Bangalore wages spur ‘reverse offshoring’

[Thinker]

http://www.ft.com/cms/s/4eeded70-27fb-11dc-80da-000b5df10621.html

Bangalore wages spur ‘reverse offshoring’
By Richard Waters in San Francisco
Published: July 1 2007 22:02 | Last updated: July 1 2007 22:02

The rising cost of paying engineers in Bangalore has prompted at least one Silicon Valley start-up to save money by closing its Indian engineering centre and moving the jobs back to California.

While this “reverse offshoring” remains unusual, it points to a broader belief in the US technology industry that the savings that drove software engineering jobs to India’s technology capital are quickly eroding.

Like.com, a search engine company that uses image recognition software to find pictures on the web, took the step of closing in India after seeing the wages of top-level engineers in some cases rise close to US levels.

“Bangalore wages have just been growing like crazy,” Munjal Shah, chief executive, complained in a blog post. In the next few months, Like.com would have had to lift the salary of one of its Bangalore engineers to 75 per cent of the US level, even though the same engineer earned only 20 per cent as much as an equivalent US-based worker two years ago, Mr Shah said.

The extra costs of running a separate office in India and the difficulties caused by the 12 and a half hour time difference from California meant the pay gap no longer made it worth staying, he wrote.

Other Silicon Valley executives report that while other parts of India remain inexpensive, salaries in Bangalore have been rising rapidly towards those of the Valley itself.

“The differential in India is very small now,” said Rick Prime, chief financial officer of Tool Wire, an online education company based near San Francisco, although his company has not brought jobs back to the US.

“If you’re a small company, saving 20 per cent isn’t going to make a lot of difference,” said Brij Singh, co-founder of Apptility, a Valley software start-up that has 20 employees in India.

[Vissario]

Capitalism in action. Is there anything wrong with this, honestly? All of those nativists who see the world as a giant black and white (with America obviously being white) should be wetting their pants now.

[cyborg]

Why throw millions of American households into layoff turmoil in the first place? Honestly. This is the behaviour of bunglers and hacks, not a well designed system that runs beneficially consistently. International capitalism will not redeem itself with this. It reminds me of the bungler and hackdom failed system called multiculturalism.

[Thinker]

Why throw millions of American households into layoff turmoil in the first place? Honestly. This is the behaviour of bunglers and hacks, not a well designed system that runs beneficially consistently. International capitalism will not redeem itself with this. It reminds me of the bungler and hackdom failed system called multiculturalism.
Because, in the long run, that helps the American economy more than it hurts (http://www.mootsf.org/forums/showpost.php?p=134372&postcount=1).

[Fissile]

Capitalism in action. Is there anything wrong with this, honestly? All of those nativists who see the world as a giant black and white (with America obviously being white) should be wetting their pants now.

You don't know what you're talking about.

First, the term "capitalism" is a pejorative invented by Karl Marx. I don't believe in "capitalism" but I do believe in a free market -- there is a difference.

I don't see any true free market systems anywhere in the world, and that includes the USA.

[Kodos]

Congratulations ya bean counters, you just set up your own international competition...

[Vissario]

You don't know what you're talking about.

First, the term "capitalism" is a pejorative invented by Karl Marx. I don't believe in "capitalism" but I do believe in a free market -- there is a difference.

I don't see any true free market systems anywhere in the world, and that includes the USA.
You're right, of course, about the usage of the word "capitalism"

I was using "capitalism" in the general sense that a free-market-styled system always ends up correcting and benefiting itself as opposed to a traditionalist and/or command economy's tendency to destroy itself with export taxes, import taxes, and other trade barriers. All of which, although popular for politicians and blue-collar workers in the short term, end up stifling long-term economic growth and prosperity. Sorry you couldn't catch that.

[Thinker]

Looks like the Wall Street Journal picked up on the Financial Times article and wrote a bit more about it.

http://online.wsj.com/article/SB118342455118256110.html

Wall Street Journal
Some in Silicon Valley begin to sour on India
A few bring jobs back as pay of top engineers in Bangalore Skyrockets
Pui-Wing Tam and Tackie Range, Wall Street Journal
03 July 2007

Silicon Valley has helped power India's outsourcing boom by shifting technology jobs to that country. Three months ago, Munjal Shah reversed a bit of that shift.

Mr. Shah, who leads a California start-up called Riya Inc., had opened an office in India's technology capital of Bangalore in 2005, hiring about 20 skilled software developers. The lure was the wage level: just a quarter of what experienced Silicon Valley computer engineers make.

