Indian software, service exports on upswing

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Re: concern

But there is some concern that the majority of what we do is exported as a commodity.

You can't export everything we do. Granted, you don't see TVs manufactured in the US, but you don't see much TV manufacturing in ANY rich economy (Japan included) because it is so much cheaper to outsource what is essentially low-skill work to lower-wage countries.

Now, we are outsourcing SOME programming tasks. I spoke at length about that in past articles, but where I think the balance will happen is that maintenance and additions to existing products will get outsourced, whereas new and custom development for first-gen products (which are a surprisingly large percentage of total development work) will remain at home due to the need to maintain proximity to the target market. That seems to be what is happening, with those who step over the bounds (outsourcing a new product, say) finding a low return on investment.

That's not so bad, and given the huge amount of software development work which needs to be done, more gets done because domestic workers get freed up to do more new development tasks. Granted, that's an equilibrium point that still lies in the future, but I don't think it's THAT far in the future.

People talked about the hollowing out of America when the Japanese started showing Detroit how bad their cars were. America continues to be one of the most dynamic economies in the world (compare it to the european average and you'll see what I mean). We did that by being open to change in ways the Europeans aren't.

Posted by: John Carroll   Posted on: 06/02/05 You are currently: a Guest | Members login | Terms of Use

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