Rising wages forcing companies to look beyond India

[OhioChick]

Monday , December 04 2006 12:03 PM

Skills shortages and rising wages in India will increasingly force U.K. businesses to look at alternative offshore outsourcing locations, according to the National Outsourcing Association (NOA).

Almost two-thirds (60 percent) of respondents to an NOA survey said skills shortages in India will push up offshoring costs and negatively impact the decision of U.K. companies looking to outsource there. That echoes a recent warning by India's IT trade body Nasscom that the country faces a shortage of highly-skilled IT workers by 2010.

Recent data security incidents at Indian call centers will also stop financial institutions offshoring there in the short and medium term, according to a third of the survey respondents.

In terms of alternative offshore outsourcing locations three-quarters said China is the destination most likely to challenge India's dominance over the next five years on both cost and capacity.

http://www.zdnetasia.com/news/business/0,39044229,61972146,00.htm

<snip> Concern about U.K. jobs being lost to India hit the headlines again last week when a Deloitte & Touche survey found almost a third of the U.K. public believes companies should be forced to bring jobs back into the country, while 82 percent said enough U.K. jobs have now been moved offshore.

[Earth_First]

1. At least they're being honest about it this time: your wages affect outsourcing.

Your wage affects our bottom line.

[qwlauren35]

2. This COULD get interesting...

One of the reasons why it was possible to outsource customer service to India is because English is their second language.

Who will pay to educate a new Asian workforce in English? Will it still be cost-effective? Or will jobs return to first world countries??? Will small businesses and entrepreneurs attempt to make "deals" to contract for customer centers in the US at competitive rates? COULD this happen?

I can see ways, and they have interesting possibilities. If Americans would allow themselves to be paid by the call instead of by the hour, then this would circumvent minimum wage laws; given the technology, this could make possible a new wave of stay-at-home jobs. What would Americans give up in terms of salaries to be able to work at home?

[Bassic]

3. Yes, we can't accept the failure

of the infinite profit growth concept now can we? :sarcasm:

[magellan]

4. See, here's the little problem with free-market outsourcing

Eventually you boost the economy and expectations of your cheap overseas employees and you have to find a NEW place to outsource to, if you want to keep paying slave wages. Sooner or later you run out of those places...and by then your own economy is so devastated you find the cheapest employees are right in your own country again.

[The2ndWheel]

7. Problem for who?

Legal humans(corporations) or actual humans?

Since nation-states are slowly disappearing(you have to take the good with the bad if you want globalization), there really is no such thing as away or home.

[magellan]

9. I think we can agree that this is bad for actual humans

Unregulated globalisation is only good for the corporations.

[The2ndWheel]

11. Is there any other kind of globalization?

Which institution would regulate it? And regulate it to do what? Everything in our world today is about growth.

[magellan]

12. I don't have the answers

I only know that it's obvious that the way the free market is currently run hurts everyone but the corporations. That there is no body to regulate it is just another indication that we aren't mature enough as a civilization to be interested in making it work well for all.

[The2ndWheel]

14. Was that ever the point?

"That there is no body to regulate it is just another indication that we aren't mature enough as a civilization to be interested in making it work well for all."

Mass economies, mass production, were they ever designed to work well for all? It was to work for exactly who it works for; those who had the ambition to say this is what's going to happen, and had the power(the state, the corporation, the corporate state) not to be ignored.

[magellan]

21. Only when unregulated

Capitalism is what we're talking about. It isn't inherently a bad thing, except when it's unregulated. And that's what the free marketeers want: unregulated capitalism. It won't work. Corporations will just take ever more advantage of workers/economies/the environment to make ever more money until they've completely demolished all the above. Look to how Bush** allowed the oil companies to write environmental policy, for a single example among many of the threat unregulated capitalism poses.

The human race is not at a place where a free market will ever work to the benefit of the many. It benefits only the few.

