The Great Indian Outsourcing Story

One of my favourite topics. The title I owe to a friend of mine who is one of the smartest and most sensitive guys I know. Thought of writing this when I got a mail from him where he said that he was glad to know that I wasn't part of the "Great Indian Outsourcing Story" anymore. Well, that makes two of us :-)

A McKinsey article on offshoring says that "the cost of hiring a college graduate in the Philippines is about $4-5, which is less than what it'd cost to hire a high school grad in the US. This implies that for the same work, you can afford to hire better quality of people, even assuming that the educational systems in the two countries aren't exactly equivalent." True. It makes sense for a firm to do it. But does it make sense for a college grad in Philippines or India to take up a job that he (just for the sake of convenience I'll keep using he instead of he/she) is so obviously overqualified for?

In India and other low wage countries, the best paying jobs on offer are no longer the most challenging jobs (this is of course a generalization and probably not entirely correct - please feel free to correct me if you do know otherwise). You have IITians struggling to code without proper training or specifications or clear communication from clients. The fact that they pull it off is just because they are so phenomenally overqualified. Offshoring works and provides better quality merely because of this massive underemployment. Excuse me Mr Friedman, but the World is NOT Flat! Not yet anyway.

If the labor market was as mobile and free as the capital market, then Intellectual Capital would probably be just as valuable as Economic Capital. Till then, the U.S. of A. will continue to provide vastly disproportionate advantages to its intellectual elite (and keep on attracting the best from elsewhere).

Mr. Friedman is right in a way - the blurring of national lines in consumerism and mindsets. Enough has been said abt globalization being Mcdonaldization etc etc. So I'll not head in that direction and instead point out that this is restricted to a small sub section of the populace in low wage countries. And of course, brands mean entirely different things. Cheap fast food in the US becomes upmarket restaurant for the Indian middle class. Inexpensive, affordable clothing brand in the UK becomes aspirational and upmarket for yuppie India. But for the rich - the global rich - the blurring has been complete and perfect. You can now pick up Dom Perignon and Beluga in Bombay ;-) and they are still frightfully expensive and mean the same as they do in Europe or the US or anywhere else.

ubergeek, the