Outsourcing the outsourcing

Interesting column today from Siddharth Srivastava:

"The dynamics of the way the outsourcing business is being conducted is changing. Faced with rising business from the West, spiraling salaries of high cost employees who constantly hop jobs as well as a predicted shortage of skilled workers, Indian IT firms are doing the next best thing — outsourcing outsourced work from the U.S. to China."

Until now, India's reaped the biggest benefit from outsourcing. But when it comes to transnational economic forces nothing's etched in stone. The Chinese economy is growing by leaps and bounds and yes, they also know a little something about high-tech, thank you. (Lenovo, anybody?) What's more, the work force, which can meet -- and beat -- India on cost, is the largest in the world. And they increasingly speak English.

The unanswered question has to do with the future direction of China's government. On the one hand, the ruling Communist party clings to the command-control power structure that has existed since 1949. On the other, it's been encouraging the proliferation of business since Deng Xiaoping took over following Mao's death.

But can the old guard hang on if a swelling capitalist class begins to demand more political freedoms? So far, the answer is yes but nobody can safely predict what the terrain might look like in another ten years.