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Story URL: http://www.silicon.com/research/specialreports/offshoring/0,3800003026,39127319,00.htm

5 years ago… Offshore outsourcing - the Asian boom
Could it be that not that much has changed?

By silicon.com

Published: Tuesday 25 January 2005

25.01.00 The IT skills shortage and rocketing wage demands are driving increasing numbers of software companies out of the US and Europe in search of staff.

But although the stereotypical view of countries like India is one of a haven of plentiful and cheap labour, the marketplace is changing.

According to Tony Sumpster, business development director of outsourcing company HPS, India isn't just about code crunching and maintenance anymore. "It's moving into high-value work where it's really able to tackle mission-critical, high-value projects," he said.

He added that the wage differences between Indian high-tech workers and their US or British counterparts will only remain for three to four years. "They're raising wages at about 20 or 30 per cent a year, which is huge growth based upon all the work that's going in."

One company that has moved its product development and research to India is US network management specialist, Entevo. (For the full story click here.)

25.01.05 This publication's recent reports on offshore outsourcing have quoted many experts saying the practice is no longer about cheap labour. However, it is clear that now, as five years ago, lowering costs is a factor in many decisions to offshore (whether in-house or through an outsourcer) but so too is quality.

Those citing a three- to four-year horizon beyond which wage differentials will have become inconsequential are, at best, only considering certain skills. But this is a massive debate and we recommend you to check out our archive of articles within our ongoing Offshoring special report.