[Skittles]

22. GIVE ME A F***ING BREAK

as an IT worker I can tell you what is going on is downright ABUSIVE and SICKENING

[OhioChick]

27. Damn Straight! n/t

[The2ndWheel]

29. Did I say something in opposition to that?

[Skittles]

30. YES

I read it as, as long as a jolly time is had by some there are benefits to outsourcing. OUTSOURCING SUCKS.

[The2ndWheel]

37. That's not what I was trying to say

I can see why you read it like that, because that is what was written in a way. Don't worry, I'm nowhere even close to being in favor of outsourcing. I don't even think there is some kind of happy medium to be had, since the whole thing is based on endless growth, so nobody will ever catch up.

[Skittles]

38. OK then

I fly off the handle where outsourcing is concerned because I tell you it is so damn dehumanizing

[Greyhound]

19. One place we could start is to stop calling it a "free market" and identify

it correctly as a slave market. "Necessitous men cannot be free" IIRC, FDR made this point in bringing the new deal to our beleaguered nation.

[magellan]

26. True

I usually differentiate it from a proper free market by putting it in quotes or specifying it as the Neolib concept of free market. It is indeed a slave market. A roving slave market, always on the lookout for poor people to take advantage of.

[Skittles]

31. THANK YOU

I am so SIK of hearing employers say they supposedly have to go outside America to "find talent" - I can tell you from a lot of experience that is PURE BULLSHIT - it's whoever will/can work for the crummiest salary, PERIOD.

[magellan]

34. Exactly. And when the latest slaves start asking for more money

...the corporations just outsource to someplace new...like China. It's predictable as sin and is beneficial to NO ONE in the long run but the corporations; for them it's a grand way to keep turning a profit because there will always be cheaper workers on the horizon.

But never fear. Skilled Americans will inevitably get their turn in the harness again, once all the other economies have been "lifted" and we're the cheapest workers to be had. Going to be a mighty long wait while flipping burgers and cleaning toilets, though.

"Free market" -- bullshit.

[Kelly Rupert]

15. That is exactly the argument that pro-globalization neoliberals make

in favor of free-market outsourcing. You come into a poverty-stricken country, you boost the economy, the employees start expecting more as local alternatives pop up, and eventually your factory can no longer compete with the local economy. You've raised the standard of living of the country you've moved into--that's hardly a bad thing. You then move your factory to another poor country, as your first country enters the global marketplace as a fully-functional economy capable of mutually-beneficial trade with all nations.

I mean, if your fundamental argument is that globalization doesn't work because you end up boosting local economies and raising standard-of-living expectations, then it's hard to also claim it harms the locals.

[magellan]

16. It does harm the locals when those jobs move on to another country

Ask any number of Americans.

[Kelly Rupert]

18. If the jobs are moving on,

it's because people aren't taking them. If people aren't taking them, it's because local alternatives are more appealing. The factory will stay as long as people are willing to work for it. Once the factory can no longer stay staffed, it moves.

I do agree that globalization harms American labor by driving wages down, but that's an entirely different issue. I also agree that it is not nearly as beneficial to the developing world as fairer forms of trade are. But I don't think we should claim that globalization has no benefits whatsoever to the developing world.

[magellan]

23. Who said it has no benefits?

I certainly didn't. I said the continued moving on of jobs is the problem with globalisation. Wherever those jobs go the local economy is buoyed, but it's temporary. Eventually it drives wages down again because the workers want more pay to meet the higher standard of living in the boom economy they're creating, and there's always a cheaper place to move the jobs.

The US has felt the brunt of outsourcing. Now India will too as corporations move their outsourcing to places like China. The effect of local wages being driven down won't be unique to America.

[Greyhound]

24. Have you been living under a rock for the last 15 years?

People are that have and want their jobs are fired from those jobs, their livelihoods are taken from them in order to "move on".

[Solon]

36. That's not true...

Companies move their factories, etc. when they find it too expensive to KEEP the workforce they have now, Mexico actually faces this problem, and they have a high unemployment rate. So the companies in question usually lay off the entire workforce for the factories, crashing local economies, and move on to cheaper places. They may return to the nation in question if they find that the people there are desperate enough, again, in 5 years or so.

