Offshore Outsourcing’s Best Days are Ahead

Sheeroy Desai

CEO

I have recently completed two trips to India and I have been very surprised by the negative sentiment of leaders in the outsourcing space.

I see the world very differently. This is the time for offshore out sourcing companies to drive harder and take long term advantage. Its counter intuitive, given the global recession, but I firmly believe this to be the case.

Historically, recessions and downturns have created the impetus for acceleration in long term off-shoring. Starting with manufacturing in the 1970’s, all the way to IT services in the early part of this decade, recessions have created the urgency for Western companies to seek out ways to increase the movement of jobs to lower cost locations.

This recession will do the same. As the US and European economies stabilize and start to recover, executives and mangers will be faced with anemic top line growth and forced to find unique ways to drive up earnings and productivity.The easiest way is to outsource and offshore work to lower cost locations. I believe we are on the cusp of the next major off-shoring drive.

There is another driver at play as well – the Internet. The internet is the highway over which professional work can be moved anywhere in the world. Much in the same way cheaper and faster shipping has allowed for manufacturing to be globalized. The internet is only getting faster and cheaper – and that will continue to drive the globalization of professional jobs.

Why do investment banks need traders in NY or London when they can be in Mumbai? Ibelieve we are headed towards this future. The question is what are the implications for the labor markets globally. I believe in the medium term we will continue to see job losses in Western markets and acceleration in the creation of professional jobs in lower cost markets – most notably the BRIC nations.

This means companies in these markets have to focus on hiring and developing the talent who can perform these high skilled jobs. Now is the time for these countries and companies to invest in the next wave of off-shoring.