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Thursday, June 16, 2005

Offshoring Harmeless To Developed World Citizens!!

"Offshoring" of service jobs to low-cost countries has reached fever pitch in the past few years, with concern in much of Europe and the US that such developments could be a big source of unemployment.McKinsey Global Institute's research suggest that the fears are overblown.Even though the supply of young people in low-wage economies with good educational qualifications is likely to increase substantially in the next decade, demand for employing them in their own nations in jobs transferred from rich countries is likely to be muted, the report says.Many of them lack the work-related experience and aptitude that foreign companies are looking for. The study brings the distinction between graduation and thinking skills and says in the developing world this is overlooked. The report indicates that even though many manufacturing jobs have migrated from rich countries to emerging economies over the past 10 years, due to cost-cutting pressure, the service sector is unlikely to see the same trend.

The study covered eight sectors Viz.automotive, healthcare, insurance, information technology services, retailing, pharmaceuticals, banking and software.It also analysed specific types of service jobs within each of these sectors that could theoretically be performed "remotely" in low-cost countries on behalf of consumers and industrial customers in rich countries.The degree to which individual jobs can be offshored depends on how "customer- facing" they are. In retailing only about 3 per cent of all the jobs in developed regions lend themselves to being transferred to low-wage economies.But in engineering and finance because many jobs in these fields are done well away from contact with customers the theoretical proportions are much higher, at 52 per cent and 31 per cent respectively.On the supply side, there is no doubt about the large number of potentially suitable candidates for service jobs done "remotely" in low-wage nations.

The study says the developing world has 33m "young professionals" with degrees and up to seven years' work experience in fields such as engineering, finance and information technology & the number compares with just 15m in the rich countries the institute studie. The number of young people with professional qualifications in emerging economies is expanding at 5.5 per cent a year five times the figure for the developed world.But the report scorns the idea that young people in this category in emerging economies can just walk into a job with a multinational employer. Many are judged unsuitable because they may be in parts of the country away from big airports or "offshoring centres".

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