According to the latest 2021 estimates, the average salary in India is INR 31,900/month($455/month) or INR 3,82,800/per year ($5,460 per year). The median salary is INR 29,400/month ($420/month).
While the average salary in India has been steadily increasing, it is still much lower compared to developed economies like the USA and the UK, economies in transition like Russia and Ukraine, and even developing economies like Thailand or the Philippines.
The following examples will help reinforce our argument further. The average monthly salary of an IT manager in India is $1,365, compared to $3,466 in China and $5,440 in Canada. The average monthly salary of a call center executive in India is $201, compared to $318 in the Philippines and $397 in Mexico. The average monthly pay of a data analyst in India is $666, compared to $718 in Romania and $1,293 in Poland.
It is this cost advantage that makes India a popular destination for outsourcing. But that is not the point of discussion. This post introduces our readers to the five significant reasons that highlight why talent prices in India are so low.
Reasons Why Talent Prices in India are so Low
Like with any other country, education, age, gender, location, and work experience play a significant role in deciding salaries in India. The question then arises. If the determining factors are the same, why is there a yawning gap in talent prices between India and other countries? Three reasons come to mind:
1. Supply More than the Demand
More than 1 million students are added to India’s already abundant workforce every year. It creates a problem of plenty where the supply is always more than the demand. The competition for every job role is sky-high. Many organizations, too, take advantage of this situation by offering lower salaries and tiny increments.
2. No National Minimum Wage Legislation
Unlike most developed and developing countries, India does not have national minimum wage legislation that specifies minimum wages for different skill sets. One often finds a discrepancy in salaries and wages paid to the same skill set across states.
3. Low Cost of Living
The average monthly salary is an indicator of a country’s cost of living. Conversely, the cost of living is a crucial determinant of the average monthly payout. Take, for example, countries like the US, the UK, and Israel, where the cost of living is 75-80% more than India. Higher education, housing, food, healthcare, entertainment, and even basic amenities like water and electricity in India are pretty inexpensive compared to most other countries. And this difference in the cost of living reflects glaringly in the variance in talent prices.
Final Thoughts
As stated earlier, while salaries in India have been steadily rising, they still have a long way to go before they meet their counterparts in most other countries. The abundance of employable talent would always exist because of India’s huge population. The cost of living remains low. Hence salaries will stay low for the foreseeable future. Therefore, India will continue to be a favored destination for recruiting lower-priced yet highly skilled talent.
About Ufinity Ventures
Ufinity Ventures provides talent management and business development solutions for SMEs & startups looking to outsource operations to Asia. Be it pre-hire services or post-hire assistance, we offer end-to-end solutions and work as an extended team for our broad global clientele base, thereby helping them save time and costs while enabling them to gain access to the best local talent.
