India, China, Outsourcing and Globalization
Ed Sim recently wrote a nice post on Globalization (after a long time – his last entry in this category is dated Jan’06). Ed is one of the few VCs who are explicitly thinking about globalization and what it means for the world in general.
I read with interest his views on outsourcing and how it has panned out across his portfolio of investments. I am watching this space closely and trying to get more of our companies to think about leveraging the cost/skills base present not just in India but also in Eastern Europe.
For many European companies, Eastern Europe is a more natural (and less daunting) opportunity than India (although it doesn’t seem to make a difference to some companies).
Having said that, quite a few Indian companies are now setting up shop (or already have offices) in Eastern Europe (see this TIME magazine article from June ’06: “Bangalore Goes Global”). In this sense at least, globalization is truly happening
Ed reproduced a graph from the Economist on his blog to make the point that it is not just low-level work that is now moving offshore. To quote:
“The last graph is quite interesting as it relates to us technology folks. We have always thought of India and China as places to offshore low-level development work. Yes, a lot of that has already been done but what is alarming is what may happen in the future as the comparative advantage that India and China have over us in terms of college graduates in science and math is overwhelming.
