»»Labor Arbitrage will continue to drive offshore sourcing
The annual report on Global Sourcing released yesterday by Everest Research Institute, as opposed to the current industry thinking, emphasises that labor arbitrage will continue to drive offshore sourcing decisions for the next 30 years.
The survey points out that issues such as growing wages and skills shortages in offshore markets, will eventually work themselves out, as the offshore labor market continues to expand into new locations.
Joe Fernandes, Managing Research Director, Everest Research Institute says:
“Our findings show that wages are rising for a relatively small base of workers and that shortages are cropping up only in certain skill areas”
The key findings from the survey:
- The offshore market will continue to grow at an approximate rate of 33 percent a year for the next three years.
- As a result of skills shortages in an offshore location, jobs outsourced are more likely to move to another offshore market than return to their country of origin, as labor arbitrage is sustained by a increasingly expanding offshore marketplace.
- Non IT-offshoring will represent nearly 45% of the offshore market in three years, with companies will prefer using subsidiary companies that serve the parent company exclusively for offshoring business process outsourcing (BPO) services
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