A multinational corportaion has an office in Palo Alto, California, and an offic

Question

A multinational corportaion has an office in Palo Alto, California, and an office in Bangalore, India. A 21 year old American computer science graduate works as a software tester at the Palo Alto office. A 21 year old Indian computer science graduate has an identical position at the Banfalore office. The american earns $75,000 per year in salary and benefits; the Indian earns $10,000 per year in salary and benefits. Is this arrangement moral? Should the company give equal pay and benefits for equal work?

Explanation / Answer

Solution

Let us first consider a few points about the living conditions of the two countries , that would enable us to make a better judgement :

1. Cost of living in the USA vs. India.

Renting a one room apartment in a city center in India will cost you around $200, while in the USA prices land around $1000. This is a huge difference and applies across the board whether you’re talking groceries, utilities, or entertainment. The same goes for salary; being able to earn a similar salary in India as in the USA translates to a high standard of living in India. If you are a skilled professional, it’s possible to earn between $4,000 – $5,000 per month which is great considering how much you’ll save on living costs. In the USA, on the other hand, you can make between $6,000 – $7,000 as a skilled professional – which isn’t significantly high enough to guarantee good savings due to the higher cost of living in the States.

2. Electricity use in the USA vs. India.

This seems like an odd topic, but electricity has long been a must-have in the USA as opposed to the commodity it is in India. The average Indian uses around 96% less electricity than the average American and this isn’t necessarily by choice. Power cuts are a common occurrence even in some of the larger Indian cities when the government is trying to conserve energy. For many Americans, it can be a big shock to have to become accustomed to going without electricity for a couple hours every day. The possibility of power shortages in India is something you should definitely keep in mind as you prepare to move abroad.

3. Going back to school in the USA vs. India.

Let’s say you move to India and you decide it might be beneficial to pursue an MBA or some other advanced degree. There are quite a few things to consider when doing this. No doubt, higher education is much cheaper in India. You can get an advanced education at a good private university for around $15,000 per year. In the USA, you’d be lucky if you only paid $15,000 per semester at a state school – generally you’ll end up dumping around $50,000 per year into your education. However, having a degree from an American university can do you more good in the long run simply because degrees from the USA are globally held in higher regard than those from India. You’ll just need to choose between paying a lot for a more ‘valuable’ degree, or paying less for the same education but having a degree considered of lesser value.

4. Running a household in the USA vs. India.

We’ve already covered cost of living, so let’s take this a step further and look at hiring domestic help. Labor is extremely cheap in India which means that most middle-class families can afford to hire a maid and at times a driver. This is a pretty foreign concept in the USA as cost of labor is higher and the average citizen would not be able to hire someone to clean their home or cook for them. In India, you can hire a live-in cook and maid for around $200 per month while in the USA you’ll end up paying this per week just to have a maid come in a couple times to clean only. Having this benefit in India could definitely make life easier for you as you can hone your focus on growing your business as opposed to spending time on household upkeep.

Now , noting all the above mentioned points we can pretty much come to a conclusion that the living conditions in USA are far more expensive than compared to in terms of food ,renting and so on . The main reason being the economy of the two countries . Here we also have to take into consideration the number of engineers that are graduating from these 2 countries annually , while USA produces 1 lakh engineers annually ,in India 15 lakh engineers graduate annually which is a really large number , and also to fit into a much smaller economy as compared to USA.Paying an Indian such a small salary as $10000 per year would not be completely fair , in contrast to an engineer who gets paid $75000 per year . But keeping in mind the living conditions in the locations they work , it is agreeable that an Indian gets paid lower than an American but there should not exist such a vast difference .According to the stats presented in the question , an Indian would be paid only 14% of what an American makes per annum , this would be immoral and totally unfair on the company's part towards their employees. The company should pay atleast half to what an american gets in terms of salaries or benefits .

Feel free to reach out regarding any queries. And please do rate the answer . Thank you .

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