Dollar Down, Insourcing Up
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It's harder than it looks to save money by outsourcing and offshoring. Now it's going to get even tougher. According to Mark McDonald, group vice president of Gartner Executive Programs, the fall of the U.S. dollar's value against foreign currencies, including the rupee, is going to raise outsourcing costs enough to cause many firms to insource. Here's what McDonald told me in a one-on-one conversation at this week's Gartner Symposium/ITxpo in Orlando: |
McDonald: A lot of IT costs, in reality, are denominated in rupees. No CIO really knows that. The price appreciation of the rupee relative to the dollar plus higher labor rates in India are creating pressures that will affect CIOs. They have a currency risk exposure; IT has never dealt with that sort of thing before. We're seeing some people who are considering inshoring back to the States, because this way they have their cost and revenues bases back on the same level -- dollar-denominated costs and dollar-denominated revenues. Somewhere and sometime, whatever appreciation of the rupee will come through and hit you.Could that drive offshoring to other countries?
McDonald: Yes, but look at the dollar relative to other currencies. That's why we are starting to hear of major global companies building IT capability back in the United States, as part of the long-term bet against the dollar. The dollar's value relative to other currencies will remain low for the foreseeable future.
Comments (3)
I am not a CEO nor am I a business man but I can tell you that you are gambling,alot.
As a worker and blue collar I struggle every day to make ends meet because of a faultering economy.
Years ago I noticed the south of the border moves,the off shore and so on as the jobs disapeared here in the states and earning power failed ever so slowly. Now the chicken is going to roost,or rather roast. The American dollar is almost worthless,industrial base is almost gone.
So your moving back,cheers but with the way things are it wont help the genneral public one bit though it may help the CEO's. You do not have to take a course in business to know that the country is almost broke,all that is left is the military. Has anyone taken a look in upstate N Y,if not you should,not a job to be had,only N Y C has anything but you have to live there,not many can and so,was not long ago there wer jobs there,only post I saw was a job opening at Wallmart--one job for a whole county. Good luck with your gamble,we will save a tent for you,unless you move off shore.
Posted by T Arden | November 20, 2007 11:12 PM
Us unemployed tech workers(and former tech workers who have left the field due to low wages, long hours, little respect etc...)need to start buying rupees! Drive down the dollar and screw the traitors who outsource by boycotting them and picketing outside offices.
Outsourcing would be even more difficult without the H-1B and L1 transfer visa. Just a little logic will tell you what the H1B program does.
The law of supply and demand applies to labor.
When supply increases or demand decreases the price of a commodity(like labor) goes down. Producers make less, supply decreases and the price reaches a balance. It's a nice feedback system that works well, It's called Capitalism and Free trade.
When Government interferes in the Free market that is socialism or Communism.
The Cheap visa indentured servants who lack the rights of Americans to change jobs, join unions, negotiate salaries, and who are baited with the Carrot of U.S. citizenship and the favorable exchange rate.
More Visas = greater supply of engineers= lower wages = less Americans entering field = lobbying for more cheap labor H1B's.....
Less visas = increased wages for engineers = Americans entering field = Less visas needed.
The companies who whine about the lack of engineers are the same ones who glorify free trade with country's that have lower standards of living, and few if any enforced labor or environmental laws.
Also does anyone know the proportion of male to female visas? I see very few women getting these, shouldn't it be around %50 or is the program deliberately sexist?
Posted by Ex-tech worker | December 29, 2007 2:46 PM
Ex-tech, I agree with the majority of your post, but I believe that it goes much deeper. Who can afford to get a four year degree these days? I have, had a good job, but even at $45k I can't afford to go to school & still manage to pay the mortgage. (Tomorrow's my last day.. outsourced after 8 years with the same company, IT related.)
It sure doesn't help that government had slashed education and R&D for Science and University's and that blue collar jobs went away with NAFTA= The fair trade agreement that was more than fair to everyone but the US citizens that deserve to have decent manufacturing jobs.
Without education creating the innovations in technology that used to drive this nation's manufacturing businesses, I think we're hopelessly screwed.
Posted by Kerri | January 31, 2008 5:13 PM