Strategic CIO // IT Strategy
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5/16/2005
10:07 AM
Paul McDougall
Paul McDougall
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Offshoring's Ebb Tide

The authors of a new book argue that IT outsourcing will come full circle and that U.S. workers will ultimately benefit from the practice. Douglas Brown and Scott Wilson, in The Black Book of Outsourcing, note that rising costs in countries like India and China, combined with the management headaches presented by offshoring, will combine to limit the number of U.S. jobs that ultimately end up offshore.

The authors of a new book argue that IT outsourcing will come full circle and that U.S. workers will ultimately benefit from the practice. Douglas Brown and Scott Wilson, in The Black Book of Outsourcing, note that rising costs in countries like India and China, combined with the management headaches presented by offshoring, will combine to limit the number of U.S. jobs that ultimately end up offshore.Brown and Wilson are correct in pointing out that the current outsourcing stampede is part of a predictable economic cycle. Jobs naturally flow to places where there is an abundant supply of underutilized, qualified workers. However, many of those jobs will flow back as supply and demand reach equilibrium on a global basis.

There are already signs of this. Indian software firms saw their payrolls increase 35.1% last year, according to the latest statistics from the Indian government. The low-cost advantage enjoyed by vendors like Wipro, Infosys and TCS is not going to last indefinitely. Ultimately, they will compete against IBM, Accenture, CSC and other U.S. players on a level field.

Similarly, Indian and Chinese IT workers will compete for jobs against workers in low-cost U.S. locations like Jonesboro, Ark., and nearshore sites in Canada and South America.

Ten years from now, an IT professional's talent and education will be the sole determinant of how much work and salary he or she commands. Where they are located won't matter.

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