Why Apple pulled out of India

— 6:30 PM on June 19, 2006

Two weeks ago, Indiatimes reported that Apple closed off its India-based software development and support arm just one month after opening it. The subsidiary was due to grow to a work force of 600 by the end of the year, but Apple ditched the idea and fired most of the staff with little official justification. BusinessWeek has now dug up some additional details about the sudden move from an anonymous informant.

Spokesman Steve Dowling would say only that Apple had "reevaluated our plans" and decided to provide support from other countries. Another source familiar with the situation, though, says the decision was cost-driven. "India isn't as inexpensive as it used to be," the source says. "The turnover is high, and the competition for good people is strong." Apple feels it "can do [such work] more efficiently elsewhere."
To back the statement, BusinessWeek cites some numbers from Indian software industry association McKinsey and Nasscom. According to the association, base income at Indian tech companies climbed 13% per year between 2000 and 2004, and salaries for mid-level managers rose 30% a year in the same time period. The outsourcing sector is said to be "plagued by concerns about rising wages" due to these increases. It isn't clear where Apple now plans to find its extra development and support manpower.
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