Keeping Up with the Offshoring Movement

Boston Consulting group released a report encouraging U.S. companies to be even more aggressive in outsourcing to low-cost countries "LCC's". The report is in fact so strong minded, that it advocates a completely opposite way of thinking.

Successful companies ask themselves, 'What must I keep at home?' rather than 'What can I shift to LCC's?'" states the report. "Their question is not 'Why outsource to LCC's?' but 'Why not?'

The Offshore Workforce

While the report is generally optimistic about the economy, it stresses that workers from the United States and Europe should not breathe too easily.

Not only are factory workers in low-cost countries much cheaper -- well below $1 per hour in China, compared with $15 to $30 per hour in the United States and Europe -- but they quickly achieve quality levels that are "equivalent to or even higher than . . . [the] best plants in the West,"

Midlevel engineers in low-cost countries, the report adds, "tend to be more motivated than midlevel engineers in the West."

The Increasing Wage Gap

The Boston Consulting report also refutes a few of the common concerns that have been raised in opposition to sending more work offshore.

While rising wages in China and India may cause alarm to outsourcing companies, the cost difference between hiring a worker in German or United States will very likely increase, instead of decrease.

The wages offshore are increasing at an annual rate of 8%. However, when applied to the wage of about $1, it does not come close to the 2% raise a German worker will get on his $34.50 per hour income.

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