Then Indian salaries soared. Last year, Mr. Shah paid his engineers in India about half of Silicon Valley levels. By early this year, it was 75%. "Taking into account the time difference with India," he says, "we weren't saving any money by being there anymore." In April, Mr. Shah shut down the Bangalore office and offered half of its engineers a chance to move to San Mateo, Calif., with work visas.

Across Silicon Valley, some technology companies, particularly start-up and midsize ones, are beginning to turn away from India for low-cost labor to do sophisticated tech work. Kana Software Inc. of Menlo Park, Calif., eliminated 100 software-development jobs in India in late 2005 and expanded its U.S. hiring instead. Teneros Inc. shut down a 30-member India office and brought 12 of the people to its headquarters in Mountain View, Calif. Some tech start-ups are choosing other low-wage foreign locales, such as Romania and Poland.

Overall, India's tech and outsourced-services industries continue to boom. The industries' revenues rose by almost a third to $39.6 billion in the fiscal year ended in March, says the country's National Association of Software and Service Companies, or Nasscom. U.S. tech companies continue to shift basic work like software coding to India, where big outsourcing companies such as Infosys Technologies Ltd. and Wipro Ltd., hire tens of thousands of new Indian employees each year. Silicon Valley giants Cisco Systems Inc., Google Inc. and Adobe Systems Inc. are expanding their staffs in India.

They often have other reasons besides pay to be there, such as to be closer to customers. But even some of the large tech companies are reconsidering India. Apple Inc. shelved plans to build a technical-support center in India last year; a spokesman declined to say why. Intel Corp. is stepping up hiring in Vietnam -- which has cheaper labor than India -- and says it isn't significantly adding to its Bangalore staff of about 2,400. "The wage inflation rate for engineers in India is four times what it is here" in America, says Intel's chief executive, Paul Otellini.

It's a new twist on the globalization debate. Around the century's turn, when U.S. companies first began flooding to India for its cheap labor, pundits warned that the subcontinent could increasingly rob the U.S. of high-end white-collar jobs. Debate was especially sharp in Silicon Valley, then in a slump, because India annually turns out nearly 500,000 engineering graduates.

Forces of Globalization

Several years on, the forces of globalization are starting to even things out between the U.S. and India, in sophisticated technology work. As more U.S. tech companies poured in, they soaked up the pool of high-end engineers qualified to work at global companies, belying the notion of an unlimited supply of top Indian engineering talent. In a 2005 study, McKinsey & Co. estimated that just a quarter of India's computer engineers had the language proficiency, cultural fit and practical skills to work at multinational companies.

The result is increasing competition for the most skilled Indian computer engineers and a narrowing U.S.-India gap in their compensation. India's software-and-service association puts wage inflation in its industry at 10% to 15% a year. Some tech executives say it's closer to 50%. In the U.S., wage inflation in the software sector is under 3%, according to Moody's Economy.com.

Rafiq Dossani, a scholar at Stanford University's Asia-Pacific Research Center who recently studied the Indian market, found that while most Indian technology workers' wages remain low -- an average $5,000 a year for a new engineer with little experience -- the experienced engineers Silicon Valley companies covet can now cost $60,000 to $100,000 a year. "For the top-level talent, there's an equalization," he says.

That means that for a large swath of Silicon Valley -- start-ups and midsize companies that do sophisticated tech work -- India is no longer the premier outsourcing destination. While such companies make up just a fraction of India's outsourcing work, they had been an early catalyst for the growth of India's information-technology business and helped the country attract other outsourcing clients.

Their rethinking of India raises red flags for the country. India's tech industry has been a powerhouse for the economy. Alongside almost 1.6 million Indians directly employed, the industry supports a further six million jobs or so, according to Nasscom, the trade group.

Against a backdrop of rising wages and international competition, it's important for India's economy that its tech giants expand into higher margin business, in order to sustain their growth rates and gain market share. Large Indian outsourcing companies are trying to expand into higher-margin programming and design work, rather than just basic call-center outsourcing and tech maintenance, which now may be done more cheaply in countries such as the Philippines and Vietnam.

Wipro's main tech arm, Wipro Technologies, now does consulting for its clients and can take over a clients' entire IT system -- work that was previously the preserve of companies like International Business Machines Corp. Tata Group's Tata Consultancy Services Ltd. is helping Italy's Scuderia Ferrari design traction-control systems and create software to improve the performance of its Formula One cars.

