The Hindu Business Line : Offshoring is win-win trend, says McKinsey

THE real economics of offshore outsourcing can create a win-win for the Indian and the US economy, according to Ms Diana Farrell, Director, McKinsey Global Institute.

Speaking at Nasscom, 2004, she emphasised that the focus of the offshoring debate would have to shift from job losses to creation of value as economics would finally prevail.

Highlighting the real economics of offshoring in a presentation, Ms Farrell said that out of every $1 spent on offshoring by the US companies, $1.12-1.14 of potential total value is created for the US economy.

"Out of the $1 spent on offshoring in the US, while India derives $0.33 of value, nearly $ 0.67 of direct benefit accrues as savings to the US. In addition, indirectly, $0.45-0.47 of new value gets created in the US through reemployment of the labour."

The fears of job displacement on account of offshoring are also exaggerated. Citing reports from the Bureau of Labour Statistics in the US, she said that job creation in the US markets would be outpacing the job losses by a wide margin.

"As the US has entered the election year, the rhetoric over job losses is going to get louder," she warned. But action may not be as pronounced as the words and get toned down, post elections.

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Offshoring is win-win trend, says McKinsey