July 05, 2007

 

Swallows and Summers

A lot of articles have been written about a startup closing its India operations due to rising costs - salaries to be specific. Free advice is being doled out generously to the startups (and possibly every company doing outsourcing) that they should not enter India for cost reasons anymore.

Well, well, well. If a startup is hiring a few engineers remotely (in India or elsewhere) solely for the cost reason, they have a bigger reason to worry about - their broken business model! The cost factor works well only when scale kicks in. Think of having an All-Hands in Chinnaswami Stadium. Or booking the entire multiplex for employees and their families to enjoy "Spiderman 3" on the opening weekend. Or setting up a small power plant to dodge the unreliable State Electricity Boards. Or INR hitting 9-yr high against USD still leaving you with enough savings.

As for the startups, the biggest cost they should worry about is opportunity cost.

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