2. The Big THREE
China has drove down the
cost of manufacturing
Wal*Mart is driving down
the cost of retailing
and now …….
India is driving down cost in
services
3. Hip Surgery, Heart Surgery –
US$10,000 only
No need to wait
Price includes round trip air –ticket
plus a few weeks vacation for full
recovery.
4. India Woos Medical Tourists
A clinic recently
opened in Mumbai
Private heart surgery in England is $50,000
The same cost applies to joint replacement,
neurosurgery and cancer treatment
The Maharashtra State government is now
working with the British Medical Services
5. More 1040s prepared in India
20,000 in year 2003
100,000 – 150,000 in year 2004
Ernst & Young said to have sent
about 7,500 tax returns last year
A U.S. tax preparer during peak
season makes $3,000/month
An Indian CPA would make $300/
month
Saving $50,000 for every 100 returns
ship to India
6. Jobs - Going, Going, Gone
2003 2007
Custom software 20% 47%
development
Software maintenance 18% 47%
IT Documentation 13% 47%
IT telephone support 9% 40%
Remote network 3% 39%
monitoring
Software reengineering 8% 36%
Systems management 5% 25%
IT administration and 3% 24%
operations
7. Work - fraction of the price
Hourly Cost to operate a Call Center
Kansas City, Missouri = $12.47
Mumbai, India = $4.12
Kansas City, Mumbai,
Mo India
Equipment $0.39 $0.56
Labor $10.00 $1.50
Profit (mark up) $2.08 $2.06
Total cost $12.47 $4.12
8. Salary Structure
India Vs the world
IT employee cost per year
Country Cost per year
India $8,000
Canada $36,000
Ireland $28,000
China $9,600
Israel $25,000
Philippines $7,000
Ea. Europe $7,000
Russia $7,000
Mexico $7,000
South Africa $18,000
9. Jobs overseas
Top 5 US Employers in India
General Electric: 17,800
Hewlett-Packard: 11,000
IBM: 6,000
American Express: 4,000
DELL: 3,800
GE Capital saves up to $340 million a
year by moving tasks to India
10. Help Wanted –
not in this country
Medical
Processing insurance claims and
hospital bills
Medical transcription and billing
Animation
3-D animation special effects
Linear and nonlinear editing
Insurance
Applications and claims processing
Benefits administration
(source: The Wall Street Journal)
11. Help Wanted –
not in this country
Digitizing
Converting text, engineering drawings,
architectural designs and maps from
paper to digital format
Desktop Publishing
Page layout
Advertising campaigns
Typesetting and color separation
(source: The Wall Street Journal)
12. Help Wanted –
not in this country
Telemarketing
Customer-service management for
international banks, software
companies and credit-card
companies
Financial
Financial analysis for wall Street banks
and insurance companies
Accounting and bookkeeping
Tax preparation
(source: The Wall Street Journal)
13. Spreading to major industries
Medical: 10 percent of U.S. jobs in
medical transcripts have moved to India,
Pakistan, Canada and other countries
Insurance claims processors:
Between 10,000 to 20,000 jobs – claims-
adjudications jobs have moved overseas
Architects: Major firms are exporting
drafting work. It is estimated a quarter of
major firms are currently exporting jobs.
14. New Middle Class have Emerged
Outsourcing is helping build a sizeable middle-class in India
India is buying more from America. (2003 export = $5 billion -
41% increase since 1998
Infosys – added 9,000 jobs last year, gobbling up jobs done in
USA – 70 % revenue comes from U.S. companies
Infosys pays higher salary than industry standard
The company received 1 million resumes for about 9,000 jobs
last year
15. U.S.A. Vs India
United States India
GDP per capita $35,060 $480
Typical salary $70,000 $8,000
for a
programmer
Unemployment 5.8% 8.8%
rate
Labor force 141.8 mill 406 mill
Population 13% 25%
below the
poverty line
India accounts for nearly 26 percent of total
undernourished people in the world.