This is why its called a vicious race to the bottom, after all.

[meow2u3]

17. Soon they'll be hiring terrorists

and then blaming the Democrats for cyberterrorist attacks on our networks :scared:

[Nederland]

32. Why are rising wages a problem?

So outsourcing leads to rising wages in the poorest places in the world...why is that a bad thing?

[magellan]

33. Because it doesn't last

As soon as the wages rise too much, corporations find somewhere else to outsource to. Or do you think we Americans are the only ones to suffer that fate?

[LiberalEsto]

5. Gee. What a piddy.

We need global unions.

[mindfulNJ]

6. They're still looking for

that magical land where the people work 24 hour shifts for no pay, and smile and sing while they do it...anyone know where Loompaland is?;)

[LiberalEsto]

13. prisons nt

[marmar]

8. Uh oh, they're getting paid too much....

Time to find a new group of people to exploit.

[Armstead]

10. This raises an interesting paradox of the Free Market Pirates -- Marx meets WalMart

The article says China will be the next hot new spot for outsourcing.

And what is China? A highly regulated communist state.

Yes, on the surface they have become more capitalist. But they are still a tightly controlled authoritarian state. Thus, there is less opportunity for those pesky workers to actually demand more money, if the government deems that higher wages are contrary to the national goals of China.

So we have this strange hybrid of authoritarian "free market capitalists" relying on an authoritarian Communist state for cheap labor.

Somehow the insane drive for profit over all has made for strange bedfellows. The worst of both worlds.

Karl Marx, meet your new best friend, Wal Mart.

[closeupready]

20. That's exactly right, and

the labor abuses and disrespect for democracy are reasons why I will not purchase products made in China, if I don't have to. Sometimes, you have no choice, but when I do. Most people think that's silly but if I can vote "yes" with my wallet, I can also vote "no".

[bleedingheart]

25. do you find the whole doing business with Red China as funny as I do?

I mean...Freepers throw around the "Red" label as an insult yet they will shop at Wal-Mart where the chinese made goods fund the Red Army...very ironic.

[The Anti-Neo Con]

28. Africa is the next slave labor pool.

There are a good number of English speakers in some sub-Saharan African countries. The poverty in Africa is so bad that people there would be willing to work for pennies, and corporations know this. I think this is why some corporations & groups are spending money there to fight AIDS and to help stabilize Africa...it's not because they genuinely care about the people, it's that the African people are a potential untapped source of dirt cheap labor.

[Lydia Leftcoast]

39. African immigrants are already the majority of staff in

nursing homes, at least in Minneapolis.

[Orsino]

35. "Companies force workers to settle for Indian wages."

Let's get the headline right.

[rockymountaindem]

40. The race to the bottom continues, eh Tom Friedman? Let me put on his hat for a minute

Rockymountaindem, as Tom Friedman:

"I realized that now, countries would all be involved in a glorious, effiency-producing contest to create the best package of wages, tax incentives, development capital and political regulations to provide MNCs with the most appealing package! What was I telling my fool self? That the "race to the bottom" is a good thing!"

Whatever, Friedman. So much for your theory about chipper Indians being better phone bankers than the 30k people who lost jobs doing the same thing in Omaha. Oh, those jobs in India are high prestiege, as opposed to us jaded Americans who only want the big bucks. See? All these jobs can be done equally easily from anywhere, right? That's what you say, yet you keep pulling in this touchy-feeley bull about how hard people in other countries are willing to work for less money. Now all your pals in Bangalore are being out-competed by someone else. The race to the bottom continues, as now only Chinese workers will have these jobs, for probably next to nothing, as Indian and US workers all hit the unemployment line and, contrary to what you would have us believe, the CEOs and CFOs just pocket the savings instead of "passing them on to the consumer". I'm sure all those people who got fired in Omaha will be happy that the warranty on their new laptop will cost $15 less than before when they were employed.

Oh, and in case anybody's wondering, I didn't choose to torture myself with Friedman's tortuous logic, I had to read that POS book for a class.