Paul Krugman and outsourcing scale

Anshu Sharma uses the Economics Nobel Prize winner's scale concepts to explain India's success vis a vis other countries when it comes to low-cost country outsourcing.

I would agree - if you are looking for 10, 50, 100 resources a number of countries are actually more attractive when it comes to infrastructure, geographic proximity etc. But India pulls away when you are planning for a larger head count.

But scale does not explain it all. English language skills (the unique "bobblehead version") and process maturity (CMM, Six Sigma) etc are two other reasons cited by a number of customers who evaluated multiple destinations.

My recent complaint with many Indian vendors is they have actually not used the scale India provides them to provide "fuel hedges" against wage and currency inflation. It will be tough to pass along those increased rates in a recession.

If anything with the rupee depreciating, rollbacks are in order. I am sure somewhere in Paul's  economic papers,  we would  find  justification in that.