The German economy: be careful what you ask for | vox - Research-based policy analysis and commentary from Europe's leading economists

The German economy: be careful what you ask for vox - Research-based policy analysis and commentary from Europe's leading economists

An interesting view on the german economy. The author is suggesting that the Germans move away from pure manufacturing and fabrication and into higher value added services such as product design and service oriented industries which are difficult to outsource.

I am afraid people are still stuck in the past, they are still operating on the premise that where a piece of work is done is limited by geography. Not at all. The assumption that product design will stay onshore while manufacturing will move off is old style thinking. Let me out this in another way, we already have remote surgery where doctors from a remote location can operate on a patient. Now there is no reason why this remote surgery cant be done out of India, can it? How about teaching? Something that was intensely personal is now being carried out from India. I had a discussion with an american colleague on a mailing list and topping and tailing the email chain, this is what i wrote to him.


Dear....

Your name and study came up yesterday in a small off the record workshop on international labour arbitrage held here in London. We had senior people from various European and American international banks, large telecommunications firms and large manufacturing firms.

Seems like besides the BRIC countries, now you have the CHIPS, Czech,Hungary, India, Poland and Slovakia. (excluding the spanish and japanesespeaking spheres of influence). These countries are now providing highquality work at low cost, which is completely negating the advantages that the USA and UK have. Also mentioned and analysed in gruesome detail was howthe median wages have basically not moved for the past 15-20 odd years.

The feeling across the table was that India is plateauing out and that's agood thing, which will allow the infrastructure to settle down/catch up, butmore importantly it would force Indian firms to move up the value chain evenmore. We are seeing large evidence of that ranging from BPO, to MC to Design to AD work, etc.

The number of electronic and electrical engineering students in Europe hasdropped by an average of 19% over the past 4 years and the engineeringdepartments are thinking about the same way as they have done with thegeography departments, and that to merge or close down departments.

The government chappie and the EC woman got very excited about the medianincome information and they have arranged for further meetings. Interestingstuff ahead but you might seriously want to delve into that aspect of median income of workers.

Cheers

bd

So all in all, people have to get out of this thinking mode that supply of services is geographically tied, firms are moving on ahead and are producing a whole service delivery middleware structure (if I may use a software term) which is focussed on the delivery to customer aspect rather than where the production happens. People who are smart will pick this up (think of the IBM, Accenture and the Indian vendors who are getting this!!!)

Update: See this story in the LA Times about Hilary Clinton getting raked over the coals about TCS and Buffalo NY jobs. One cant win now, can they?