Chapter 12 Project Management and Outsourcing

by ebeneke
“Offshoring” is an article I found on the economist.com web site.  It differentiates outsourcing with offshore outsourcing and offshoring.  Outsourcing is when a company decides to shift or hand one of its functions to another company.  Offshore outsourcing is when this is done with another company overseas.  Many claim this is harmful to the country because jobs are being shifted elsewhere.  In the U.S. it started with manufacturing and labor intensive jobs.  It then moved to service jobs like customer support.  India is a main destination for these call centers.  Offshoring though, is when a company transfers one of its functions to another one of its extensions in another country.  Economists argue, according to the article, this is a win-win situation.  The country that sends their jobs benefits from lower costs and the country that receives the jobs benefits from an increase in their job sector.  The panic of the departure of jobs has calmed down as many companies are even starting to bring the jobs backs.  The article talked about the difficulty of a customer trying to explain localised problems to someone in a different time zone and possibly even a different climate.  I think it may not be a win-win situation.  The country that gains the jobs benefits more than the country that looses them.  Even though the country who has outsourced may increase in profitability, in the long run it will end up hurting it.  Less people in the labor force will reduce income and have harmful effects to the economy and may even experience a contraction.

REFERENCE:

October 28, 2009, Offshoring, accessed on November 16, 2009 on economist web site: http://www.economist.com/research/articlesBySubject/displaystory.cfm?subjectid=3282216&story_id=14301171