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:
- Myth #1: All Indian IT Wage Levels are Going Up at a Dramatic Pace
- Myth #2: Increased wages in India translate directly to increased costs for U.S. buyers of IT services
- Myth #3: The cost savings from labor arbitrage in India will be lost in the very near future
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.