A recent Wall Street Journal article discussed how the Next Wave of Remote Work Is About Outsourcing Jobs Overseas, as companies respond to labor shortages and rising wages by moving some positions abroad.
I have experience with software development teams in the U.S., China, & India with many pros/cons and lessons learned. Some of the considerations, include:
- Cultural differences can lead to miscommunications and delays. ‘Yes’ can mean, “I heard you,” and not, “Yes, I will do it.” Or, they can build a piston for you, but not an engine. Turns out you cannot outsource the essence of ‘you.’
- Espionage – It’s real, not just a ‘news story.’ In one country, they built a new building across the street from ours, hired our developers, and then began building a copy of our product. Trying to formally lay claim to the IP you paid to have developed in another country can also prove very burdensome, time consuming, and costly.
- Economics – Labor arbitrage isn’t what it was. It is not always cheaper to find people overseas. For instance, China has begun building domestic versions of foreign-sourced software, driving developer costs sky high. It’s hard time compete with ‘lifetime benefits’ and multiple 20% pay increases.
- BRICS – BRICS’ emergence as an economic rival to the EU and US will change the global economic landscape. This will force companies to reevaluate and carefully consider where to source their labor and materials. Don’t think it’s happening? Consider France’s purchase of CNOOC (Chinese oil) LNG in Yuan, March 31st.
- Equivalency – What you consider a competent accountant, domestically, may not be the same overseas. Particularly if (example) you’re a US company looking for a foreign-sourced accountant proficient in U.S. GAAP.
Moving, decisions to offshore will increasingly become very murky. Not just for raw industrial materials, but for labor and everything else important to domestic economic survival.