Labor Cost Analysis: Consequences of Experience and Vertical on Labor Cost

Skilled ‘Human Capital’ plays a key role in organizational sustainability.  New technologies have raised competition to such a level that it has become essential to identify the best skilled talent pool available at lowest possible cost anywhere in the world.

It is difficult for any country to emphasize on all required skilled workforce.  By evolution or design most countries end up choosing few funcational areas for specialization.  This has an adverse affect on the labor pool as high skilled low cost labor in other verticals start aspiring for more increments.

As we analyzed the low cost destinations in China, India and Philippines and understand the viability of executing long term sourcing strategy in these locations, the key findings are the following:
  • Vertical Laterality is very critical for a location strategy.  It is important to understand the vertical laterality from the long term viability standpoint.
  • To understand vertical laterality, we need to consider the minimum of least experience group (0-3 years) and maximum of most experienced group (10+ Years).
  • If the spread of vertical laterality is high then it may pose long term risks to globalization strategy.ft

For additional information, download the report here

Pradeep Mavuluri,
Senior Consultant -Analytics

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