Duke University professor Arie Lewin estimates that the benefit of doing business, from a labor-cost point of view, in such locales as Bangalore, India, will disappear for some companies in three to four years.
That's due to a combination of dollar depreciation, wage inflation, and other costs. Others say it will take longer.
"Costs are escalating, so the level of labor arbitrage isn't as great as it used to be, but that's not to say labor arbitrage is disappearing, nor will it disappear in the next 10 years or so," says Sid Pai, partner and managing director of TPI India, a sourcing advisory firm.
Indeed, while costs are increasing in India, the country is generally less expensive than Latin America and most other locations, especially for companies that don't require high-end software developers.
Image: Employees walk at the hi-tech Egyptian Media City compound in the northern deserted outskirts of Cairo. Egypt has set its sights on grabbing a share of the multi-billion dollar Indian-dominated call centre market | Photograph: Cris Bouroncle/AFP/Getty Images
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