There's been a great deal of interest in the use of offshoring. Last year, the main focus was on labour arbitrage, ensuring that the same business functions could be done for lower prices in a different geography.

Unfortunately, history has shown that labour arbitrage only works for a short period of time. In the early 1990s, it was Ireland and The Netherlands that benefited, but the burgeoning economies of both countries soon drove salaries to a point where cost savings were no longer noticeable.

This is beginning to happen in India. Salaries have risen by as much as 67 per cent in certain areas and job sectors over a 12-month period.

Offshoring was also seen as a means of tapping in to a highly educated and motivated workforce, and this was certainly the case in India when the practice started to become popular.

However, as the market matures, we have seen the cream moving to the top and being able to claim higher salaries and better positions, and moving on to different jobs in the increasingly fertile home markets or to similar style jobs in overseas markets.

But the latest intake at many of the offshore bucket-shops is not as highly educated and motivated as one would like; script driven agents abound with little capability to think out of the box.

This is exacerbated by the problems with churn. Many workers in an offshore environment see such jobs as a stepping stone only, and turnover can be very high (in excess of 70 per cent per annum) in some areas.

But arbitrage is dynamic, and even Indian firms such as TCS are looking to eastern European countries for cheaper, educated workforces for parts of their offerings.

For many companies looking at offshoring, though, following the arbitrage dynamics as they move around the world negates any cost savings that could possibly be made.

So does this mean that offshoring is dying? No. All it means is that it must be done for the right reasons, and with the right controls.