This caught my eye:
A daylong strike by local political groups shut down India’s technology hub, Bangalore, forcing many outsourcing companies to shift work elsewhere in the country and abroad.
Wednesday’s strike was called to press the southern Karnataka state’s decades-old claim over a small town in a dispute with neighboring Maharashtra state.
Normal life was crippled across Karnataka with vehicles staying off the streets, forcing people to stay at home. Schools and colleges also were closed for the day.
Bangalore, Karnataka’s capital, plays host to top multinational and Indian information technology companies like IBM Corp., Intel Corp., Infosys Technologies Ltd. and Wipro Ltd. Infosys and Wipro write software and handle back-office work for many Western companies.
There are a number of factors that must be taken into account before making the decision to offshore a business process: local resources, comparative productivity, actual return, regulatory considerations, liability, and a host of others. Add local politics.
I wonder if Intel’s management thought about this before setting up shop.
I suspect Intel did, when they started up the outsourcing. Whether or not they continued to do so, on a regular and frequent basis, is another question.
Outsourcing to Bangalore changed the “facts on the ground,” turning a pretty sleepy backwater into a huge economic dynamo. That created (and continues to create) further ripples in the pond.
Suddenly, serious money was being made. People with new money started spending it on things like houses, servants, consumer goods, etc. In doing so, they upset the status quo. And whenever you upset the status quo, somebody who was on the top of the heap is now in a lower position of power and respect.
Your point about the need for ongoing oversight is a good one, John. I wonder if that’s been factored into the cost equation.
And, as you also note, unforeseen secondary effects may have even greater secondary consequences.
I continue to wonder if the lack of an enforceable international civil code will become an enormous issue at some point.