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Research points to continued growth of offshoring
Offshoring will continue its growth, despite claims that the labour arbitrage for companies operating within countries such as India is eroding.
Addressing online delegates at Global Sourcing Live, Darryl Conley, managing principal – Europe, Everest Group, said that media coverage of the demise of offshoring had been greatly exaggerated.
Conley pointed to research carried out by Everest, which showed that, using measures such as exchange rates and cost inflation rates, labour arbitrage in India was viable for at least the next ten years.
“Based on the US dollar to the rupee you’ll see between eight to ten years arbitrage sustainability,” he said. “The good news for Europe is a similar exercise using European currencies shows that labour arbitrage could last for over 18 years.”
Conley also rejected the notion that many companies were turning their back on India and backshoring operations such as call centres.
He said that media coverage of recent high profile decisions by the likes of Lloyds TSB and Aviva to bring some functions back to the UK from India had not provided an accurate portrayal of offshoring trends.
“These are exceptions that have been used anecdotally to distort the picture,” Conley said.
