Is the correction starting?

A few weeks ago, a friend of mine forwarded this article to me.  It talks about a small town in Wyoming in the US providing English language training to students in Asia via video conferencing technology.  Then today I was visiting a client in the north of England who told me that there was a significant salary differential between the south and the north of England; a distance of just 200 miles or so.  The two points set me thinking about whether the correction in costs is beginning to take place?

The UK and US look set to have growth rates of maybe 2.0 – 2.5% for the foreseeable future while India and China are both forecasting growth of at least 9%.  Will we see salary and office space costs rise in the growth countries while they plateau in the developed nations?  Will the differential reach a point where it no longer makes sense to locate teams in countries like India?

My conclusion though is no, it will still be many years before the so called correction is really in place.  In the UK, the salary cost inflation that is already going on in places like London will spread outwards.  It may take a year or so but it will happen; it’s just that people forget that when they’re in the middle of a recessionary period.  We’re already seeing banks start hiring technology staff in particular and that is bound to have a ripple effect.  I recently heard an example of a developer from one of our clients in the UK moving jobs for a £20k ($31k) annual salary increase.  In addition, we’re seeing office space rental rates in the London and again this is bound to spread outwards.  Even if it doesn’t spread, differentials like that are bound to make people move.  In addition, companies will delve deeper into China and India away from the well known cities where costs are still relatively low and cost of living more affordable.

As for the article above – it makes sense for English to be taught by native speakers.  The world is full of English as a Foreign Language teachers from the UK and US and this just uses the technology to make it more cost effective – no more and no less.