US versus India: Earning versus Cost of Living

The once magic word NRI particularly US NRI is slowly losing its magical charm these days with rupees consistently getting stronger against US dollars and the continuing downward trend in US economy. In fact, if the trend continues to move the same way, the days are not too far where you will find a US techie drawing just the same salary as an Indian techie or to put it in another words a US techie will be earning as low as an Indian techie earns in India (that means US salary dipping and Indian salary rising).

SALARY:  Based on the data compiled by Manpower, take a look at the following startling revelations:

1. Sector's staff level salaries were as much as 86 per cent higher in the US compared to India in 2006. However, this gap declined to 82 per cent in 2007 and is expected to decline further to 78 per cent in 2008.

2. In the case of executive level salaries, the gap dropped from 68 per cent in 2006 to 60 per cent in 2007 and could further decline to 52 per cent this year.

3. The steepest decline of 21 per cent is likely to be seen in the middle manager level, where the US salaries used to be 69 per cent higher in 2006, but would be only 48 per cent higher than India in 2008. This difference stood at 57 per cent in 2007.

According to data compiled by Manpower, the average annual executive salaries in the US stood at $205,047 in 2006 and increased to $213,336 in 2007. In comparison, the Indian average annual salary is expected to rise from $65,356 to $103,167 in 2008.

For middle-manager level, the US average annual salary actually dropped from $104,681 in 2006 to $103,379 in 2007, while in India it rose from $32,733 in 2006 to $44,250 in 2007 and would further improve to $53,566 in 2008.

The Indian staff-level salary is expected to rise to $20,337 in 2008, from $13,156 in 2006 and $16,800 in 2007. In the US, the staff-level salary dropped from $92,201 in 2006 to $91,965 in 2007.

So, here we see a definite rise in Indian salary as compared to US salary.

COST OF LIVING:
1. Rent: Comparing the rent from a major US city like New York, Chicago, San Francisco, or LA to a major Indian city like Delhi, Bangalore, Chennai (except Mumbai), the rent difference will be as much as $700 (Rs. 35,000) where in a major city in an upmarket locality you will have to pay $600 to $1000 (Rs. 30,000-50,000) against a whooping $2000-2500 in a major US city.

2. Children Education: US definitely is much better than India because a public school in US is free, but in India the fee varies anywhere from $20 to $200 per month depending upon the choice of school.

3. Food: Of course, India much cheaper than US the savings in India can be as much as $300 to $500 a month.

4. Healthcare: Well, if you are fully covered in US, then its out of question, but if not, the healthcare in India is at least 25% cheaper than US.

5. Domestic Aide:  Undoubtedly, much cheaper in India, where in US, a single visit domestic maid takes anywhere from $25 to $50, in India for $50 you can get a domestic aide for a month.

Now, if you compare both these data together, I think its much less profitable becoming an NRI and better work in India and still make much better savings than US and enjoy the joy of living in your own country rather than some foreign land. In fact, if the trend continues, we might see a reversal trend and start seeing more of NRAs (non-resident Americans) in India rather than NRIs in US. Wat say guys???


© 2010 Ranjan Kumar

Why Obama chose to target Bangalore?

The entire BPO industry in India went berserk after the Harvard Law Graduate President Barrack Obama said the following, "It’s a tax code of corporate loopholes that makes it perfectly legal for companies to avoid paying their fair share. It’s a tax code that makes it all too easy for a number — a small number of individuals and companies to abuse overseas tax havens to avoid paying any taxes at all. And it’s a tax code that says you should pay lower taxes if you create a job in Bangalore, than if you create one in Buffalo, New York.”

Why Obama chose to name Bangalore instead of any other city in the world remains an open mystery to the world, particularly Indians, and more particularly namma Bangaloreans. It seems like not only the other cities in India, but even the most powerful county in the world is fearful of namma Bangalure, the Silicon Valley of India, or should we say Silicon Valley of world. One thing is very clear, Bangalore is now much ahead in terms of IT business than any other cities in the world and so we Bangaloreans should feel proud about it.

But what worries everyone here in the IT capital of India is the after-effects of Obama's now famous Bangalore speech. Rumors have started spreading like wildfire that the BPO industry in Bangalore may see huge repercussions in the coming 6 months. Well, the fears are genuine but we should not be too much worried about this. This means like Obama wants some drastic changes made in the income tax laws of his own country, so that more revenues should come in US treasury. Now the accounts for about 60 percent ($30 billion) of the $50-billion IT export revenue from India. About 70 percent of the export revenue is generated by Indian firms and the remaining by multinational captives or third party vendors in the sub-continent. That means that if any loss of revenues will also be loss of revenue for US if they change the tax laws in their own country.

So, in other words, as long as Bangalore and the rest of India continues to work smartly, the US would always try to make reforms in their tax laws, so that a part of revenue generated in India will be paid back to US in terms of taxes, and thus we all Indians can says proudly that now we are helping US getting out of the great recession of all time.

© 2009 Ranjan Kumar