Outsourcing the Outsourcers
Thu, 09/08/2005 - 20:30
The Job
The hue and cry about outsourcing to India is old news, but we may be quietly entering the next phase of that trend. A small item on the EE Times site noted that India is in the process of opening a technology center in Moscow. A large part of this smacks more of mutual political back-scratching than it does of a major trend, but it is notable nonetheless because it involves India reaching out to technical resources and touting their business acumen.
Eastern Europeans (and Russians in particular) have long been respected for their knack of getting the most out of scarce technical resources. This is also a part of the world that provides technical talent at even cheaper prices than India. This is particularly true given the fact that only about 6% of India’s population is college-educated. This fact is often forgotten in the panic over outsourcing. There are those that conjecture that a relatively fixed percentage of any given population is even capable of advanced engineering work, and the implacable law of supply and demand is at work in India, where turnover has approached 50% per year and salaries are quickly rising for a number of contracting companies. This speaks of a tight labor market, rather than the infinite one it sometimes appears to be.
This leveling still has a way to go, and India still enjoys such a lower cost of living that we shouldn’t expect it to reach parity with the US market anytime soon, but there is something comforting about the fact that in some places the outsourcers are getting outsourced.
The maquiladora manufacturing phenomena of the last decade is a good example of this happening. The factories that were built in Mexico suddenly got quiet when their costs rose above those in China. Many of these Mexican companies have adapted by emphasizing how close they are geographically to the US and concentrating on boutique-style low-volume manufacturing.
The one constant in the world is change.
Larry Mittag
Eastern Europeans (and Russians in particular) have long been respected for their knack of getting the most out of scarce technical resources. This is also a part of the world that provides technical talent at even cheaper prices than India. This is particularly true given the fact that only about 6% of India’s population is college-educated. This fact is often forgotten in the panic over outsourcing. There are those that conjecture that a relatively fixed percentage of any given population is even capable of advanced engineering work, and the implacable law of supply and demand is at work in India, where turnover has approached 50% per year and salaries are quickly rising for a number of contracting companies. This speaks of a tight labor market, rather than the infinite one it sometimes appears to be.
This leveling still has a way to go, and India still enjoys such a lower cost of living that we shouldn’t expect it to reach parity with the US market anytime soon, but there is something comforting about the fact that in some places the outsourcers are getting outsourced.
The maquiladora manufacturing phenomena of the last decade is a good example of this happening. The factories that were built in Mexico suddenly got quiet when their costs rose above those in China. Many of these Mexican companies have adapted by emphasizing how close they are geographically to the US and concentrating on boutique-style low-volume manufacturing.
The one constant in the world is change.
Larry Mittag
