I have been talking about the end of the India offshoring tsunami for several years. With wage inflation annually running between 15% and 20%, the delta between the U.S./Western Europe was bound to shrink to the point that the raison d'etre for offshoring to India no longer applied.
Now, it has come to this: India is outsourcing outsourcing.
Tata Consultancy Services (TCS) opened a software development center in Guadalajara, providing about 5,000 jobs to Mexicans over the next 5 years.
New Delhi-based IT firm Genpact (G), self-described as “a world-class” alternative to India for IT outsourcing, opened a 125,000-square-foot facility in Ciudad Juárez, employing 2,500 people.
Bangalore’s Infosys (INFY) set up shop in Monterrey last year - 150 miles south of the United States border.
This is the new paradigm: A company in the United States pays an Indian vendor 7,000 miles away to supply it with Mexican engineers who work within driving distance of America.
It’s what happens when a country’s companies are trying to cope with wage inflation hovering around 15% annually.