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It's tough out there—layoffs, stagnant real wages, and longer workdays are only part of the malaise gripping American workers and consumers. The situation is steadily worsening as more U.S. companies of all sizes decide to outsource to lower-cost locales such as India, the Philippines, and China.

The offshore trend is not a fad, but a mega-trend. The allure of saving millions of dollars by utilizing lower-cost labor has entranced corporate America. However, in the near term, the benefits of offshore outsourcing are being oversold. As a result, we expect that a considerable number of offshore projects are either going to fail or deliver mediocre results in 2004–2005. But the companies that get it right are going to dominate.

What does this mean for you? Structural changes in the economy mean changes for all of us. We have to adapt just as previous generations did when agriculture became mechanized or manufacturing became automated. The digitization of back-office services is paving the way for offshoring. To paraphrase Charles Dickens: It is the best of times, it is the worst of times.

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