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Mckinsey study explodes the myths of anti-outsourcing campaign

PTI, Chennai

Making a strong case for outsourcing, global consultancy firm Mckinsey has said that many jobs are moved to India because they are viable only in a low-wage environment, and without offshoring companies in the US would have done away with these jobs.

In its latest quarterly ‘Exploding the myths of offshoring’, Mckinsey said that for every dollar of corporate spending outsourced to India, the US economy captures more than three-quarters of the benefit and gains as much as $ 1.14 in return.

“From being a zero-sum game, offshoring creates mutual benefit,” The Mckinsey quarterly said.

Equally untenable is the notion that China and India are taking work from the United States because of their low wages.

“Without offshoring, for instance, companies would scale back or withdraw services such as round-the-clock customer help,” the study said.

On the cost front, for every dollar of corporate spending that moves offshore, US companies save 58 cents and the quality of the services they buy is often higher, the Mckinsey report said.

“Offshore workers are often more highly motivated than US workers and perform better, particularly low-skilled jobs that lack prestige in the US,” it said.

For instance, one British bank’s call centre agents in India not only process 20 per cent more transactions than their counterparts in the UK, but also do so three per cent more accurately.

The Mckinsey study, authored by Mr Martin Baily, a senior fellow at the Institute for International Economics and Ms Diana farrell, a director of the Mckinsey global institute, said that a “number of myths and half-truths are muddling the public debate over white-collar offshoring.”

There are some who argue that the number of workers in China and India is so massive that integrating them into the global economy will cause persistent unemployment in the US and Europe.

“Both China and India do have a large supply of productive labour, but they also have a fast-growing appetite for goods and services,” it said.