With offshoring very much the flavour of the month, a recent piece of research has caught my eye.

Carried out by the McKinsey Global Institute (MGI), “The Coming Global Labor Market”, examines the global jobs market and asks if rising salaries in Bangalore and Prague are an indication that supplies of cheap offshore talent are already running dangerously low.

The research assessed not just the number of university graduates in countries that have been the major beneficiaries of the offshoring boom – India and China, but also their suitability and accessibilities for employment by multinationals.

MGI’s conclusion – that the small size of global labour market will increasingly lead to the inflation of wage rates and employment in the developing world, is likely to set alarm bells ringing. And although MGI claim that this isn’t likely to create ‘sudden discontinuities in the developed’ world, it is certainly a warning to companies who are thinking of moving work to low-wage countries.

These finding follow the publication of a paper by McKinsey in 2005, in which the report authors of, “Sizing the emerging global labor market”, Diana Farrell, Martha Laboissiere and Jaeson Rosenfeld, argued that there was “confusion surrounding the newly integrating and still inefficient global labor market.”

Two years on it seems that this confusion still remains.