Offshoring: Cheaper Wages Mean More Training and Management

In the United States, high wages are a major reason for the understandable tendency of high-performing companies to strip out layers of middle management and to increase the operating span of the remaining managers, forcing them into administrative and supervisory roles. In Asia, by contrast, the ratio of managers to staff is much higher, so they can spend more time building the skills of employees.

[…]To give an example, eTelecare maintains a ratio of one “team lead” (frontline manager) to eight customer service agents, compared with a ratio of 1:20 or more for similar U.S. operations. The company invests heavily in formal training programs, which are reinforced by apprenticeship, coaching and mentorship. Agents who handle complex mutual-fund advisory calls, for instance, take a 16-week training course leading to the NASD Series 7 examination for broker certification.

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Now, that’s something interesting and (to me) new in this whole realm: domestic IT labor is very expensive, so to make up for that, companies hire fewer manager and provide less training. Offshore folks are cheaper, so companies can hire more managers and provide more training. Obviously, then, there’s the potential for the lower paid folks to be much more skilled.

While this may not be entirely representative of the entire arena, this also reframes the claims of pro-offshores that it’s not all about cost, but the lack of needed skills onshore: the argument going, “it’s not that it’s cheaper, we just can’t find enough qualified people here, so we have to go there to get them.” Instead, it looks like companies have to raise the skills of both pools of labor, it’s just cheaper to do it with the offshore folks. What was that about rapture and the LSAT?