India is Outsourcing Their Outsourcing

By Deane Barker on September 24, 2007

India tries outsourcing its outsourcing: Apparently the outsourcing business has become so good in India that it’s not cheap to maintain programmers there…so Indian companies are outsourcing their work to other countries.

Now India is outsourcing outsourcing.

One of the constants of the global economy has been companies moving tasks — and jobs — to India, where they could be done at lower cost. But rising wages for programmers here, a strengthening currency and companies’ need for workers in their clients’ time zones or for workers who speak languages other than English are challenging that model.

Now, I hate to say “I told you so” but if you look back a few months, here’s what I said about outsourcing.

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).

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Comments

  1. You guys just don’t get it….

    India as a country is making so many babies and making them so fast , and has been at it for a long time , that finally it has to pay up … the number of young ones in India is just too high. Sure you can find some more in Africa etc. etc., but the sheer numbers are just too overwhelming. When you have such a large young population, it has to work somewhere .

  2. “India as a country is making so many babies and making them so fast”

    … and rather perversely, the hungrier people there get, the more children they will tend to have, meaning that the supply-and-demand curve argument from basic microeconomics that so many have in the back of their minds breaks down in this case. Labor becomes a commodity the production of which goes up as the price goes down.

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