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Tata says hello to Mexico’s cheap labor

Dan Grech Jun 6, 2007

Tata says hello to Mexico’s cheap labor

Dan Grech Jun 6, 2007


Kai Ryssdal: One of the arguments you hear all the time in the immigration debate is this: If we can move goods all over the planet in this era of globalization, why not move people, too? Send them where the jobs are?

As it stands now, we move the jobs. U.S. software firms outsourcing to India, for example. In fact, thats being done so much, India itself now faces a shortage of qualified engineers.

So what do companies there do? Why, they outsource to even lower-cost countries. Just last week, India’s largest computer-services provider, Tata Consultancy, opened a new office in Mexico. From the Americas Desk at WLRN, Marketplace’s Dan Grech has more.

Dan Grech: Tata’s software-development center in Guadalajara will eventually employ 5,000 people — all doing tasks currently handled in India.

Ankur Prakash directs Tata’s Mexico operation. He says the U.S. represents half of Tata’s business. Servicing those customers forced Indian employees to work through the night.

Ankur Prakash: So Mexico being in the same timezone as the United States, we can definitely support all of these applications from Mexico during the day time. So this will completely take away the problem we had of the night shift.

Mexico is also much closer to the U.S., cutting travel time and expense.And it provides a hedge against India’s overheated economy by spreading Tata’s workforce around the world. Other Indian companies,such as consulting firms, software developers, call centers are also beginning to outsource.

Jyoti Narasimhan is with the economic forecaster Global Insight.

Jyoti Narasimhan: With India growing so rapidly, we’re seeing an inevitable rise in wages. And so we see many of these concerns hiring elsewhere — partly to diversify and partly to take advantage of low wages elsewhere.

Jagdish Bhagwati: They’re doing what we do: Going where the prices are lower.

Jagdish Bhagwati’s a senior fellow at the Council on Foreign Relations.

Bhagwati: A lot of people are finding India, actually, getting to be a tight market. And many of the salaries are international salaries. So it’s not that cheap to go there anymore.

One wrinkle to the Tata outsourcing: While they’re better located, Mexican engineers aren’t actually cheaper. Their salaries are 30 percent higher than those in India.

I’m Dan Grech for Marketplace.

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