The emerging global labor market

By Diana Farrell, Martha Laboissiere, Robert Pascal, Charles de Segundo, Jaeson Rosenfeld, Sascha Stürze, Fusayo Umezawa

A three-part series explores the impact of offshoring services on specific industries and economies, wages, employment and how companies should select offshore locations.

MGI's latest research takes a look at the emerging global labor market in services and explores the notion of "global resourcing," the process a company goes through to decide which of its activities could be performed anywhere in the world, where to locate them, and who will do them. It also explores the real demand and supply of offshore talent.

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Part I—The demand for offshore talent in services

 

Although the practice of offshoring is growing among companies in developed countries, a wide gap exists between the number of service jobs that they could locate remotely and the actual number of jobs that they have located offshore, or plan to offshore, by 2008. The potential for offshoring varies depending on the industry.

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Part II—The supply of offshore talent in services

The number of graduates with a university degree and 7 years of experience in low-wage countries exceeds the supply from high-wage countries by two-fold. But the total quantity of graduates that can actually be deployed in offshoring is smaller than the raw numbers suggest.

Part III—How supply and demand for offshore talent meet

At an aggregate level, the supply of suitable talent from low-wage countries exceeds likely demand. Importantly, of all the occupations, engineering has the least supply relative to demand. Offshoring will raise wages in some occupations in the lowest-cost supply countries, but will not significantly impact wages or employment in developed countries.

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