Comment Re:Hybrids are key (Score 1) 284
It's an interesting argument, but I think some of your assumptions are flawed:
1) Japan isn't the best comparison; after all, there are reasons why they call post WW2 Japan "the economic miracle". The development of the keiretsu combined with governmental cooperation and significant cultural stability created a perfect storm of growth, which affected all tiers of society. For this alone, I'm not sure your historical analogy holds up.
2) The disparity between rich/poor, educated/uneducated is significantly higher in India/China than was the case in Japan after WW2. Japan focused on industrial manufacturing and got a healthy boost from the Korean War which increased demand --- demand exceeded supply. Since the product we are referring to in offshoring is ultimately labor, the overall supply of said labor in those two nations is more concentrated than any other place in the world, thus supply exceeds demand - the historical example again isn't particularly relevant.
3) Even if we took your above #1 on face value and your analogy with post-WWII Japan as valid, you still have to remember that Japan had 40 years of absolutely ridiculous growth, and when it stopped, it had little to do with western living standards, it had to do with the banking crisis - a ton of bad debt, and a full bank consolidation. In fact, if you read about it, you'll find that much of the more western dynamics in the Japanese economy were implemented after that crisis, during the 90s and inordinately affected younger workers.
If Japan is the measuring stick, I'm thinking we have a couple of decades to go before the slowdown occurs.
4) And even if we took all of the above to be total bunk, there's one more problem with the argument --- if they did create their own brands and their own companies with the IT workforce, choosing not to bid particular resources rather entire projects or even divisions of US companies, it simply increases the scope of the offshoring capabilities. I work at a bank - we aren't talking about India becoming more organized and starting a bank to compete with my company, we are talking about IT offshoring... they can't bid on a lot now because of lack of business competency in their workforce, but once it's there (given your statement on increased sophistication at an macroeconomic and organizational level), they have the ability to go after even more US IT work.
1) Japan isn't the best comparison; after all, there are reasons why they call post WW2 Japan "the economic miracle". The development of the keiretsu combined with governmental cooperation and significant cultural stability created a perfect storm of growth, which affected all tiers of society. For this alone, I'm not sure your historical analogy holds up.
2) The disparity between rich/poor, educated/uneducated is significantly higher in India/China than was the case in Japan after WW2. Japan focused on industrial manufacturing and got a healthy boost from the Korean War which increased demand --- demand exceeded supply. Since the product we are referring to in offshoring is ultimately labor, the overall supply of said labor in those two nations is more concentrated than any other place in the world, thus supply exceeds demand - the historical example again isn't particularly relevant.
3) Even if we took your above #1 on face value and your analogy with post-WWII Japan as valid, you still have to remember that Japan had 40 years of absolutely ridiculous growth, and when it stopped, it had little to do with western living standards, it had to do with the banking crisis - a ton of bad debt, and a full bank consolidation. In fact, if you read about it, you'll find that much of the more western dynamics in the Japanese economy were implemented after that crisis, during the 90s and inordinately affected younger workers.
If Japan is the measuring stick, I'm thinking we have a couple of decades to go before the slowdown occurs.
4) And even if we took all of the above to be total bunk, there's one more problem with the argument --- if they did create their own brands and their own companies with the IT workforce, choosing not to bid particular resources rather entire projects or even divisions of US companies, it simply increases the scope of the offshoring capabilities. I work at a bank - we aren't talking about India becoming more organized and starting a bank to compete with my company, we are talking about IT offshoring... they can't bid on a lot now because of lack of business competency in their workforce, but once it's there (given your statement on increased sophistication at an macroeconomic and organizational level), they have the ability to go after even more US IT work.
