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Common Sense Advisory Blogs
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Looming Labor Shortages in Offshoring Centers
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Disney's latest take on the fable of Chicken Little retells a tale of impending doom and how a community of animals reacts. In one sense, there's been a big helping of Chicken Little in the offshoring debate as analyst firms and governments forecast the loss of jobs to China and India, and businesses in the North Atlantic region do their best to prove those forecasts correct. To hear some tell it, by 2025 there won't be a single high-paying manufacturing, service, or white-collar job left in the U.S. -- every interesting position will have been offshored to a lower wage-rate country. Even uninteresting positions will go offshore; we regularly receive telephone solicitations from India on behalf of local (to Massachusetts) dentists who are willing to clean our teeth for a much reduced fee. Really. Boston-area dentists are outsourcing their telemarketing to boiler-rooms in India.
There's only one problem with that every-job-goes-offshore scenario. Not everyone in China and India can develop software, invent hardware, create new products, or answer the Lexus customer service hotline. In fact, Business Week quoted a software engineer living in Bangalore who wrote that "Anyone in India who can spell Java already has a job." Salaries have gone way up, so programmers are misrepresenting the extent of their coding expertise. That has sent some companies looking elsewhere for Java-savvy Indians in cheaper locations -- or perhaps even Tibetans if they miss their exit in India.
So near term, layoff-fearing Americans can breathe easier about their jobs. But for how long? The McKinsey report lays out some expensive investments for China as it positions itself for a bigger role in the global economy. China is listening. According to a recent news report, China has increased the number of undergraduates and doctorates 500% in the last 10 years. The country is recruiting top international scholars to teach at its universities, while leveraging low local labor costs to build state-of-the-art labs and other facilities.
Meanwhile, the U.S. talks about a "no child left behind" education policy but the government doesn't fund the programs that can make that a reality. Maybe the sky is falling after all.
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