16 December, 2004

On the horns of a dilemma -The Hindu Business Line
To outsource or not to outsource... Read on. Last April, a 41-year-old software engineer in California committed suicide, according to his father, because the bank he worked for offshored his job. Is there anything CIOs can do to prevent that kind of tragedy?

On `outsourcing,' again, there is something relevant in a recent issue of McKinsey Quarterly, under `economic studies' - how for every euro of corporate spending that German companies send offshore returns are "just euro 0.80 of value for Germany's economy." The US scenario is different - for every dollar of spending US companies transferred to India, there was new wealth of $1.46. Of this, 33 cents accrued to India in the form of wages, profit and taxes, while the US economy captured $1.13 "through cost savings to businesses, increased exports to India, repatriated earnings from offshore providers in which US companies have invested, and the additional economic output created when US workers are reemployed in other jobs."

Why are German companies not reaping similar benefits of offshoring? Because of language and culture differences, which in turn make it "more expensive to coordinate" .

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