Yet while India's tech sector has come a long way from basic services such as software coding and tech maintenance and support, the majority of its business still derives from that type of work. At Wipro Technologies, 55% of revenue comes from basic services. At India's other large tech companies, such as Infosys and TCS, 50% to 60% of revenue still comes from such tasks, analysts say.

Some Indian outsourcing companies are themselves looking to other countries -- mostly as a response to the globalizing nature of their business, but also to tap new labor pools amid a tight hiring situation at home. TCS recently opened a center in Mexico and is planning to move into Morocco. Wipro has two centers in China and is thinking about adding one in the Philippines.

'Dirt Cheap'

For Mr. Shah, 33 years old, opening a Bangalore office for Riya was a natural move. An Indian native who came to the U.S. at age 7, he had led another tech start-up in 2001 that had engineering and customer-service operations in Bangalore. "It was dirt cheap," he says. "It completely worked for us."

Riya is a "visual search" company, building technology to search through images and identify faces or other features. The company has launched an online photo site and a visual-search engine called Like.com and will change its name to that later this month. Mr. Shah opened a Bangalore office in early 2005 to help find the engineers he needed.

It was a challenge. Riya, which remains closely held, was unknown in India, while global tech giants were staffing up there and competing for talent. Cisco, for instance, is building a million-square-foot Bangalore campus that will hold 10,000 workers. U.S. venture capitalists have flooded in as well, looking to fund engineers who want to turn entrepreneur.

Mr. Shah spoke to the local Bangalore news media to try to get the company name out. His vice president of engineering, Azhar Khan, held recruiting sessions where he asked candidates to take a technical test to weed out unsuitable applicants. To hire Riya's first six engineers, Mr. Khan says he had to interview 50 to 70 people.

Riya approached Navneet Dalal, who was about to graduate with a doctorate from a computer-science research institute in France, INRIA Rhone-Alpes. Mr. Dalal says he was also talking with Google and Microsoft Corp. about jobs. Riya felt it had to move fast. After interviewing with Google in Mountain View early last year, Mr. Dalal met a Riya executive at a coffee shop. Riya quickly offered him a lucrative package for a job in India.

"The initial incentive was good enough for me not to think about Google, in terms of stock and salary," says Mr. Dalal, now 29, who declines to disclose his pay. (Someone with his experience and qualifications typically earns around $75,000 in India.) Mr. Dalal joined Riya as a computer-vision researcher in Bangalore in May 2006. Within a year, he says, he got a better stock-options deal and a 25% raise.

Increases like that have spurred a lot of job-hopping in India. Pervasive Software Inc. of Austin, Texas, opened a Bangalore unit in 2004 and hired 45 people. But soon its turnover was more than 25% a year, says the company's CEO, John Farr. The company kept having to invest in training workers, only to see them leave. A year ago, it shut its Bangalore unit.

Hidden outsourcing costs surfaced for other tech companies as well. To bridge the geographic and time gaps, some have found they need to hire more U.S. managers to handle their Indian teams. Kana Software in Menlo Park has one engineering manager for every 25 to 50 engineers, but it found it needed one for every five to 10 engineers it employed in the Indian city of Chennai. In December 2005, Kana decided to close its Indian operation.

Mr. Khan, Riya's California-based vice president of engineering, says he often stayed up until 4 a.m. so he could talk with the team in Bangalore. Mr. Shah, the chief executive, flew to India six times a year to make sure things were running smoothly.

Straddling time zones slowed development work. Sometimes a researcher gets stuck on a problem. "It's not really a good thing to keep bugging people at midnight every day, so that introduces some delays," says Mr. Dalal. He also felt cut off. "For us sitting here in India, it's hard to get the business aspect of the problem," he says.

Mr. Shah commissioned a yearly survey of salary trends among top computer engineers in Bangalore. They showed wages jumping 30% a year. To keep people, "we needed to match the increases." In January, Riya gave its Bangalore crew raises of 25% to 40% each.

But it was also having trouble filling open job slots. "I realized price expectations were too high," Mr. Khan says. "I thought, "Wait, why are we paying a junior guy $50,000 or $60,000 over there when I can get a guy [in California] for $80,000?"

In April, he and Mr. Shah decided to shutter the Bangalore operation and bring key staffers to the U.S. After getting board approval, they flew to Bangalore and assembled the 20 engineers to break the news. "They were all upset," says Sowmya Karnad, Riya's human-resources director in Bangalore. But given the soaring wages, it didn't come as a surprise. Messrs. Shah and Khan offered 10 engineers a chance to move to Riya's U.S. office. Eight, including Mr. Dalal, accepted.

