Outsourcing to India and China is getting more expensive.

Bruce Nussbaum

Latest reports from India show a labor shortage. Can you imagine that? Yes, a labor shortage is growing among both white collar and even blue collar workers. Amazing what growth can do. The same thing is happening in China. What does this mean? Wages are rising for Indian software writers, engineers, etc., narrowing the gap between American/European and Indian knowledge workers.

For companies involved in outsourcing, the rise of Indian and Chinese knowledge worker salaries is both bad and good news. Of course, it makes outsourcing more expensive. That's the bad news. But rising white collar wages abroad ( I bet they are rising in Eastern Europe as well) also means that teams working globally on projects will not be as divided as they have in the past. Indian and Chinese and Hungarian software writers and engineers are no fools. They know the going rate for Western knowledge workers. While they may be thankful for the work and the salary, they can't be too happy working for a fraction of the compensation of their other team members. Closing the wage gap worldwide, I would guess, makes for happier team members.

Remember, we are entering the post-global economy, where geography doesn't matter. Only the project, the team and time. And if geography doesn't matter, why should wages be differentiated on the basis of geography for the same work? Hmm.... That's a big thought.

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