Tuesday, 17 April, 2007

The economics of outsourcing

If Indians are to supply creative or analytics services to the West, they must do so at a small fraction of Western rates. Otherwise, the work wouldn’t exist. There would be no cost advantage. Sounds logical.

But does a Western copywriter or analyst living in a village charge less than his counterparts in cities (I assume it costs less to live in a village than in a city)? Where does the logic of the factory manufacturing end and that of professional services begin? Which universal and basic economic law am I breaking by asking this question?

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