If you are a CEO of a multinational - it's your duty to outsource

[sasguru]

It's obvious. You want the largest and growing markets for your products, by outsourcing you:

1) Create a new population of affluent consumers
2) Who can then buy your product.

Why bother with stagnant, aging markets like the UK when you have young, growing markets like India and China?

[The Lone Gunman]

Only if the rate you pay allows the locals to buy your products.

[DimPrawn]

It's obvious. You want the largest and growing markets for your products, by outsourcing you:

1) Create a new population of affluent consumers
2) Who can then buy your product.

Why bother with stagnant, aging markets like the UK when you have young, growing markets like India and China?

Are you talking about yourself again?

[sasguru]

Only if the rate you pay allows the locals to buy your products.

Indeed. That's what Henry Ford realised - he had to pay his workers a reasonable wage so they could buy his cars.

The modern Ford has created a cheap Indian car (built in India for peanuts)which they can sell to their outsourced IT workers (and similar) in India. Margin is probably higher than a similar model in the UK.

Simples.

http://news.bbc.co.uk/1/hi/business/8270541.stm

[TimberWolf]

It's obvious. You want the largest and growing markets for your products, by outsourcing you:

1) Create a new population of affluent consumers
2) Who can then buy your product.

Why bother with stagnant, aging markets like the UK when you have young, growing markets like India and China?

3) Avoid first world taxes and social costs but sell to first world economies at first world prices.

Why stop at outsourcing technical skills? If there is a cheap market to be tapped for technical skills, there's an even bigger one ready for soft skills. Don't stop until the CEO has himself been outsourced.

[BoredBloke]

It's obvious. You want the largest and growing markets for your products, by outsourcing you:

1) Create a new population of affluent consumers
2) Who can then buy your product.

Why bother with stagnant, aging markets like the UK when you have young, growing markets like India and China?

Wrong - outsourcing to a cheaper economy is about reducing your baseline costs and that's all. If two companies produce similar products with similar production costs and a selling price then both will make similar profits. If one can significantly reduce it's operating and production costs then it will make more money. This competative advantage would mean that the outsourced company could benefit from 3rd world costs while selling at a 1st world price. This extra profit could be used to make their similar product the market leader (price drop or extra marketing) and eventually swallow up their competitor.

When outsourcing becomes common then yes the income in the outsouced countries will increase, but not by as much as you would think. We are talking about 2 of the most populous countries on the planet. The tiny percentage involved in the outsourcing can easily be replaced so the wages stay low when compared to those earned in the west.

[sasguru]

When outsourcing becomes common then yes the income in the outsouced countries will increase, but not by as much as you would think. We are talking about 2 of the most populous countries on the planet. The tiny percentage involved in the outsourcing can easily be replaced so the wages stay low when compared to those earned in the west.

Completely and utterly wrong.
http://www.mckinseyquarterly.com/Tra...dle_class_2032

[BoredBloke]

The middle classes may well increase - that wasn't my point. What is the salary of an IT developer in India compared to here? Is he part of this growing middle class? Probably yes. By western standards his salary is still low. He will not be buying the high price goods being outsourced to India and China for a very long time. When India and China become too expensive there are plenty of other poor nations to outsource to.

The reason companies outsource to India and China is to reduce costs and boost proficts. Cost to the business is the only driving factor. If they can get some sales from the Indian sub continent then all well and good, but only a fool would say that companies outsource for some moral reducing poverty type crusade!

[Moscow Mule]

I'd like to see a big multi-national do an experiment: One project, two teams (one onshore, one offshore).

What is the total cost (inc paid for re-works / bugs etc) for each model? I'd be willing to bet the onshore team wins on total cost & time.

Has anybody actually done this?

[The Lone Gunman]

only a fool would say that companies outsource for some moral reducing poverty type crusade!

I saw what you did there.