Offshore Outsourcing: the controversy over Moving jobs abroad -
Every day thousands of workers find and lose jobs as businesses grow or close. Every new job is found income for food, shelter and education. Every job lost may be giving up some or all of these basic necessities. When a global company decides to move its business operations abroad - a process called "off-shore" - one of the country's loss or worker jobs may result in increase of another country or worker. The growing phenomenon known as offshore has both advantages and challenges for the developed world and the developing.
What it is offshore?
Imagine that the computer you are using has suddenly crashed. It calls the toll-free customer service, because you need to help solve it. The person who answers the phone call is very polite and professional and helps you to correct the problem immediately. You're happy because the computer is working again. But what do you know about the person who has just helped to solve the problem for you? When dialing the green service number, the phone number that seemed calling from somewhere in your country. But it was the person who just helped somewhere close by, or halfway around the world?
Thanks to rapid technological advances that make global communication easier and easier, either way you can. Companies today are faced with many options on where to hire the workers they need to serve their clients. When a company recruits workers in one country in another country to perform select business functions - how to provide customer service to fix a broken computer - this is an example of off-shoring. Offshore is now an increasingly common business practice that affects both the developed and developing.
offshore outsourcing vs
To do business, companies need employees to do the work, or the work done by human beings. A company can hire their own employees directly, or you can use the contracts to ensure the laborers (workers) it needs from elsewhere.
The global labor market consists of all buyers (companies) and sellers (workers) of labor around the world. Companies that want to hire workers in exchange for a payment representing the demand for labor. Workers who want to offer their skills in exchange for a payment representing the labor supply.
When a company contracts the labor it needs from another company based in the same country, it is called outsourcing. When a company decides to contract the workers it needs from an overseas location, this is called off-shoring (perhaps because, in many cases, workers are found literally in a sea, far from the coasts of the first country.)
in both cases, the work would be lost if the companies layoff workers in favor of the new contractual arrangement. By outsourcing, these losses are offset by gains of workers find new jobs elsewhere in the same country. With offshore, these jobs are lost to overseas workers.
Typically, companies that engage in offshore are located in developed, high labor cost countries, while contract workers are found in less developed, low-wage countries.
Types of offshore
When we talk about offshore, we're talking about displacement of two types of jobs - manufacturing or services - a new position abroad.
A company in the manufacturing sector produces goods or products, as its main source of income. To engage in offshore production, this company would need to install production equipment in a new foreign destination, or hire a foreign company to track its equipment and existing business processes. An example of offshore production is a company based in Europe, the production of its products (eg, clothing, toys, electronic goods or materials) in China, and finally, the sale of these goods in markets around the world .
A company in the service sector earns income from service, or the conduct of business activity (such as repairing a computer), that its employees offer customers. To engage in offshore services, this company would simply hire workers in another country to do this work, or contract a foreign company to manage these foreign workers.
should also be noted that manufacturing companies can employ workers in service occupations (for example, computer programmers and accountants). Therefore, offshore services can cut in both the services and manufacturing sectors.
Why is it occurring?
There are five main reasons why offshore is becoming an increasingly popular way for companies to do business.
• Cost savings. There can be large differences between the wages paid to workers in developed and developing countries. Many companies try to take advantage of this wage gap, the difference between the highest salary and the lowest wage, to reduce their cost of production of products or provision of services. For example, hiring a software developer in the US will cost a company about US $ 60 per hour. It could cost the only company US $ 6 an hour to hire a worker in India to perform the same task.
• A large global labor supply. the job posting refers collectively to workers who are willing and able to work. Many developing countries have a working supply of highly educated and highly skilled workers. These workers can be easily trained to perform the tasks that foreign companies require.
business operations
• 24 hours a day-7 days a week. Exploiting the time differences around the world, companies are able to operate all day. For example, when a telemarketing team ends its turn in a company in the United States, a team which is abroad could be ready to start their day's work. (When it is 20:00 in New York City, it is 08:00 in Singapore.) This allows for continuous operation.
• Access to foreign markets. Companies that want to sell their products or services in foreign markets may choose to produce these goods and services in the foreign country. In this way, they can reach customers more quickly and efficiently than if they needed to export, or transfer out, the goods and services from their domestic market.
• technological possibilities. Many services jobs in the sector (programmers, such as computers, radiology technicians, and computer support specialists, telemarketers, and even tax preparers) does not require a physical presence in the rental company. Work can be done remotely and delivered via the technology (for example, via the Internet or telephone).
where is it occurring?
According to the McKinsey Global group, the US companies account for about 70 percent of the total labor demand offshore. (Europe and Japan account for the remaining 30 percent.) The data of the US Department of Commerce shows that imports of the United States, or purchases of services (ie hiring of overseas workers services) grew from $ 21 2 billion in 1997 to $ 37.5 billion in 02. This increase of about 80 percent is mainly due to the increased popularity of IT services and the offshore data processing.
The position of the supply of labor hired by global companies depends on the particular service that is involved. The demand for call center and telemarketing services is mainly provided by English-speaking countries such as Australia, South Africa, Philippines, Canada, India, Ireland and Israel. A common language helps to ensure high quality of service.
Other service activities that do not require interaction with the customer, or English language skills (such as computer programming, graphic design, and the 'data entry) are often performed in non-English countries like Mexico, China, Russia and several Eastern European countries talking.
What are the advantages and challenges?
There is a great deal of debate and anxiety over offshore in developed countries. Opponents argue that offshore is a threat to, a well paid highly skilled employment in the developed world. The loss of jobs can make a country less able to compete in the global economy. The workers in the developed world who have lost their jobs because of offshoring will have to be re-educated and re-trained to take advantage of new job opportunities. If not, they may experience a lower standard of living or quality of life.
Both global companies and in developing countries are the beneficiaries of off-shoring. Global companies benefit by reducing the cost of doing business, because they are able to pay less for the job they need. They can pass some of these savings to consumers through lower prices. Developing countries benefit from employment growth of their populations. More income for their citizens can lead to higher levels of economic growth for the nation.
Future trends
Not much data exists to determine the number of service jobs that can be off-shored from developed countries, but a number of studies have made estimates. One of the McKinsey Global Institute study finds that there are about 0 million jobs around the world that could be off-shored. It is estimated that a total of 4.1 million, or 2.5 percent of the "at risk" services workforce were likely to be affected. In the United States it is estimated that between 01 and 04, approximately two million jobs have been transferred abroad. Most experts predict that offshore will continue to increase as companies seek to reduce costs and remain competitive. Information technology will continue to drive the process.