Few Job Worries

Those who stayed behind have few job worries. Sandeep Gain, a 28-year-old lead engineer for Riya, declined a U.S. transfer, partly to stay close to his family but also because he likes his opportunities in India. He says he has received two offers, from a large U.S. conglomerate and from a Nasdaq-listed company. Both involve pay increases.

Shutting down in India isn't cheap. Teneros, which closed a 30-person operation in New Delhi in late 2005, says it spent $2 million to do so. It had to get out of contracts, and it brought 12 of its Indian workers over to the U.S. on work visas, incurring immigration fees. Teneros left partly because of wage inflation and a lack of information-technology infrastructure that was slowing its work, says its CEO, Steve Lewis. Mr. Shah says Riya's shutdown costs, such as immigration charges and a broken lease, will be in six figures.

He has cleared eight desks in San Mateo for the eight Indian engineers coming over and is waiting for their paperwork to clear, hoping they'll be in Silicon Valley by the end of the year. "I thought I understood India," Mr. Shah says, "but now I know it's so much more effort to have a remote office as a start-up."

[Dan Dare]

Thinker has already conceded over on MSF that this 'reverse offshoring' is a microscopically insignificant event, so it's a little mystifying why he chooses the raise the matter here as well.

[Intellectual]

The main thing Thinker neglects is the moral contract between the corporation and the worker. The foreign worker will work harder under the illusion that they will be given more and get more. When that illusion is broken the moral contract is broken and productivity declines.

It's vital for the worker to believe in an illusion that he is on the right path in his labor agreement. The Thinker has avoided this social contract dynamic.

[Ambrosio Spinola]

It's vital for the worker to believe in an illusion that he is on the right path in his labor agreement. The Thinker has avoided this social contract dynamic.

This is very much true.

[Thinker]

Thinker has already conceded over on MSF that this 'reverse offshoring' is a microscopically insignificant event, so it's a little mystifying why he chooses the raise the matter here as well.
It was also noted by the people in the article that the cases of this to date are probably on the leading edge of a trend. We shall have to wait and see how this develops.

[Thinker]

The main thing Thinker neglects is the moral contract between the corporation and the worker. The foreign worker will work harder under the illusion that they will be given more and get more.
I'm not sure what you had in mind when you say "that they will be given more and more," but compared to what they would have gotten in their home countries, they *are* getting "more and more."

[Intellectual]

Be honest, you misquoted my post to hide your fallacy.
I'm not sure what you had in mind when you say "that they will be given more and more," but compared to what they would have gotten in their home countries, they *are* getting "more and more."

I said they will be given more and get more. Given and Get are a promissory contract. Carrot and stick. Good faith in business it is called.

They asked for higher wages to get the American Dream, they didn't get it.


How is losing their jobs getting more? They unionized and demanded higher wages to get that shiny car on TV, then the company closed out to prevent them getting that shiny car on TV. It means broken contract.

http://www.ft.com/cms/s/4eeded70-27fb-11dc-80da-000b5df10621.html

Bangalore wages spur ‘reverse offshoring’
By Richard Waters in San Francisco
Published: July 1 2007 22:02 | Last updated: July 1 2007 22:02

The rising cost of paying engineers in Bangalore has prompted at least one Silicon Valley start-up to save money by closing its Indian engineering centre and moving the jobs back to California.

How is that getting more?

Indian businesses shutting up shop and moving away. Is that giving them what they already don't have?

[Dan Dare]

It was also noted by the people in the article that the cases of this to date are probably on the leading edge of a trend. We shall have to wait and see how this develops.

"The leading edge of a trend"?

What trend? Anyone who is actually active in the tech sector and who does not just vicariously live it through the MSM has long been aware that nobody responsible for managing a start-up would dream of outsourcing the critical early development work to India.

It's one thing importing legions of Bangalore code-jockeys to do your routine GUI clean-up at a knock-down price and quite another to rely on same to bring a new product to market.

[Thinker]

Be honest, you misquoted my post to hide your fallacy.

You are right, I misquoted. It was not intentional.

I said they will be given more and get more. Given and Get are a promissory contract. Carrot and stick. Good faith in business it is called.

They asked for higher wages to get the American Dream, they didn't get it.

How is losing their jobs getting more? They unionized and demanded higher wages to get that shiny car on TV, then the company closed out to prevent them getting that shiny car on TV. It means broken contract.

