Hiring staff in India may not be worth it

Salaries of engineers in India have risen strongly — as they should — but apparently enough for several U.S. companies to give up on the idea of hiring there.

The WSJ has a notable story (subscription required) about the trend, worth reading for start-ups with investors pressuring them to hire abroad for cost reasons. It may not be worth it any more, with salaries for software engineers officially growing at 10 to 15 percent a year — but with some people saying it is more .

…Three months ago, Munjal Shah reversed a bit of that shift. Shah, who leads a California start-up called Riya Inc., had opened an office in India’s technology capital of Bangalore in 2005, hiring about 20 skilled software developers. The lure was the wage level: just a quarter of what experienced Silicon Valley computer engineers make.

Then Indian salaries soared. Last year, Shah paid his engineers in India about half of Silicon Valley levels. By early this year, it was 75%. “Taking into account the time difference with India,” he says, “we weren’t saving any money by being there anymore.” In April, Shah shut down the Bangalore office…

The story lists a bunch of other companies making similar moves, including Kana Software, of Menlo Park, Calif., Teneros, of Mountain View, Calif., Apple, of Cupertino, Calif.