Is India's software talent getting too expensive? Henning Kagermann, chief of SAP, the leader in client and server enterprise application software, believes so. His recent statement that Indian software developers are becoming expensive and SAP intends to look elsewhere for hiring, has sparked off a debate on whether India can retain its competitive edge in software.

Kagermann was stating what the Indian software industry knew for a while. The salaries have been rising because of a demand-supply mismatch in the software developers market. The mismatch is acutely felt at two levels: fresh and middle-level.

Middle-level salaries have annually risen by as much as 15-18 percent for the past two years compared with 10-15 percent in other categories. Puneet Jetli, GM at the People Function department of MindTree Consulting, is of the opinion that Kagermanns statement and a threat from competitors like China and east European countries should not be taken lightly.

"The salary increases of Indian software developers have been in range of 15 percent in 2005 and we expect it to be between 14 and 15 percent in 2006, and in some cases a little higher. Demand is especially high for software developers, who specialise in package implementation, data ware housing, hardware design, board design specialists and domain consultants," says Jetli.

The consistent rise in the salaries of software professionals is likely to give rise to low-cost centres, which will emerge as alternate software destinations, says Hema Ravichandar, former human resources head at Infosys India. "This is a key challenge for the Indian IT industry.

However, India retains the competitive edge when it comes to the depth of technical talent, language skills and ability to deliver quick and large-scale manpower ramp up programmes. And this is evident in the way many multinationals are viewing India," says Ravichandar.

The good news is that with the Indian software industry, in conjunction with educational institutes, is getting its act together. Nasscom and industry veterans are taking a look at whether the available graduates can match industry expectations and have the required skills.

(www.tmcnet.com)