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3.3 m US jobs to go off-shore by 2015, says IIM lecturer
Financial Express - Bombay,India
3.3 m US jobs to go off-shore by 2015, says IIM lecturer
Gunjan Pradhan
New Delhi, April 4 About 3.3 million service jobs in the US
are estimated to move off-shore by 2015, according to a
study by Prof Peter Haug Fulbright, lecturer at the Indian
Institute of Management, Kozhikode. Comparing India and
China as outsourcing destinations for manufacturing, he told
FE China has an edge due to its dedicated and well
established special economic zones. “China is more
attractive as its infrastructure spending and development
are very high,” he said. India has lost out on
infrastructure development and this has impacted its
progress as an outsourcing hub for manufacturing. Still,
India has an advantage in many areas of off-shoring and
outsourcing. In addition to the IT sector, it has a
comparative advantage in healthcare services like medical
transcription.
“Philippines is another country to watch out for. It has a
knowledgeable manpower and has a locational advantage as
well,” Mr Haug said. “In India the information technology
and enterprise solutions (ITES) market is likely to touch
$142 billion by 2009,” Mr Haug said. Projecting tremendous
growth in ITES, he said the sector was likely to generate
6,50,000 to 1.1 million jobs in India by 2008. The suppliers
to outsourcing companies would provide another 5,00,000
jobs, he added. This trend will be coupled with 50-100%
growth in wages as compared with other white collared jobs.
India ranks first in financial structure and people skills
availability in the off-shore location attractiveness index
prepared by AT Kearney, Chicago. “In fact, not only the IT
sector but also medical outsourcing is going to be a major
area of growth for India. It is cheaper to have people here
to transcribe medical reports rather than Americans
technicians,” he said. The cost advantage remained, he
added. u
As far as IT is concerned, 67% of the 115 US companies
surveyed in 2003 have off-shore operations in India. India
is high both on location attractiveness due to its market
size and people attractiveness in education and language.
The other hot locations identified by AT Kearney is China,
which is high on location attractiveness but low on people
attractiveness.
Out of every dollar spent by a US company, India benefits 33
cents in terms of employee wages, profits of outsourcing
providers and suppliers, taxes collected from the second and
third tier suppliers to the outsourced companies. To the US
companies, he said, cost savings were almost 58 cents
against every dollar spent.
India had an advantage both in off-shoring and outsourcing,
he said. While outsourcing is contracting and delegating
business processes to third-party vendors who own,
administer and manage the process based on performance
metrics, off-shoring has more to do with contracting
business processes to third-party vendors located in another
country. For instance, the Microsoft Campus in Hyderabad is
an apt example of off-shoring. Off-shoring is done to take
advantage of both the low cost location and cheaper labour. |
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