The race to the bottom

It's no longer cheap enough to outsource tech jobs to India. As the tech industry in India has grown, workers are demanding higher wages. So now, Indian companies are outsourcing FROM India, so they can pay even less. But what's even more disturbing is that one of those "developing countries" is low-cost areas of the United States:

One of the constants of the global economy has been companies moving their tasks — and jobs — to India. But rising wages and a stronger currency here, demands for workers who speak languages other than English, and competition from countries looking to emulate India’s success as a back office — including China, Morocco and Mexico — are challenging that model.

Many executives here acknowledge that outsourcing, having rained most heavily on India, will increasingly sprinkle tasks around the globe. Or, as Ashok Vemuri, an Infosys senior vice president, put it, the future of outsourcing is “to take the work from any part of the world and do it in any part of the world.”

To fight on the shifting terrain, and to beat back emerging rivals, Indian companies outsourcing companies based in India are outsourcing jobs to developing countriesare hiring workers and opening offices in developing countries themselves, before their clients do.

In May, Tata Consultancy Service, Infosys’s Indian rival, announced a new back office in Guadalajara, Mexico; Tata already has 5,000 workers in Brazil, Chile and Uruguay. Cognizant Technology Solutions, with most of its operations in India, has now opened back offices in Phoenix and Shanghai.

Wipro, another Indian technology services company, has outsourcing offices in Canada, China, Portugal, Romania and Saudi Arabia, among other locations.

And last month, Wipro said it was opening a software development center in Atlanta that would hire 500 programmers in three years.

In a poetic reflection of outsourcing’s new face, Wipro’s chairman, Azim Premji, told Wall Street analysts this year that he was considering hubs in Idaho and Virginia, in addition to Georgia, to take advantage of American “states which are less developed.” (India’s per capita income is less than $1,000 a year.)

For its part, Infosys is building a whole archipelago of back offices — in Mexico, the Czech Republic, Thailand and China, as well as low-cost regions of the United States.

Thomas Friedman, DLC Democrats and Republicans who sing the praises of outsourcing (easy to do when it isn't YOUR job that's in danger of being shipped overseas) will point to these 500 jobs that Wipro is creating and say that outsourcing works for everyone. But I'd be interested in knowing for how many jobs formerly in the U.S. Wipro handled the outsourcing to India in the first place, and I'd also be interested in how many of these 500 jobs will be filled by H-1B programmers.