The Truth about Outsourcing
People outsource a lot in their lives, but may fail to recognize doing so. For example, ahousewife sent her daughter to elementary school and decided to start working. She hired a household helper to take care of thehouse so that she could enter the job market and earn some money. This housewife is outsourcing, and her choice of doing so is necessary and preferable. Actually, outsourcing in daily life is unbelievably handy.“We do outsourcing in our everyday lives, such as dining out, whereby we purchase our prepared food froman external source instead of making the meal ourselves”
In the past several years, multinational companies based in developed countries have increasinglyturned to developing countries to carry out some of their business activities. This phenomenon, looselycalled
is the transfer of some aspect of a company’s business activity toanother company in another country. Typical outsourced business activities include data entry,accounting, and information technology support. Even tax returns are being processed by foreigncomputer operators. These forms of outsourcing have helped create tens of thousands of jobs in somedeveloping countries. At the same time, however, fears have grown among workers in developedcountries that their jobs could be outsourced.Outsourcing is not a new development in the global economy. Some author, traces its roots to whalingfleets and floating factory ships of the late eighteenth century. Economist, the more recent example of Motorola in the 1960s, when the company outsourced its labor-intensive assembly process to Malaysia,Korea, and Monterrey, Mexico. As is often the motive for outsourcing, the move allowed Motorola tocompete effectively with other firms in the United States and, later, Japan.Despite the growth in outsourcing around the world, or perhaps because of it, opposition has grownsignificantly in many developed countries. In the United States, for example, the former chief executiveof Intel, Craig Barrett, believed U.S. workers face the prospect of 300 million well educated people inIndia, China, and Russia who can do effectively any job that can be done in the United States.” For opponents of outsourcing, the problem is not just low tech manufacturing jobs; more and more high- paying, white collar service sector jobs are being outsourced as well. According to Deloitte Research,two million financial sector jobs could be outsourced by 2013. Economists put it , “The worldwide pool of available well-trained workers is much larger, and they are only a mouse-click away.