outsourcing to manila

There is an interesting article in this morning's SMH entitled: Offshoring: high price of low cost. http://www.smh.com.au/business/offshoring-high-price-of-low-cost-20120127-1qlot.html

The article uses the example of an Australian-based credit risk officer with National Australia Bank earning what the article calls a 'reasonable wage' $60,000 a year. This salary could range up to $80,000 for someone with more experience. They compare this to the wages paid in Manila for the same job. There credit-risk officers working for overseas banks are being advertised (paid) at 20,000-30,000 Philippine pesos a month. That is equivalent to $5000-$7800 a year. The candidates who earn these salaries will have a university education and a minimum of four years of similar experience.

Let's assume that an average grossed up employee cost at CCP is $50k and that in Manila they are paying the equivalent of $5k. The average cost saving is $45k per employee. If CCP employ 150 people on Manila than that equates to annual salary savings of $6.75m. This figure would increase profits by about 20%.

I'm sure that there is much more to this than these rough and ready figures, but this idea seems about right and it is certainly something to look out for when the half yearly results are released next month.

Does anybody have a better handle on this than I do?

K