Question

In 2004, The New York Times reported that India might be losing its outsourcing edge due to rising wages[3] The reporter noted that a recent report “projected that if India continued to produce college graduates at the current rate, demand would exceed supply by 20% in the main outsourcing markets by 2008.” Using the terminology you learned in this chapter, explain what he meant to say was happening in the market for Indian workers in outsourcing jobs. In particular, is demand for Indian workers increasing or decreasing?

Answer 1

The demand for outsourcing to Indian workers would be decreasing because the wages are rising which would make it more expensive to outsource to India.

Answer 2

Is the supply of Indian workers increasing or decreasing? Which is shifting faster? How do you know?

Answer 3

The statement as quoted above is somewhat confusing. However, it seems to me that college graduates are increasing but the supply of lower wage workers is decreasing which is causing a greater demand for cheaper labor. At least that is the way I am interpreting the above statement--it is really not that clear.

Answer 4

Glad someone else thinks so too.