Off-shoring / Outsourcing

The constant carping of policy makers and others about the detrimental effect off-shoring / outsourcing will have on the national economy, seems they are hell bent on misleading the public. Little understanding about the main principles behind off-shoring / outsourcing, they continue to harp on about the trend that will help eradicate poverty and raise living standards globally. While, it is true, a number of pink slips have been handed out as low-end jobs began to be outsourced; the trend has also helped create more new jobs and helped in lower the prices of many services for consumers.

The efforts of various people including a couple of Californian Senators in a bid to scupper the off-shoring / outsourcing trend will not only discourage outsourcing, but will end up in damaging the economy. According to the unanimous consensus of high profile economists, and in the words of G. Mankiw, Chair for Council of Economic Advisors, free trade, in other words off-shoring / outsourcing is: "just a new way of doing international trade" and "a plus for the economy in the long run."

If you look at it, there is very little difference between international trade of services and international trade in manufacturing. Both countries involved in off-shoring / outsourcing gain from the resultant free trade. Before the advent of high tech and advanced telecommunications, it was necessary for service jobs to remain at home in order to be close to customers, but since, international competition has allowed call centres and information processing firms to service customers from across the globe due to the latest in cutting edge information technology and telecommunications.

In the same way that the cost of transporting goods was lowered, and a wide array of agricultural products and manufactured goods brought to millions of consumers with the introduction of the 19th century steam engine, 20th century information technology promises to perform the same miracle for the service industry. Shifting manufacturing to low cost countries resulted in lower costs for consumers, similarly off-shoring / outsourcing greatly benefits the American consumers by providing many more and cheaper services.

The fear that off-shoring / outsourcing is going to destroy American jobs is conceptually wrong, for every job that is lost a new one is created to replace it. By spending dollars on off-shored / outsourced services, the same dollars are either reinvested or used to purchase American goods and services. The American public does not often see new jobs created by the same dollars spent on off-shoring / outsourcing services, but they do return to US export industries as service providers purchase equipment and other goods for their business.

Off-shoring / outsourcing as a result of free trade does not alter job numbers in a country. Rather, it changes the job mix to reflect areas where we have a greater competitive advantage over other countries. Off-shoring / outsourcing services in most cases leads to job specialisation as employees having lost low-end jobs upgrade and specialise, in turn helps raising their living standard. Often, unemployed workers move on to work in other industries or re-train for better paying jobs.

A positive trend, off-shoring / outsourcing, it helps in the following ways: 1. Off-shoring / outsourcing of service jobs creates more jobs in the US export industry when service providers return the favour by buying American goods and services. 2. Off-shoring / outsourcing results in cost reduction for domestic firms. 3. Off-shoring / outsourcing means consumers get top quality and a wider array of services at lower prices.

In the long term, off-shoring / outsourcing will benefit all Americans, and the IT industry will be the biggest beneficiary of all. In the best interests of American economy, US businesses should continue to off-shore / outsource to retain a competitive edge in consumer markets.

About the author: For more information on offshore outsourcing and offshore software development,please visit http://www.a1technology.com

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