Fact:- Increase in fuel cost is making the global transportation
costly.
Hypothesis:- Rise in global transportation
cost combined with wage rise in China
will make sourcing from china costly.
Implication:- Manufacturing outsourcing
will reverse and manufacturing will shift back to US and European countries in
coming years.
Evidence:- Signs are visible now
as many Chinese manufacturers are scouting for land deals in US cities for
manufacturing sites.
This rising fuel cost will impact manufacturing
outsourcing as manufacturing outsourcing requires physical transportation of goods. It will not impact
services outsourcing ( IT and BPO).
Possibility:- On the contrary,
with reverse in manufacturing outsourcing the employment situation will improve
in western countries and there will be less public pressure to stop services
outsourcing, which will be good reprieve for India ’s outsourcing business.
So rising fuel cost can be
actually good for India ’s
outsourcing business provided India
keep check on rising wages of IT and BPO manpower!
