Sunday, January 18, 2004

Outsourcing, India, Sowell

While I agree with most of what this article says, India does take advantage of the situation, perhaps not maliciously or intentionally, by having such a glut of talented computer engineers willing to work for very low wage, as Thomas Sowell writes:

The grand fallacy of those who oppose free trade is that low-wage countries take jobs away from high-wage countries. While that is true for some particular jobs in some particular cases, it is another half-truth that is more misleading than an outright lie.

While American companies can hire computer programmers in India to replace higher paid American programmers, that is because of India's outstanding education in computer engineering. By and large, however, the average productivity of Indian workers is about 15 percent of that of American workers.

In other words, if you hired Indian workers and paid them one-fifth of what you paid American workers, it would cost you more to get a given job done in India. That is the rule and computer programming is the exception.


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