Local Employees Local Pay Essay Example

seek their expertise. Some engineers even create their own successful software firms within the United States. While those with less advanced skills may not have as many options, the increase in foreign investment and start-ups in Bangalore offer attractive opportunities within their community. Initially, the discussion between friends seemed relaxed and nostalgic.

Rao had overheard a conversation where one of the brightest engineers in the development unit complained to a co-worker about the salary disparity between him and his American counterpart on a joint Boston-Bangalore project. The Indian staff found this issue important. Initially, O'Dell's reaction was that it was expected as technology skills are abundant in Bangalore, and pay rates for software engineers are much lower than Boston. He also mentioned that productivity in the programming unit was not always up to US standards. However, upon reflection, he realized that the issue was much more intricate.

The economies faced a dilemma as manufacturing firms that had relocated to low-cost, off-shore sites found that cost savings not achieved immediately could be permanently lost. Although wages were low, productivity was also at times low and employee motivation was lacking. Through improved training, supervision and equipment, productivity levels could be increased. However, increasing productivity would make these employees more desirable to other employers.

Furthermore, with the progression of the economy in these regions, there was oftentimes a change in the exchange rate causing local salaries to increase. However, due to exchange rate impacts, salaries would increase even more when converted to US dollars. Consequently, businesses utilizing contracted services might relocate to a different site with lower costs. Yet, relocation could be problematic and complicated if the enterprise

had already made a direct investment in the international location. As a solution, O'Dell suggested that it would be simpler for the company to be based in Bangalore for a short-term period. Nevertheless, LG's interest in Bangalore experienced significant changes over the past year since it had been outsourcing basic programming to an Indian subcontractor for several years.

They were not directly concerned about individual pay levels as the Indian firm managed everything related to recruitment, performance evaluation, and compensation. However, LG recently made the decision to acquire the Indian firm and establish a software development lab in-house to have more control over the operation.

The opening of the software development lab represented a significant change that would prioritize quality, especially after training programmers to meet the company's specific requirements. This move also allowed for the utilization of India's skilled engineers, particularly in areas where there was a shortage worldwide. Additionally, LG could tap into the potential of the fast-growing Asian markets.

To meet the unique needs of Asian customers, specialized programs had to be developed. While the technology initially came from Boston, significant modifications were necessary to tailor it for the local market. Eventually, the lab became independent and responsible for creating programs not just for Asia but possibly for the global market. To achieve this, daily team collaboration and interaction between engineers in both locations was crucial.

The discussion about short-term transfers of personnel between facilities brought to mind a compensation plan for the revamped India operations that the speaker had left on his desk before the trip. Although the plan did not specifically address compensation levels, it did raise some important questions about the

appropriate type of compensation package, adherence to local customs regarding vacations and leave, and extension of generous stock option and pension plans from Boston operations to those in India. This information is extracted from HRM: An Experimental Approach, Bernadin & Rusell, 2000.