September 13, 2005
Written by C.N.
Those of you who have been following the issue of labor outsourcing know that the country at the epicenter of the global economic phenemenon is India, which boasts cheap labor and a well-educated labor force. However, CNN/Money Magazine has an article that suggests India’s outsourcing boom may be ending soon due to rising wages and a developing labor shortage:
A new report from market research firm Gartner, Inc. warns that a labor crunch and rising wages could erode as much as 45 percent of India’s market share by 2007. Indian industry watchers acknowledge that the country’s outsourcing industry — its golden goose of the moment — is indeed facing a “serious” problem. . . .
More importantly, the Gartner report cautions that a host of emerging countries such as the Philippines, Malaysia, Vietnam and Eastern European nations including Hungary and Poland, are also starting to challenge India’s leadership in offshore business process outsourcing (BPO). . . Gartner estimates that India’s current 85 percent ownership of the BPO market share could dwindle to about 45 percent by 2007.
The article notes that four years ago, the average Indian call center employee earned the equivalent of about US$125 a month. These days, the average wage is about US$180 and that while this increase in wages is not a threat to India yet, if it keeps rising, India may soon experience what Ireland went through about ten years ago when it was the darling of the outsourcing world before wages got too high and companies moved their outsourcing to India.
Not terribly surprising, all in all. Capitalism does not care about this country or that country — it simply wants to find the lowest wages available. Today that is India and China. Years from now, it’s likely to be some other developing country — it’s only a matter of time.
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Suggested reference: Le, C.N. . "Outsourcing to India Slowing Down?" Asian-Nation: The Landscape of Asian America. <http://www.asian-nation.org/headlines/2005/09/outsourcing-to-india-slowing-down/> ().
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