Will the Labor Arbitrage Advantage Disappear?
Will the Labor Arbitrage Advantage Disappear?Outsourcing Journal: One of the biggest recent stories in the offshoring community has been that of India's wage inflation. The concern has been that wages in India (and the Philippines) are rising so rapidly that many question the value of wage arbitrage, and thus, the larger value of offshoring. With this in mind, Everest Research Institute analyzed the problem from all angles and came up with this: The wage differences between the U.S. and key offshoring locations (re: India) are enough that offshoring will continue to offer enough savings to be viable for at least the next 20 years. The study found that wage inflation is only one part of the offshore equation, and that often the reported numbers don't correct for averages, instead focusing on maximum salaries. Even if wages do rise, according to the report, factors such as productivity increases will help offset the wage hikes.
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posted by Victor Lloyd Smith @ 5:32 PM
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