There are no unions involved in this. The wages have been rising just from demand for their skills.

As for the rest, you have lost me. Who asked for higher wages? The techies in Bangalore? As the articles said, their wages have been rising at a ferocious clip - to the point where some multinational tech companies are starting to think it's more worth it to keep the jobs in Silicon Valley. If you're getting paid $50,000 in Bangalore, you are beyond rich, and can live the Indian version of The American Dream 5 times over.


How is that getting more?

Indian businesses shutting up shop and moving away. Is that giving them what they already don't have?
You're kidding yourself if you think the people in these Bangalore companies are suffering. Perhaps you didn't read the entire article:

In April, he and Mr. Shah decided to shutter the Bangalore operation and bring key staffers to the U.S. After getting board approval, they flew to Bangalore and assembled the 20 engineers to break the news. "They were all upset," says Sowmya Karnad, Riya's human-resources director in Bangalore. But given the soaring wages, it didn't come as a surprise. Messrs. Shah and Khan offered 10 engineers a chance to move to Riya's U.S. office. Eight, including Mr. Dalal, accepted.

Few Job Worries

Those who stayed behind have few job worries. Sandeep Gain, a 28-year-old lead engineer for Riya, declined a U.S. transfer, partly to stay close to his family but also because he likes his opportunities in India. He says he has received two offers, from a large U.S. conglomerate and from a Nasdaq-listed company. Both involve pay increases.
So, some of them got transferred to Silicon Valley. That's getting plenty, if you ask me. The others who chose not to transfer to America have found jobs elsewhere in Bangalore paying even more!

If anything, they gave, and they got even more than they could possibly have imagined.

[Intellectual]

The article, which maybe you didn't read, said they were upset.


"They were all upset," says Sowmya Karnad, Riya's human-resources director in Bangalore. But given the soaring wages, it didn't come as a surprise.

Sandeep Gain, a 28-year-old lead engineer for Riya, declined a U.S. transfer, partly to stay close to his family but also because he likes his opportunities in India. He says he has received two offers, from a large U.S. conglomerate and from a Nasdaq-listed company. Both involve pay increases.




How is sacrificing your family good?

This is the same old trick Boeing has used for decades, transfer the worker away from his family, increase his workload because he has less time taken by his family. It is essentially holding workers hostage over their value system. This is why they are declining it. In other words instead of continuing on in the bargain of offering increased wages with experience, they are changing the rules and saying only if they give up their families.

As the article says, they are "upset".

How is workers being upset a sign of getting anything? First they offered the Indians low wages, then when that ran out, they offered them removal from their families.

Did the soaring wages occur because the price of coconut oil increased in India?

[Thinker]

How is sacrificing your family good?
Ummm . . . he isn't sacrificing his family - the one guy decided to stay in Bangalore and seek opportunities there (which are plentiful and pay very well), so that he could be close to his family!

This is the same old trick Boeing has used for decades, transfer the worker away from his family, increase his workload because he has less time taken by his family. It is essentially holding workers hostage over their value system. This is why they are declining it.
I'm afraid to inform you that you have paid no attention to the article. The article pointed out that these people had a choice: Either: 1) Accept the company transfer to America (oh the suffering!), or 2) quit the company and seek out one of the plentiful opportunities in Bangalore. The one guy got two offers paying even more than his old job! (oh the suffering!)

As the article says, they are "unhappy".

How is workers being unhappy a sign of getting anything? First they offered the Indians low wages, then when that ran out, they offered them removal from thier families.
Good god - your reading comprehension is really suffering here. The whole point of both articles that these these people have been paid incredibly high wages, not low wages!

Of course they were "upset" when they first got the news, but as the rest of the article explains, they had the choice to move to America, or seek other opportunities in Bangalore. Both moves involve making huge sums of money, doing what they want to do. These people are hardly suffering!

Did the soaring wages occur because the price of coconut oil increased in India?
I hope you were being sarcastic - or you really, truly have not read a single word in either of these articles. And you call yourself "Intellectual?" :rofl:

[Intellectual]

Of course they were "upset" when they first got the news, but as the rest of the article explains, they had the choice to move to America, or seek other opportunities in Bangalore.

That wasn't part of the deal, that they would have to forfeit their families for a pay raise.

