By Deane Barker on December 11, 2006
Outsourcing: Beyond Bangalore: Apparently outsourcing in India is running into the same problems as everywhere else. I knew the polish was going to wear off this thing before long.
After 10 months of working with software developers in Bangalore, India, Bill Wood was ready to call it quits. The local engineers would start a project, get a few months’ experience, and then bolt for greener pastures […]
Many are fed up with the outsourcing hub of Bangalore, where salaries for info tech staff are growing at 12% to 14% a year, turnover is increasing, and an influx of workers is straining city resources.
I’ve heard that Bangalore has gotten so much outsourcing business because of the low cost, that’s it’s driving the opposite — real estate prices are through the roof now, so the cost of living is much higher, so workers are demanding more money to move there, so the cost of offshoring your work to Bangalore is going up.
The article goes on to say that the next offshore darlings of the tech world are likely to be Eastern Europe and Southeast Asia. Of course, I give them five years of “wonderchild” status before the same thing happens there.
The bottom line is this: there is no free lunch. If you find a part of the world that will do work cheap, there is a time limit on that advantage. They’re likely only willing to work cheap because their standard of living is lower than the options (e.g. — the United States).
But once you start pumping work into a situation like that, the standard of living and economic status that allowed you to do that will improve, and people will start acting very much like the alternative you were trying to avoid (e.g. — the United States).
What’s happening now in India is an example of what will happen everywhere. Economics is economics, no matter where you go.