*GE was able to reduce the labor portion of costs by outsourcing to Wipro. *This increased their ability to be competitive in the global marketplace. *GE’s work with Wipro gave GE access to local knowledge to penetrate the Indian market *GE’s work with Wipro gave GE a launching pad to other Asian markets Answer 1b:
*Short-term, such outsourcing did hurt American workers whose jobs were outsourced, of course, yet long-term, it improved the economy through job growth.
Question 2: Did General Electric help to create Wipro? How? Answer 2:
* it provided work (provided financial stability)
* it provided a management model (six-sigma) for Wipro to emulate and learn *by playing Wipro against other Indian companies, GE provided pressures to which Wipro had to respond by increasing efficiency and improving quality *it provided credibility (brand cachet, brand name, good will) for Wipro to work with other multinationals (after all, people tend to know GE, and not Wipro, in the beginning)
Question 3: If India’s information technology companies continue to prosper, over time what do you think will happen to the income differential between software programmers in the United States and India? What are the implications for the American economy? Answer 3a:
*If India’s IT companies prosper, and demand continues to increase, wage rates will equalize between the U.S. and India because given the population differentials, it is likely that new U.S. programmers will be paid less that formerly. Moreover, as demand for Indian engineers grow, assuming insufficient supply of skilled Indian engineers, the price (wage) of such engineers will rise. *[If …,] wages will still not equalize because it is possible that U.S. programmers will move on to higher-paid, higher level jobs...