2005-08-16

The Emerging Global Labor Market Indicates the Opportunity to China

The recent topic about the offshoring brings out two extremely different opinions. One is nearly all service jobs will move from developed countries to developing ones for theirs low cost; the other is the rising wages in some offshoring cities make their supply of offshoring talent thinner and thinner.
These disagreements generate the global labor market which is newly integrating and strategic. But the information and insight about it is still rare, so some executives and policy makers are still blinded when they are making some decisions to solve the crisis they face. In order to help them, the McKinsey Global Institute (MGI) made a survey for eight professions including IT services and packaged software across 28 low-wage countries. The analysis shows the current situation of the whole offshoring services:

• Offshoring will unceasingly create a relatively small global labor maker, which can give a certain threatening influence to developed countries in employment and wages.

• Though the demand for offshoring labor in developed countries will undoubtedly push up the wages rate of some professions in low-wage countries, the rate would not as high as the current one in developed ones.

• Potential global supply and demand are still imbalanced for their inefficient match.

  According to the study, MGI suggests that the efficient resources allocation would create more value if the emerging global labor market functions are utilized efficiently. So insightful policy makers and executives should take smart and specific measures to raise their efficiency and keep the balance between the supply and demand.

  From the conclusion, we can obviously feel that all these factors are beneficial to China's software outsourcing. Now more and more attention is being focused on China, for its reliable infrastructure, skilled workers, vast potential domestic market, and relative low-wage rate of course. China will be the substitute of India, and the next global software outsourcing centre.

 

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