Outsourcing to India Hits the Wall

[selenite0]

The WSJ has a story today on the shortage of technical talent in India (subscription). That guy on the phone is getting a 15% raise each year because there's only so many people to go around. It's getting worse at the higher levels. Larsen & Toubro Ltd., the subcontinent's largest construction company, loses 800 experienced engineers a year to software firms and multinational engineering companies, despite having doubled salaries over the past couple of years. Turns out only a fraction of the colleges producing engineering degrees are good enough to make someone ready to work on the global economy. The rest are out of date or crippled by political control. So even with that level demand for technical workers an army of unemployed recent graduates, estimated at more than five million, is expected to grow.

Maybe US companies should look at getting more value from the engineers who are already here instead of trying to cut costs no matter what.

Comments

So What Did You Expect??

[rlseiver.livejournal.com]

Ah, don't you just love the law of unintended consequences. What global outsourcing will really do is reduce the wage disparity between comparably skilled workers in the US and places like India, China, Ceylon, etc. At least, it will reduce it for jobs where physical location is unimportant. And if a construction company is having to raise wages to compete for talent, maybe even that limitation won't hold up for long.

I say "reduce the disparity" because other factors will keep many of these countries from reaching full wage parity. Lack of infrastructure is probably the biggest one. It's hard to put a call center in a place that doesn't have reliable electric power and phone service. Any money that you spend creating your own infrastructure is not available to pay to your workers.

All in all, this is a Good Thing. If they're busy competing for high-paying jobs, they'll have less time and inclination to strap bombs around their waists and look for crowded market squares. And those of us who are losing jobs over here will have to put our much-vaunted ingenuity to work, and invent even better jobs.

Re: So What Did You Expect??

[jordan179.livejournal.com]

One problem in India is a corrupt socialist bureaucracy and limited infrastructure. This poses all sorts of problems for businesses, from the trivial to the extreme.

Having said that, enriching India and cutting our own corporations' wage costs at the same time isn't a totally bad thing. Among other things, the Indians become a richer market for American products, and the corporations can sell said products more cheaply.