India Offshoring

"To be sure, many corporations have run into myriad headaches, ranging from poor communications to inconsistent quality. Dell Inc. recently said it is moving computer support for corporate clients back to the U.S. Still, a raft of studies by Deloitte Research, Gartner, Booz Allen, and other consultants find that companies shifting work to India have cut costs by 40% to 60%."

http://archive.midrange.com/cpf0000/200401/msg00005.html

This is exactly where the problem lies. Management teams in the US demand blindly that as much as possible is outsourced to India (call it the herd effect) without really having any data regarding the effect on quality. There is no question that some jobs can be performed offshore cheaper and better, and that eventually the quality factor can disappear, but at this time it still is a huge problem (incidentally this holds true for Chinese manufacturing as well). In my opinion sometime in the next decade we will witness a sharp decline in Indian outsourcing as managers realize the costs of reducing costs this way, leading to an equilibrium in job offshoring.

In the long term (50-100 years) the boost of the Indian economy will also lead to higher living standards and a smaller gap between costs of labor in the US and in India, essentially erasing the advantages of offshoring. That gap may not be sufficiently accentuated for a long time though.