Labor Arbitrage Key Factor for Offshoring – Everest Research

According to Everest Research Institute , labor arbitrage, which is one of the main factors for cost-saving in the offshore outsourcing model, will continue to drive most of the offshore outsourcing deals for the next thirty years.
The report counters the growing opinion that labor arbitrage is going to lose its importance as the driver for outsourcing in the wake of rapid hike in wages and lack of easy availability of skilled resource in major offshoring destinations like India. Everest reveals that hike in wages is phenomenon for a select section of talent pool. Further, the shortage of skilled labor is not an industry-wide trend but only affects certain domains.

The report also predicts that the global offshoring market will exceed the USD 160 billion mark by 2009, growing at a rate of 33 percent. Also, the non-IT offshoring will constitute around 45 percent of the offshore market in the next three years.