Service Offshoring : Threats and Opportunities

When asked to provide a framework piece on offshoring, I decided it would be much easier to have the work done by an Indian consulting firm. A quick bit of research turned up a perfect corporate partner. Not surprisingly, the company has a London-based front end—it is a fact of the industry that many customers prefer to work through a Western intermediary. The company quoted the job at $63,000, no taxes. That’s about one-tenth of what an American management consulting firm would charge, but still too rich for my academic salary. So you are stuck with me. The experience taught me two things. First, you can outsource abroad just about anything, from which I conclude that all of our jobs are threatened. Second, the big money in offshore outsourcing goes to the OECD business analysts who help customers communicate their needs to business process outsourcers in low-cost countries. I conclude from this that offshoring brings remarkable opportunities to us all. Therein lies the paradox of offshoring: it is both a threat and an opportunity. In considering international offshoring, two trends scream out for our attention. The first is the rise of China as the world’s manufacturer. Surprisingly, many American firms have yet to wake up to this sea change in their sourcing possibilities. Better information about the strategic offshoring options available to American firms is desperately needed. Aside from this, the rise of China’s