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Debate Over Offshore Outsourcing
Whether offshoring is good or bad for the people of a country is an issue of constant controversy among the economists. Some economists relate this offshore outsourcing to Free Trade.
Free trade provides job to the destination country and lower costs of goods and services to the origin country. Thus, both origin and destination countries are benefited through free trade. This makes both sides see GDP grow. Total numbers of jobs increase in both countries. On the other hand diminishing number of jobs and wage in developed countries has created opposition to offshoring. Experts argue that the quality of any new jobs in developed country is lower than their earlier jobs and offer lower pay.
Offshore outsourcing provides mainly call-centre type jobs. Debate has surfaced that this system does serious damages to the quality of customer service and technical support that customer receives from the companies who are catering it. Call centres have sprung up in South Africa, India, Pakistan, China, Caribbean and many other countries. But majority of the American public complain that most of the offshore outsourcing services they are getting from these countries are of very low grade. Overseas workers communicate with Americans in broken and incomprehensible English. Many US companies have caught public dissent for their decision to use Indian and Pakistani labour for customer services and technical support mostly because of the apparent language barrier that it creates. Though India has younger skilled workers who speak English fluently, their English skills have caused debate in North America.
Though offshoring companies sometime treat their worker well, some existing complains are that workers in developing countries do not get same level of legal protection as their counterparts in developed countries. Moreover, some companies move to third world countries to avoid first world laws. Low wages, inability to form a union, lack of child labour laws, lack of worker safety laws, lack of environmental protection laws, lack of worker retirement benefits or pension cost and lack of federal or state employment taxes, reduce cost, therefore, save money.
Some who are against this offshore outsourcing claim that companies lose control and visibility across their extended supply chain. There are legal concerns too. Other concerns include theft of intellectual property laws in overseas locations such as China. If problems arise domestic companies have nothing to do because they do not have proper legal resources.
Political corruption is another problem in the Third World. The bribing system prevalent in the Third World used to avoid the negative consequences increases the offshore business cost and difficulties.
Another problem is the transfer of knowledge. It creates competitors to the original companies themselves. The capital is also transferred from developed to developing countries. With these systems unemployment increases in their own country and sometimes qualified skilled labours in domestic land are forced out of jobs. Also people in domestic countries are losing interest in education, as most of the jobs are being offshore to foreign market. An effort to retrain these people is facing difficulty as retraining them to their current level in another type of job is resulting in wastage of time and cost invested in educating them.
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