Myth #3: The cost savings from labor arbitrage in India will be lost in the very near future

March 25, 2013

A common critique of offshore outsourcing is that wage inflation in India is quickly shrinking the value of labor arbitrage.   However, this analysis is based on three myths:

This post exposes the flaws in Myth #3 and explains how outsourcing professionals can leverage the truth to improve decision making and negotiations.  We explained Myth #1 here, and Myth #2 here.    Read the rest of this entry »


Myth #2: Increased wages in India translate directly to increased costs for U.S. buyers of IT services

March 12, 2013

A common critique of offshore outsourcing is that wage inflation in India is quickly shrinking the value of labor arbitrage.   However, this analysis is based on three myths:

This post exposes the flaws in Myth #2 and explains how outsourcing professionals can leverage the truth to improve decision making and negotiations.  We explained Myth #1 here, and will explore Myth #3 in a future post.

Read the rest of this entry »


Myth #1: All Indian IT Wage Levels are Going Up at a Dramatic Pace

March 4, 2013

A common critique of offshore outsourcing is that wage inflation in India is quickly shrinking the value of labor arbitrage.   However, this analysis is based on three myths:

This post exposes the flaws in the first myth and explains how outsourcing professionals can leverage the truth to improve decision making and negotiations.  Future posts, will explore Myths #2 and #3.

Read the rest of this entry »


Three Myths about Wage Inflation in Indian IT Services

March 4, 2013

One can hardly mention global IT outsourcing these days without hearing references to “wage inflation” in India and the fast-shrinking value of labor arbitrage from offshore outsourcing. These dramatic, seemingly logical, arguments are used to support an analysis that predicts that cost savings will soon be too small for offshore outsourcing to be viable.  However, this deeply flawed analysis is based on three myths:

In future posts, we explain why each of these myths are false and how outsourcing professionals can leverage the truth to improve decision making and negotiations.

Analysis and Opinions by Matthew Sullivan and Cindy Carpenter.