Outsourcing has become synonymous with western jobs heading to India and China. This definitely has been the case for low-skilled work and increasingly holds true for knowledge industries such as IT. However, ongoing talent shortages, particularly in the high-tech sector, are leading to some surprising results. For instance, rising salaries in India have led one company to relocate its development team to the U.S to save costs. .

In the media hype over outsourcing it is sometimes forgotten that the developed world’s labor force is significantly better educated than that of the more populous rising economies. The global nature of the war for talent means that labor savings are quickly arbitraged away, leaving education as the key to attracting jobs. This is where the developed world still holds an edge. Here is an illustrative diagram created by McKinsey: