Not all off-shorings are created equal …
One major branch of the Globalization movement is off-shoring, whereby companies outsource some aspect of their business process (software testing & development, customer call center, etc.) to another country. For companies based in developed nations, off-shoring can not only bring significant cost savings but also provide a beach head opportunity to build the experience curve and develop assets to enter emerging markets to capture growth. This opportunity however is not created equal for everyone.
In particular, knowledge based firms from non-English speaking G7 nations will lose out. Qualified knowledge based talent pool from off-shoring destination countries often pursue English over other developed nation languages. In effect, English on the global stage has achieved significant supply side externalities, making it harder for other languages to rapidly diffuse across the white collar segment of the populace of the emerging economies such as BRIC.
All else equal, English speaking services firms will be able to more efficiently “dis-assemble” its supply chain and configure its scope of the firm compared to non-English speaking firms. This will translate to not only cost side advantages but also to being more aligned with a global market.