[Thinker]

That wasn't part of the deal, that they would have to forfeit their families for a pay raise.
The "deal" was, they were given a choice to accept a transfer to America (bringing their wives and kids with them, you can be sure), or they could stay in Bangalore and seek other opportunities with other companies. In both cases, they ended up making more money than they did at the original company. You're trying to paint these people as having been screwed over and suffering in some way, when that isn't remotely the case. Not even close. These are all highly paid, highly skilled professionals who can pretty much do whatever they want, wherever they want.

[B-Pep]

Isn't it ironic how predatory traitor capitalists end up losing to capitalism just like the rest of us? The "free market" of compettition that these neo-liberal scum champion, is actually bringing down their profits. I bet all these employers will put pressure on the indian government to force the population to accept much lower wages, so that they can "enjoy" the investment these bastards bring.

[Macrobius]

Labour news is all well and good (though this is a drop in the bucket --the Asian tech market won't go away soon I'm sure). Fact is we have a labour crunch right now in the Tech market, and can't get skilled labour at any price, from here or in India. As far as I know, the 2000-2002 crash killed off the pipeline, and most corporate recruiting structures are so gutted they wouldn't know a glut of engineers if it hit them in the face.

That's good if you are in the market to sell Tech services, but the bad side is that very few American corporations have a plan to make anything profitable. Most of the ideas I've seen in the last five years for making money are ludicrous, and without a good business plan everyone, capital *and* labour, gets screwed. Most corps are running on profit margins so thin they depended on cheap labour to make bad plans work on paper.

A combination of weak business plans (marginal firms), and underqualified workers (marginal workers) indicates a condition of business over-expansion. I'll bet two bits that we see a contraction, with migration of capital and labour to other greener pastures. If the Asians are smart, they will find opportunities in Asia.

[Thinker]

Isn't it ironic how predatory traitor capitalists end up losing to capitalism just like the rest of us? The "free market" of compettition that these neo-liberal scum champion, is actually bringing down their profits. I bet all these employers will put pressure on the indian government to force the population to accept much lower wages, so that they can "enjoy" the investment these bastards bring.
Of course the Indian government would never bow to such pressure, because the higher wages this "free market" brings are good for the Indians themselves. India, being a democracy, is hardly going to overthrow a government under whose administration wages and living standards have been rising. Nor would they want to elect a government which pledged to deliberately force wages lower.

[harjit]

Labour news is all well and good (though this is a drop in the bucket --the Asian tech market won't go away soon I'm sure). Fact is we have a labour crunch right now in the Tech market, and can't get skilled labour at any price, from here or in India. As far as I know, the 2000-2002 crash killed off the pipeline, and most corporate recruiting structures are so gutted they wouldn't know a glut of engineers if it hit them in the face.

That's good if you are in the market to sell Tech services, but the bad side is that very few American corporations have a plan to make anything profitable. Most of the ideas I've seen in the last five years for making money are ludicrous, and without a good business plan everyone, capital *and* labour, gets screwed. Most corps are running on profit margins so thin they depended on cheap labour to make bad plans work on paper.

A combination of weak business plans (marginal firms), and underqualified workers (marginal workers) indicates a condition of business over-expansion. I'll bet two bits that we see a contraction, with migration of capital and labour to other greener pastures. If the Asians are smart, they will find opportunities in Asia.
I've heard that within India alone there is enough tech work that needs to be done to keep all those code jockeys busy for a while.

Which brings up a real Economics 101 question I have, and perhaps the responder may need to create a seperate thread: Are there ways to wealth and prosperity that don't involve international trade? You'd think that nations the size of India or the U.S. or China can have something resembling a global economy within their borders. Is the problem the fact that they would not be self-sufficient in terms of all necessary natural resources? That would likely be the case for Japan, for example.

It's a bit embarrassing to admit to being such an economics ignoramus at my age and occupation, but it the global economy is like a car, you can use it effectively without understanding the details of how it works.

[Macrobius]

I've heard that within India alone there is enough tech work that needs to be done to keep all those code jockeys busy for a while.


I was guessing something like that was happening. The asian countries are building cell phone networks and doubtless computerising some operations along the lines of Western businesses (inventory management, billing websites...). There must be quite a bit of local work driven by the *use* of the new tech income.

One factor that is left out of analyses is that while Indians often know English, Americans seldom know Asian languages. That means they have an absolute advantage in an alternative market, which works *against* having a comparative advantage in the international one. If person A has an absolute advantage (in price efficiency) over person B in 4 skills, but his best possible employment is using a 5th skill B does not possess, person B may have no competition at all, despite being 'second best' in everything.