The Future Of Outsourcing
There was a time, not too far in the past, that outsourcing
of jobs was just a concern of factory workers in the US. While this is
still true, they are not the only ones that need to be worried anymore. Any job
that does not require the worker to have physical contact with other members of
the company is at risk of being outsourced to other parts of the world.
For decades now, manufacturing of many products including
textiles, toys, auto parts, and consumer goods have been shifted overseas to
countries with lower waged workers. The shift not only included the work but
also the revenue stream. With this new found financial stability, more and more
families have been able to educate their children to a higher degree than ever
before. In countries like China, India, Philippines, and Pakistan, the number
of students enrolled in engineering and IT schools has exploded.
Many of these students are attending classes and earning
degrees in their homeland but there are an increasing number of them attending
western universities. Because of this, many companies have found out that they
can outsource more than just production to these developing nations. The
shift to outsourcing the design phase of products to a freelancer
firm in these countries is occurring more frequently than ever before.
In 2003, the Mckinsey Global Institute conducted a study
that attempted to show that even with the outsourcing of jobs to
developing counties, America was still benefiting financially from it. For
every dollar spent in outsourcing, over 3/4ths of the benefits of it were being
returned to America with a net revenue of $1.14. This, on the surface, sounds
wonderful but the reality of it is that the corporate heads and share holders
are the ones benefiting from this global outsourcing of jobs.
With the manufacturing gone and now the design phases along
with the accounting, the only jobs not being outsourced to freelance
firms is the management of companies. The lack of business managers with
experience is the reason most headquarters are still located in western countries.
But with highly trained and educated professionals in the developing world
willing to work for 1/5th the pay that their western counterparts
need to survive on, it is only a matter of time before the transformation of outsourcing
begins.
With more professionals being educated in the developing
world, there has become a reduction in unskilled workers. As with all things,
supply and demand influence the price, with fewer individuals willing to work
for the extremely low wages in these countries. China alone has seen a wage
increase of over 100% in the past few years. The economies of India and China
have recovered far better than many western nations that could cost their
prices to rise while the once powerful western nations have a large work force
sitting idle. This will lead to outsourcing of work back to the western
countries but at a reduced wage.
The equilibration of the standard of living will never be
fully reached, but the shift has already begun. This is the future of the
global market place and how outsourcing brought it about.
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