Slashdot Mirror
Growth in Indian Offshoring Slowing
quantumstream writes "CNN/Money is reporting that high wages are causing some software companies to look to other countries for outsourcing, including Eastern Europe and several other SE Asian countries. Gartner Research believes a drop of 45% in India's share could happen in the next two years. Is this the beginning of the end of the dominance of India in the tech offshoring market?"
When they say "Southeast Asia," are they talking about Vietnam? I can't think of anywhere else where they have a large residue of English speakers.
The Philippines - not a residue, but native speakers along with Filipino(Tagalog).
I'm a consultant - I convert gibberish into cash-flow.
Are they also taking into account changes in exchange rates when they are calculating the dollar cost? The figures stated look like they are basing the dollar cost in todays dollars(since the ratios stay about the same), but could it be that 6,000 ruppees buys more dollars now than it did 4 years ago?
Monstar L
Canadian wood? I wish. The tariffs on Canadian lumber are massive. This is a blatant transfer of money from the American home owner (who has to pay more for lumber) to the American forestry industry. It's a fine example of hurting the many for the good of the few, and why trade restrictions both suck and blow.
Not sure about the rest of your comment, but it sounds mostly like anecdotal evidence and opinions tend to be subjective. I disagree with this particular excerpt from your comment, though.
Convering salaries directly my multiplying/dividing by the exchange rate without taking into account the Purchasing Power Parity is plain ridiculous. To sum it up for you, PPP is used because:
The PPP measures how much a currency can buy in terms of an international measure (usually dollars), since goods and services have different prices in some countries than in others.
Goods and services cost an order of magnitude less in India than they do in the US. For example, a loaf of bread costs about Rs. 10-20 (about 0.25 - 0.50 USD). Monthly rental for a pretty spacious house would approximate to Rs. 10000 (about $250). Those are rough figures, and will differ by region, but a single software engineer (for comparison purposes, since I'm single too) could live *comfortably* in a metro city like Bangalore for about Rs 15000 (including food/rent/groceries/booze/other_expenses). That works out to about 50% of his average salary of about Rs. 30000. Ofcourse when you convert his salary to USD, it comes to only about $750, (which wouldn't even cover the monthly rent in most areas in the US) and causes you to gasp, go hyper and claim "OMG, they're exploiting software engineers" or "OMG they're stealing our jaabs by working for less".
In the end, the major cost saving for companies is *not* the lower salary (as you claim fast food workers in the US get), but about the *Exchange Rate*. Poorer economies have a lower cost of living than more developed counterparts, and hence have a weaker currency against the US Dollar. This multiplication/division factor allows companies to earn in USDollars and pay in Rupees (or any other weaker currency) thus widening their profit margin. So please ponder over these finer points before spreading FUD/incorrect information and basing other (consequently erroneous) axioms on an incorrect assumption. Thank you.
An Indian-American Hindu committed to non-violent thought/speech/action alarmed by the global explosion of radical Islam
Well if anything, it makes things even more expensive (for India) because 4 years ago, it was about 49 rupees to the dollar. Now it's about 43 rupees. The more you outsource, the more the excahnge rates rise, the less revenue Indian outsourcing companies get, the less lucrative outsourcing becomes, yada yada and yada.
As an Indian working in India, I've been screaming myself hoarse about this, and how America really doesn't have much to fear from outsourcing - because wages/costs/value of rupee is rising a lot faster than jobs/wages are falling in America. So eventually, say within the next 5 years, it won't be worth it to outsource to India. Now some people think that it just means things will be outsource to China or Kazakhstan or Sudan..but no.
1) China's GDP per capita is already much higher than India's. This means (in very inaccurate, general terms) that a chinese worker is ALREADY more expensive than an Indian one - coupled with a MUCH higher exchange rate - so the work will NOT be shipped to China.
2) It won't be sudan or wherever because India's main advantage is ENGLISH population. Sure they're not speaking as perfect as an American (debatable point actually), but there are more people speaking English in India, than in China, or the Philipines or wherever - in fact the World's largest selling English Daily is published in India - the Times of India (I'm not including a link to it because the f-ing site is bloated with spyware, and one of you poor souls might actually still be using IE!). There's that and the fact that India is 10-12 hours ahead of a US time zones. This is one reason for the efficiency - providing 24 hour customer service to Americans is easy if for 12 of those hours, your customer reps are actually just doing a regular 9-to-6 in their own country.
So again, there some particularly unique factors as to why India has been successful. Once our economy picks up, outsourcing on the *relatively* large scale will slow, or even drop greatly. Plus, in those 5 years, America will also move on in different ways (incomes won't rise or may even drop, yyou guys will find some alternative "growth" industry to keep you going, allowing retrenchment of unemployed software engineers/call centre workers, e.t.c).
My Favourite Meme