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India, China more expensive than US to hire engineering talent: Intel CEO

Chipmaker's CEO Paul Otellini says engineers with four-six years experience in India, China cost the same as in the US; managers cost more.

twitter-logoGoutam Das | October 5, 2012 | Updated 20:12 IST

Goutam Das
Goutam Das
India and China are now more expensive than the United States to hire engineering talent from. That is what Intel's president and CEO Paul S. Otellini believes.

During a discussion with Dr Tom Campbell, Dean of the School of Law at Chapman University and a former Republican Congressman from California at the Intel Capital Summit in Huntington Beach, Otellini argued that there was a case for creating more jobs in the US right now. "The cost of hiring for those with four-six years of experience is the same in US compared to India-China. For first and second line managers, the cost exceeds that of the US," he said. "There is an opportunity to create jobs in the US."

Otellini is part of President Barack Obama's Jobs Council.

Historically, the difference in salary between the US and India was 1:3. This means that for every engineer hired in the US, companies could hire three in India. Many at the Intel Capital Summit thought Otellini's comments were exaggerated. Still, the Intel CEO's comments indicate that the cost advantages of Asian economies are changing. Intel currently employs 3,500 in India.
 
A few Intel executives, who did not want to be quoted, argued Otellini is not wrong. "He is not talking of just salaries. He is talking of the overall cost of operations. In India, there is more attrition and the return on investment on an employee in terms of training costs and other expenses incurred are always not great," an executive attending the Intel Capital Summit said.

First line managers usually have about four to five years of management experience, besides years of engineering experience. They need to speak the local language and also communicate with other multinational partners. "It is a supply-demand thing," another Intel Capital executive said. "The supply of this kind of talent is limited and they are often hired with big salaries."

Sudheer Kuppam, a Managing Director with Intel Capital, said that Intel being a design house in India hires VLSI designers. This talent pool is limited and this drives up their salaries.

*This story has been corrected to reflect the fact that many at the Summit felt the Intel CEO's comments were exaggerated.

(The writer is attending the Intel Capital Summit in Southern California on the invitation of the VC firm.)

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