Narrowing Wage Gap Between the

¶ … Narrowing Wage Gap between the U.S. And Other Low Wage Countries Outsourcing has been growing with the ever increasing globalization that is having an effect on the lives of many people around the globe. There is the very real possibility of more and more jobs in America and Britain being lost as a consequence of outsourcing of jobs to countries like India, and China.

The headlines in many newspapers of the developed countries are more and more focused on the loss of jobs owing to many segments of the industry including banking and insurance moving some of the non-core functions offshore, as they observe the potential for reducing costs. The savings that these organizations make by moving these jobs outside America and Britain is such that this trend to offshore jobs is going on for some time.

Wages for staff and the requirements of office space for them to work are two of the larger overheads that organizations have to put up with and so they are on the constant look out for the means to reduce these overheads and thereby reduce costs and increase profits and outsourcing provides them with these means.

(Change of scene) The issue is how long would this flow of jobs continue and is there any likelihood of the increase in wages that is a very likely result as the demand for workers and the supply of these required skilled workers slowly taper off. There are already the necessary signs in the direction of the tapering of availability of skilled labor and a significant rise in the wages and quality of life for the skilled labor in India and China.

This will definitely cause a slow down in the flow of jobs out of the United States of America. Discussion: The Growing Wage Scene in India and China: The major reason why there has been a large outflow of jobs from the United States of America to counties like India and China is the availability of labor at low costs.

In the event of increase in the cost of labor and services in these countries it will no longer be attractive for these jobs to be relocated here and the flow of jobs outside the United States of America will diminish.

India Daily had conducted an informal study and found that the rates of growth in India and China within a span of five years would cause an increase in wage levels that would make the outsourcing of jobs from the western world to India and China no longer viable from the profits angle.

This because the rates of growth and per capita GDB of India and China are progressing at much higher rates than the western world and cause the labor costs to escalate to rates that very nearly match their western counterparts.(How Long Will Indian/Chinese Outsourcing Last?) the wage inflation as experienced in Wipro and Infosys, two of the largest software BPO's in India is as high as fifteen to seventeen percent every year and is showing every sign of getting worse.

(the place to be- Survey: Outsourcing) These projections also come from examining the progress pattern that is seen with the large number of Indian engineers that went to the United States of America during the past fifteen years as they are commanding salaries at levels that are almost equal to their western counterparts.

Thus as the forecasts show that in the with such high growth rates in the next five years there will be increase in wage levels and also Indian and China would no longer be so keen in providing cheap labor for the depleting Western currency values. One of the most critical factors towards this is the price of oil and energy costs.

Nearly eight percent of the dynamic non-deflationary component of the economy of the world is likely to get distributed between India, China, Brazil and South Africa and maybe Russia. It is estimated that as a consequence of this by the year 2010, the cost of services getting done in India will be almost equal to having the same services done in the Western world due to the escalating cost of energy and elevated standard of living that is expected in India and China.

(Look into the crystal ball - Outsourcing from India in 2010) The Diminishing Availability of Quality Skilled Labor in India: Official Indian figures show that India produces nearly three hundred thousand engineering graduates each year in comparison to the fifty thousand engineering graduates produced every year in the United States of America, yet the quality of the engineering graduates that come out of Indian institutions is in doubt. It is estimated that only about thirty to forty thousand of the engineering graduates are up to the required western standards.

Many of these engineers are provided employment abroad in companies like IBM and Accenture. This means that even less quality engineering graduates are available for off shore jobs in India.

Mckinsey has forecasted the demand for quality off shore it and software engineers would be in the region of one million and India is not going to be able to come anywhere close to meeting this demand despite all the efforts that may be made in improving the quality of engineers that may be passing out of the Indian engineering colleges (the place to be- Survey: Outsourcing) The same is the case with the management school graduates. Top-quality Indian MBA's are not available in the quantities that will be required.

The number of management graduates that pass out every year is about ninety thousand. Just as in the case with the engineering graduates these numbers drop drastically when the quality standard is applied. The six state-run management institutes bring out about five thousand management graduates every year and only few of these graduates are considered up to western standards.

Some of these graduates are lost to foreign companies who employ them abroad leaving only some of them available for jobs in India and this makes the availability picture of quality management graduates in India very bleak. The largest chunk of skilled labor requirement today is in the BPO segment of call centers and transcription requirements. The universities in India do bring out nearly two and a half million graduates a year.

Here too only a quarter of these graduates are suitable for the quality standards that are required in the BPO industry, leading to a growing paucity of quality skilled workers for these kinds of jobs.

(the place to be- Survey: Outsourcing) The potential for quality skilled labor is understood by India and the government has initiated some steps in the direction of improving the quality standards in all the educational institutions, but it is still going to be a case of too late and too few and this scarcity of quality of skilled labor is definitely going to have a negative impact on the flow of off shore jobs to India.

(Future Projections and Concerns) Boredom and Health Concerns of Employees: Most of the Indian companies are focused on the low end BPO and it enabled business activities. These companies face the danger of being negatively impacted by the sheer monotony of the job function and the effect on the biological clock by having to work at nights to keep to the business activity timings in the United States of America.

These health problems and the monotony of the job will become more and more pronounced and the lure of higher level of salaries will just diminish and thereby make the number of workers available for jobs in call centers and data transcription and conversion centers much lower than then required levels and this will cause the reduction of such jobs moving to India.

Another factor that is affecting the health of the managers of BPO and it enabled services is the fact that the work pressure and demands are very high and to keep down the wages bill.