Last month, Passport blogged about an online newspaper in Pasadena, California, that hired two journalists in India to cover the meetings of the Pasadena City Council, which are broadcast over the Internet. Many U.S. reporters are understandably outraged. They believe that important nuances will be neglected if Indian reporters don't understand the local culture and institutions, and aren't physically present to report the news.
The local "nuances" represent the opportunity costs of off-shoring. The locals enjoy a comparative advantage and therefore can charge more for the not-so-same service. As a result, you will continue to pay through the nose for transactions that require close proximity.
Thanks to improved telecommunications, the value of explicit knowledge is decreasing. Meanwhile, the price of tacit knowledge continues to rise. Tacit knowledge exchange is notoriously difficult, thus serving as a barrier to outsourcing. Tacit knowledge also limits migration, which is why most moves tend to be over short distances.
Relocating far from home is still a risky proposition, but knowing somebody on the other end is a great way to lower the opportunity cost of long distance migration.
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