Labor Arbitrage Seen Remaining Primary Value Proposition of Offshore Outsourcing

Fears about wage inflation, skills shortages in offshore markets "largely misplaced," Everest Research Institute asserts

  • The global offshore market will reach upwards of $160 billion by 2009, according to Everest, which predicts that the market will continue to grow in line with demand at an approximate rate of 33 percent a year for the next three years.

  • Jobs are moving permanently offshore. Jobs outsourced to an offshore location are more likely to move to another offshore market than return to their country of origin, as labor arbitrage is sustained by a rapidly developing and expanding offshore marketplace.

  • Non IT-offshoring, which was virtually non-existent five years ago, will represent nearly half (45 percent) of the offshore market in three years, according to Everest. While the use of third-party suppliers dominates offshore IT services, companies prefer using "captives" (internal cost centers or 100 percent subsidiary companies that serve the parent company exclusively) for offshoring business process outsourcing (BPO) services.

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