While there are twice as many experienced university graduates in low-wage countries as in high-wage countries, only a fraction of this total labor pool is actually suitable to work for a multinational company’s offshore operations. In addition, many countries beyond China and India have sizable, attractive talent pools.
Approximately 33 million people in a sample of low-wage countries had a university degree and up to 7 years of work experience—twice as many as in high wage countries. However, only 13 percent of these graduates (4.6 million) are actually suitable for employment by multinationals.
The reasons for the limitation are suitability—defined largely as language abilities, quality of education, practical skills, communication confidence, and work ethic—access to talent, and competition for talent with non-export oriented services companies within the country (particularly in China). Middle-manager scarcity is also a constraint to growth in offshoring for many countries.
Given differences in the portion of university graduates that could successfully work for a multinational company, many smaller countries can be attractive offshoring locations. For example, while India’s population is almost 28 times that of Poland, the suitable pool of young professional engineers is only three times that of Poland.
Countries seeking to play a role in the emerging global labor market should concentrate on improving the quality, not just the quantity, of their talent.