54 percent of population is
under 25 – 555 million people
16. Origin of Outsourced Jobs
Americas 71 %
United Kingdom 14 %
Europe (non-UK) 9%
Rest of the world 6%
17. British Government
British government has committed to a free,
transparent and open market
British minister for energy and e-commerce,
Stephen Timms said that Indian firms would
boost the competitiveness of British industry
Recently an IT contract worth more than
$200m had been awarded by Britain's
National Health Service to two Indian firms,
Tata consultancy and Mastek.
18. Companies
Owned by Foreigners
Tasters Choice – coffee Chrysler
MP3. Com
Holiday Inns
Chicago SUN Times
Jerry Springer show Ben & Jerry ice cream
Dannon yogurt Snapple
Yoplait yogurt Britney Spears record label company
Motel 6
Universal Studios
Women’s Day magazine
BIC pens, razors
Club Med (vacations)
Casual Corner – chain of stores
Niagara Mohawk power utilities
company
We live in a globalized world, and the products American use
now can be owned by companies almost everywhere
19. Toy Industry in the U.S.
American Icons
One after another ….
Are Made in China
20. Toy Industry in the U.S.
Labeled American-
made, but racks,
tiles and letter bags
are made in China
Timer – Made in Taiwan
Playing pieces and Dice
– Made in Britain
Rest made in America
21. Toy Industry in the U.S.
Bath tub finger paints are made in China
But, bath tub tints – fizzy water color tablets
are made in the U.S.A.
Swan Lake Barbie and Happy
Birthday Barbie are made in
Indonesia
The plastic Volvo that carries
her and friends are made in
China
22. Wal*Mart
Empire
• With sales more than $245billion- largest retailer in U.S.A.
• More than 2,740 discount stores, Supercenters and
Neighborhood Markets, and about 538 SAM'S CLUBS in the United
States
• 1,300 stores in 10 countries (Argentina -11, Brazil - 25, Canada -
235, China - 34, Germany - 92, Korea - 15, Mexico - 623, Puerto
Rico - 53 & United Kingdom - 267)
• Britain (purchased ASDA) Japan (purchased 34% in Seiyu)
• More than 80 percent of the 6,000 factories that supply Wal*Mart
are in China
• If Wal*Mart were a separate country, it would rank as China’s
fifth largest export market, ahead of Germany and Britain.
• Largest importer of Chinese goods. 10% of all Chinese imports
into U.S.
23. Wal*Mart
Empire
• Abandon the “Buy American” campaign
• Nearly 34 stores in China
• Sell Eel and Chicken feet and also sell M&Ms and
sliced Pizza, Max Factor, Johnson & Johnson
products and SONY TVs
• Pharmacy sells Tylenol and Chinese herbs and
dried sea horse
• 500 stores in Mexico
• Annual revenue more than $9 billion in sales
• SONY built a Vega TV factory in Mexico to supply TV sets – taking
advantage of NAFTA and to reduce tariffs
• Local needs – uniform for the maids
• A Bangladeshi worker earns as little as nine cents/
hour making shirts for Wal*Mart (USA today. August 14, 2001)
24. Changing of America
Hollywood dominates the global movie making market
and swamps local products in many countries
Top actors and directors are often foreigners
Some studios are foreign owned
Many movies are shot abroad
A million or so immigrant arrive each year- since 1990,
the number of foreign-born has risen by 6 million to just
over 25 million
More foreigners are investing in the U.S.
At last count, nearly 4 million American directly work for
European-owned companies
25. The Big THREE
China has drove down the cost of
manufacturing
Wal*Mart is driving down the cost of
retailing… and now
India is driving down cost in services
26. Challenges Ahead
US trade deficit with China is
now running at $150 billion a U.S. Jobs headed
year – a record for any country to foreign soil
3.3
New countries, such as million
Honduras, Vietnam, Bangladesh
are now building state of the art
technology – replacing Mexico
1.6
Corporations are under pressure million
to deliver earnings
600,000
Outsourcing has become an
irreversible trend 100,000
2000 2005 2010 2015
More Eastern European
countries are aggressively
promoting their business
27. What can we do
U.S. still has a distinctive advantage
U.S. has the biggest economy on earth,
enabling America to make technological
bets
Establish long term plans to develop new
frontiers of information technology as well as
biotechnology and nanotechnology
Use cost savings on job creating activities
and R&D
Build better educational system and job
training to graduate the world’s best
