SAP CEO Henning Kagermann commented this week that Indian programmers are getting expensive and SAP is looking at other labor markets. Demand and supply. But sit down and negotiate with SAP and they will argue till they turn blue that they, as a vendor, are reasonably priced. Some of their consultants bill more in a week what SAP pays a programmer or a consultant in India for the whole year.
We live in a free world and SAP or Oracle or IBM or TCS can price their products as they want, with no government mandated controls. But I am am always amazed at vendors thinking while they can leverage cheaper global labor, open source, broadband - they themselves are under no obligation to pass those lower costs along. They must honestly believe their customers do not know how their "raw material" costs are rapidly declining.
But customers are not chumps. They may not waste time writing blogs like I do, but they are starting to custom build more than buy packaged software. They are buying more third party maintenance. They are evaluating BPO closer.
After all, in a free world, there is no law that says customers cannot buy the same raw materials that vendors buy - often at even better price points.
