
The effect of Bangalore's participation in this global production chain on software professionals in the city has been revealing. First of all it has given a lot of graduates from the IITs the opportunity to work on software and in the computer/IT industry in their own country. Until the mid-1980s, opportunities for this kind of work in India were negligible, so India ended up training world class engineers and then losing them mostly to the United States. Secondly, whether the firm is involved in body-shopping, or has moved up to doing offshore software development, the software industry in Bangalore has enabled [next page]