Vivek Paul: Warned of foreign threat

Vivek Paul, vice-chairman and president at Wipro's global IT arm, warned of an end to the low-wage culture which has been at the heart of India's software boom.

Indian software engineers typically earn one eighth of the salaries of their counterparts in the US and Europe.

Mr Paul also said that the rupee was, in "purely economic" terms, 20-30% undervalued on international currency markets.

The rupee has risen only 1% against the US dollar over the last six months, during which the greenback has plunged against major currencies such as the euro.

Future threat

Mr Paul, in an interview with news agency AFP, warned that India's cost advantage would "fritter away as salary costs go up and, more importantly, as the rupee continues to appreciate".

"If the rupee ever rises to a true purchasing power parity level, that would take away a lot of the cost advantage.

"India will continue to gain over the next couple of years. It has a fairly strong competitive advantage.

"But two years from now you cannot take your advantages for granted."

Shift abroad

India's software exports are expected to have surged by 29% to 470bn rupees in the year to the end of this month.

But Mr Paul warned of the growing competition India already faces from lower-wage countries such a Vietnam, China and the Philippines, which are beginning to focus on the software sector.

"I do not think it is an immediate threat," he said.

"Everybody is going to emulate [the Indian] model one way or the other."

Indian firms such as Wipro were themselves increasingly looking at shifting work abroad where they could "bring the advantages of cost and quality", Mr Paul added.