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?"

Comments

That's the effect of a global economy.

[CyricZ]

In a global economy, there will always be someone able/willing to do it for less money. Eventually those who were the go-to people are undercut. And then the undercutters are undercut. And it so on, and so forth. Eventually a global economic equilibrium is reached, where the price is the same everwhere.

When price is no longer the main factor determining where to outsource a project to, the focus will shift back to quality, maintainability, and so forth. Indeed, it is quite possible that the future software industry will appear very similar to that of today's automotive industry in terms of multinational competition.

latin america - the new India

[iggymanz]

a number of business sites are saying Latin America is the new India for outsourcing. They have similar timezones to U.S., speak English, and are even a relatvely short plane trip away. Who knows, might be a more attractive spot to immigrate to than south asia too, for those willing to follow the work

Bound to happen...

[JaredOfEuropa]

Is this the beginning of the end of the dominance of India in the tech offshoring market?"

Probably yes. The multinational I do work for recently awarded large outsourcing contracts to two Indian firms, to do helpdesk and IT work. The main reason these two firms got the contract? Because these firms were already setting up shop in China. When the China branches become operational, my client will pay even less for the outsourced work.

Next step for India..

[jcr]

I visited Bangalore a couple of years ago, and talked to a bunch of people in the IT industry there. They were already starting to realize that the outsourcing business is, basically, working for wages.

The real money is in developing a property income. Look for a wave of Indian software products, developed from their own designs. A couple of years later, look for the same thing from China.

-jcr

Re:Skilled labor offshoring temporary...

[Hiro Antagonist]

Have you bloody BEEN to Japan recently? Because I think you're overlooking a hell of a lot of things about the Japanese culture and economy. Here's a few:

1. Most cheap goods in Japan are produced in China or Korea nowadays, and most lower-level work is done by Korean and Chinese immigrants who don't have citizenship, even though their families have been there for generations. These people have been moving up in the economic food chain, but lack the solid ties to Japanese society that citizenship would help bring.

2. Japanese secondary schools are rapidly going to shit; teachers get assaulted, students don't pay any attention, and other than the entrance exams, the material covered is not terribly difficult. Japan needs a major dose of education reform.

3. Japanese workers used to have employment for life in the 80s; now, the only lifetime workers are government employees. This has caused mounds of social problems, doubly so because everything in Japanese society is based on seniority.

4. Better educated and more competent? Japanese work twelve-hour days, getting eight hours of work done, because their culture demands it, and afterwards, those Tokyo salarymen go out and drink and smoke as if cancer and liver failure were going out of style. Even if a younger employee has good ideas, they are overlooked because of their age, and the amount of pure ass-kissing that happens is beyond belief. How would you like it if you *had* to go to your boss' house and fix his bratty son's computer, for no pay, and you can sleep on the couch because the trains stop running at eleven.

Don't get me wrong. Japan's not a horrible place, but it's no paradise either. Their big advantage over the U.S. is that the younger generation is disgusted by most of the things I've listed, and fortunately, Japanese education is still very science-centric (unlike the American school system). So Japan stands a better chance of reinventing themselves; but make no mistake, they are not in a happy position right now.

Apologies about my English, as got back from Japan a few weeks ago, and I'm still not quite adapted to being home.