[photopress:IT_workers.jpg,full,alignright]China continues to revalue its currency against the dollar. Chinese currency becomes more valuable thus exports become slightly more expensive. Some experts are looking at the potential impact of this on the global IT industry. The general consensus of opinion is that if there is an impact, it will be slight.
The renminbi has been gradually appreciating against the dollar since 2005, when it increased 2% in value, followed by a 4% increase in 2006 and a 6% increase so far this year. By the end of this year this may have become as much as 10%.
One area where the impact may be sharpest is in IT offshore outsourcing and BPO (business process outsourcing). Michael Raisinghani, associate professor of the executive MBA program at Texas Woman’s University School of Management, in Denton, Texas, said that ‘the strengthening of [the renminbi] will have a negative impact’ in those markets.
He cautioned U.S. companies outsourcing their IT/BPO programs to China that they need to ‘establish good reporting systems within the firm to monitor exposure positions and produce regular foreign exchange exposure reports that can be used as a basis for action.’
Roughly what he is saying is that companies should keep an eye out to make sure the return is worth the effort.
Stuart Williams, an analyst with Technology Business Research, said China’s labor supply is likely to remain relatively inexpensive.
He said, ‘The country remains a relative bargain that international software firms will increasingly tap as the cost and availability of qualified software engineers continues to rise in India and Eastern Europe.’
Arthur Kroeber, managing director of Dragonomics Advisory Services, based in Beijing, said the Indian rupee has risen by 10% against the dollar — triple the rate of appreciation of the renminbi.
He said this may have an impact ‘on the plans of Indian outsourcing firms to add capacity in China.’
Some experts say that the time isn’t right yet for China’s impact to be felt in global IT labor markets.
Alex Adamopoulos, general manager and senior vice president at Boston-based Exigen Services, an application outsourcing service provider that taps talent pools in Central and Eastern Europe said, ‘China has the resource pool and capabilities to make a dent in the software development market, but not in the near future.’
Out illustrations shows what might be IT workers in China. On the other hand, they could be game addicts in a Net cafe. Dashed difficult to tell the difference.
Source: eWeek