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Current Affairs Web/Tech

What About Us?

Morgan Stanley’s Stephen Roach looks at the effect of low cost information technology and telecommunications on shifting formerly nontradable work into tradable, now easily movable work.

To the extent that the knowledge-based content of the output of white-collar workers can now be exported anywhere around the world with the click of a mouse, the rules of the game have changed.  And that’s exactly what’s now happening — not just at the low end of the value chain with respect to call center operators and data processors but increasingly at the upper end of the chain for software programmers, engineers, designers, accountants, actuaries, lawyers, consultants, and medical doctors. 

Meanwhile, a Washington Post article reviews a May report from the Boston Consulting Group chastising American companies for not offshoring work more aggressively.

Particularly troubling is the report’s information about confidential discussions with executives at Boston Consulting’s client companies, many of whom conveyed low opinions of their American employees compared with labor available abroad. Not only are factory workers in low-cost countries much cheaper — well below $1 per hour in China, compared with $15 to $30 per hour in the United States and Europe — but they quickly achieve quality levels that are “equivalent to or even higher than . . . [the] best plants in the West,” according to the report.