The reversal of IT Offshoring - How far is it?

How far is the reversal of offshoring witnessed by IT companies?

That question may probably be answered by looking at why companies actually chose to offshore:

1. Labour cost arbitrage in other words low wages
2. Currency arbitrage - Appreciation of US dollars against developing economies
3. Flexibility of resources - For example Loose labor policies & its enforcement allowing companies to exploit Indian labour (Imagine overtime in Indian IT services need not be paid). Working in odd hours to make few extra bucks!
4. Availability of Talent - Tricky bit lets defer this for later
5. Scalability of workforce - Ability to quickly ramp-up resource. Another tricky one which we can defer to later

Some of the above conditions may not hold for too long.
1. The wage inflation in developing countries are faster than that of developed world. For example the wage inflation in Brazil, China and India are in the range of 21%, 19% and 33% in last 5 years as per EIU
2. Currency have been artificailly maintained at pegged level, we had seen enough debates of this between China and US. India is not a open market....How many times have we seen RBI intervention in the currency market to manage the float of rupee against the dollar.
3. Labor in developing can no longer be taken for granted...Gen X & Y dont want to work overtime anylonger and defintely cannot tolerate working in graveyard shift...
4. Availability and Scalability are tricky bits....i'll not address this...but they are more perception then reality...Imagine tomorrow technology innovation eliminates a need for huge labour skills!

How long before we can see the trend reversing...it is a worhtwhile study by looking at the above factors. India today is 1/3rd cheaper then the wages in US...so we can do a simple math to arrive at the number of years 11. Now we've not even included the predictions of exchange rate.

What can the Indian IT Industry do to ensure that we dont loose our jobs when we become less competetive (assuming the technology innovation are not mature enough to eliminate the need for significant labour)?

This is an interesting topic in itself...we'll try and deal with it in another Post...