Outsourcing the outsourcing
American companies spend about $26 billion each year outsourcing IT services. For years, the lion's share, about 80 percent, of that spending has gone to India. But development is an fickle mistress. Even as she helps countries such as India raise their standards of living, she also spreads her ugly tentacles in the form of higher wages ...
American companies spend about $26 billion each year outsourcing IT services. For years, the lion's share, about 80 percent, of that spending has gone to India. But development is an fickle mistress. Even as she helps countries such as India raise their standards of living, she also spreads her ugly tentacles in the form of higher wages and increased overhead. That, combined with concerns over whether India's educational system can continue to churn out ever higher numbers of IT-savvy workers, has some U.S. firms looking elsewhere for cheap, skilled labor.
American companies spend about $26 billion each year outsourcing IT services. For years, the lion's share, about 80 percent, of that spending has gone to India. But development is an fickle mistress. Even as she helps countries such as India raise their standards of living, she also spreads her ugly tentacles in the form of higher wages and increased overhead. That, combined with concerns over whether India's educational system can continue to churn out ever higher numbers of IT-savvy workers, has some U.S. firms looking elsewhere for cheap, skilled labor.
The outsourcing phenomenon is no longer limited to a handful of large Asian countries. The hot new destinations for outsourcing are countries such as Mexico, Brazil, and Russia. For instance, one large American firm, CareFirst BlueCross BlueShield, uses Epam Systems Inc., a New Jersey-based company, that employs an outsourced labor force of more than 2,000 people in Russia and Eastern Europe.
What's an Indian outsourcing firm to do when faced with globalization's double-edged sword? Some are following suit by outsourcing their outsourcing. Consider Hyderabad, India-based Satyam Computer Services Ltd. They just opened a 2,000 employee facility in Malaysia, where they can have access to a cheaper yet still skilled labor market. As India's share of U.S. IT outsourcing continues to decline (it's now down to 59 percent) watch for other Indian firms to follow suit.
More from Foreign Policy
Can Russia Get Used to Being China’s Little Brother?
The power dynamic between Beijing and Moscow has switched dramatically.
Xi and Putin Have the Most Consequential Undeclared Alliance in the World
It’s become more important than Washington’s official alliances today.
It’s a New Great Game. Again.
Across Central Asia, Russia’s brand is tainted by Ukraine, China’s got challenges, and Washington senses another opening.
Iraqi Kurdistan’s House of Cards Is Collapsing
The region once seemed a bright spot in the disorder unleashed by U.S. regime change. Today, things look bleak.
Sign up for Morning Brief
Foreign Policy’s flagship daily newsletter with what’s coming up around the world today. Delivered weekdays.
By submitting your email, you agree to the Privacy Policy and Terms of Use and to receive email correspondence from us. You may opt out at any time.
