I came across this piece in the Times praising US tech companies. The article uses revenue per employee (RPE) as a yard stick and claims "US IT professionals more productive". Basically we have Wipro,Infosys,TCS etc on one side and IBM,Dell, HP etc on the other. The arguments are backed up by numbers but the logic is flawed. I find it hard to believe RPE can be linked to a professional's productivity. The revenue a services company makes is broadly (ignoring systemic factors like currency risk, credit risk etc) dependent on the following :
- Bill rate (significantly higher for 'Western' players)
- Utilization rate (More or less the same)
- Offshore onsite mix (Much better for Indian players).

The higher RPE that US companies make is largely on account of the following:
- Significantly higher bill rate
- Broader portfolio that includes software products and consulting which traditionally have a greater RPE than pure services
- Higher onsite/offshore ratios leading to a higher top line for the same number of FTE's billed.

None of these factors have anything to do with employee productivity. In fact for certain types of engagements staffing more productive employees could reduce RPE! A better caption for the article could have been "US companies turning people capital into cash more productively".