Working in India

Recently while having dinner with friends I was engaged in a lighthearted conversation with friends about how the Indian Software Industry is booming and how many interesting jobs are to be had in India right now. From this stemmed a conversation about base pay in some companies in India and well, the numbers that were thrown out were anywhere from $20,000 to $30,000. My jaw nearly dropped since these are remarkably high salaries given the cost of living in India.

Lets do some basic calculations, most economists agree that the best way to compare quality of life/cost of living standards between two countries is by using the ‘Purchasing Power Parity (PPP) figures - India’s PPP is 0.194.

So if you earn $25,000 in India today that is equivalent to (25000/0.194 =) $128,000 and some change….. wow! This number is outrageously high right! Remember also that the PPP equates the standard of living and is not a simple currency conversion so its easy to see the positives in moving back (given ofcourse that you do land one of these dream jobs).

Now, this gets my mind racing - we have heard many times on the news and in print about a possible levelling off of the economic scales between the developing countries and the west - which would mean that the PPP index of India for example would rise and equal that of (for arguments sake) Nebraska, USA. This is a scary scenario for India as a whole, minus the IT industry (which might be able to command a higher PPP over time - though I highly doubt we’ll see this in the next 15-20 years), since this would increase the already wide gap between the rich and the poor and this would lead to absolute lawlessness as seen in some cities in Brazil. Also, from a standard of living perspective which the PPP indicators claim to capture I would argue that infrastructurally Indian cities are atleast 10-15 years behind even China which explains the higher PPP awarded to it (incidentally the Chinese PPP is higher than Russia).

So what does all this mean for me if I want move back?

It’s almost like a chicken and egg paradox - if I move back today with the low PPP my $25k in India will take me a long way in buying parity but I would have to deal with the terrible infrastructure and grit it out like the early settlers did in the US ( a bad example - but I am sure you get my point). I could alternately wait it out for a lot of the basic infrastructure work to be completed which could take about 15-20 years (modest estimate) but that would increase the PPP to levels of say Nebraska which would mean I have to earn a lot more to have the same quality of life.