In This Article
- Exhibit 0: Suitability of job candidates in low-wage countries
- Exhibit 1: Factors affecting labor supply
- Exhibit 2: Choosing an offshore location
- Exhibit 3: The location cost index
- Exhibit 4: Comparison of hourly labor costs
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The topic of offshoring generates extreme differences of opinion among policy makers, business executives, and thought leaders. Some have argued that nearly all service jobs will eventually move from developed economies to low-wage ones.1 Others say that rising wages in cities such as Bangalore and Prague indicate that the supply of offshore talent is already running thin.2
To a large extent, these disagreements reflect the confusion surrounding the newly integrating and still inefficient global labor market. Much as technology change is making it possible to integrate global capital markets into a single market for savings and investment, so digital communications are giving rise to what is, in effect, a single global market for those jobs that can now, thanks to IT, be performed remotely from customers and colleagues.
The newly integrating nature of this global labor market has strategic and tactical implications for companies and countries alike. Information and insight about it are sparse, however, and executives and policy makers have little of either for making the decisions they face. To provide help for governments and companies in both high- and low-wage economies, the McKinsey Global Institute (MGI) analyzed the potential availability of offshore talent in 28 low-wage...