Is Bangalore getting expensive for IT startups?

Riya, a California tech firm, has just upped and left Bangalore. Reason: It was getting just too expensive for the startup in Silicon Halli.

Too expensive to hire top-flight talent from the best schools. Too expensive to keep experienced guys on board beyond a point. Plus, the pressure of having two offices, with one working while the other slept, was telling on everybody. The opportunity to leverage cost difference was no longer available. And, therefore, the ROI—return on investment—was getting lower and slower.

Munjal Shah, the firm’s CEO, writes:

“There is an employee of ours who took the first 5 years of his career to get from 1% to 10% of his equivalent US counterpart. He then jumped from 10% to 20% of his US counterpart in the next 1 year. During his time with us (less than 2 years) he jumped to 55% of the US wage. In the next few months we would have had to move him to 75% just to “keep him at market.”

It’s OK, says Shah, for big companies like Infosys and IBM to train new graduates, but he believes other startups in Bangalore will see the same issue in the next 12-24 months.

“I was one of the biggest India advocates you’ve ever met (I still am) but it is clear the primary business drivers of Bangalore are changing and with it the city must change.”

Read the full story here: India grows up