SAP CEO: India is getting expensive

Kagermann has eye on China, Eastern Europe

By John Blau

January 30, 2006 12:00 PM ET

Recommended

IDG News Service - Escalating personnel costs in India -- one of the world's largest markets for offshore software development services -- have prompted business software vendor SAP AG to begin looking elsewhere for low-cost, skilled programmers.
"India is slowly getting expensive," SAP CEO Henning Kagermann said in an interview today in the German edition of the Financial Times. "We have decided to hire a certain number there and then start looking at other locations."
SAP spokesman Frank Hartman confirmed the statements.
Kagermann pointed to India's relatively high staff turnover, which is fueling personnel costs, Hartman said. "Personnel costs are a key factor in the software industry."
Staff turnover in India has increased as SAP competes against other IT powerhouses such as IBM and Microsoft Corp., as well as local Indian IT companies such as Infosys Technologies Ltd. and Wipro Ltd., for qualified staff.
SAP is likely to expand in China and Eastern Europe, according to Kagermann. The reason the German vendor has only limited software development in China is largely because of the country's lack of protection for intellectual property rights, he said. "But that isn't going to prevent us from doing more in China," he added.
Today, about 1,000 people work for SAP in China, mostly in sales and marketing, Kagermann said.
Eastern Europe is another area where the German CEO sees opportunities for offshore software development. Turnover is low, he said, and the costs aren't too high.

Recommend Digg Twitter ShareThis

Email Print Send Feedback Reprints

Reprinted with permission from

IDG.net
Story copyright 2009 International Data Group. All rights reserved.

Jump to comments

Outsourcing

Additional Resources

WHITE PAPER

EFD vs. HDD - What You Need to Know

Enterprise flash drives provide a new Tier 0 storage layer capable of delivering high I/O performance at a very low latency. Proper use of EFDs in an Oracle environment can deliver increased performance compared to fibre channel drives. Read the recommendations for identification of the best DB components for EFDs.

WHITE PAPER

Gartner Research Report: Magic Quadrant for Application Delivery Controllers, 2009

The market for products to improve the delivery of application software over networks remains dynamic and innovative. Vendors focused on solving enterprises' most-pressing application problems have become the top players.

WHITE PAPER

Eight Criteria for Server Load Balancing

Server load balancers are a simple yet highly effective means to scale an application environment while ensuring its availability. Today's solutions should also address application performance and security. Read about the top eight criteria you should consider when choosing a server load balancer and how Citrix NetScaler meets those requirements.