Is Outsourcing Becoming Outmoded?
Business Week — “Honest corporate managers will tell you that to make offshoring work, you need at least a 300% to 400% wage spread between American software writers, engineers, accountants, and call-center employees and their Indian and Chinese counterparts.
Labor costs have to be very, very low overseas — not just lower — to compensate for time-shifting, managing over such long distances, and decreased productivity. Just think about how many times you’ve had to ask the person on the help line (who is usually in Bangalore) to repeat an answer because you couldn’t understand their accent or because of a communication gap caused by cultural differences. Such friction has a real cost, and companies that have sent services offshore know this.”
September 29th, 2004 at 10:28 am
So wages are increasing overseas as job demand increases. Wages are decreasing here because job demand is decreasing. If they pack up from overseas and come back here, won’t wages go back to increasing here again? Eventually they’ll just want to move back overseas again! It’s a seasaw, what’s the point?
Better to keep the industries where the head offices are. Makes the most sense to me. It’s just logical.
January 11th, 2007 at 11:01 am
True, outsourcing can be risky. But you could also find reliable partners in some pour European countries. Cultural differences are much less you have a similiar cultural background, people are very well educated and they’re a short flight away.
The key thing is to find a reliable quality partner, good and reliable experts - nothing can compensate that. That’s much more important to have to succeed then having “very, very” low labour costs.