Emergic: Rajesh Jain's Blog

Emergic: Rajesh Jain's Blog header image 2

Outsourcing Causes and Effects

February 16th, 2004 · 2 Comments

NYTimes has an analysis:

Globalization and technology are amplifying the impact of outsourcing. For decades, American foreign policy has been to urge developing nations and Communist countries to join the global economy in earnest. Now they have, and vast numbers of skilled workers have joined the world labor force, seemingly overnight. Countries like China, India and Russia educate large numbers of engineers. Add the low-cost, nearly instantaneous communication afforded by the Internet, and an Indian computer programmer making $20,000 a year or less can replace an American programmer making $80,000 a year or more.

“The structure of the world has changed,” said Craig R. Barrett, chief executive of Intel, the Silicon Valley company that is the world’s leading computer chip maker. “The U.S. no longer has a lock on high-tech, white-collar jobs.”

Many American workers are worried that outsourcing is just beginning, and they fear that in an information-age economy all kinds of jobs are potentially at risk. Not only anxious workers in the United States take that view. Nandan Nilekani, chief executive of Infosys Technologies, an Indian outsourcing company, declared at the World Economic Forum last month, “Everything you can send down a wire is up for grabs.”

Another difference, some analysts say, is that during the 1980’s, the interests of American workers and companies were more closely linked than they are today. From 1984 to 1986, the American semiconductor industry lost $4 billion and shed 50,000 jobs in the United States.

“But now, it is the workers who are suffering and not the companies,” said Ronil Hira, an assistant professor for public policy at the Rochester Institute of Technology. “The companies outsourcing jobs overseas are profitable and mostly gaining market share. There’s no gun to their head this time, no real motivation to address the issue.”

Beyond jobs shifted, the broader impact may be to put pressure on the wages of many technical workers in the United States, who increasingly live under the shadow of foreign competition.

Tags: Emerging Markets

2 responses so far ↓

  • 1 Tara // Jan 26, 2010 at 6:58 am

    I see no real information on the causes and effects of outsourcing in this article.

  • 2 Amanda // Oct 7, 2015 at 9:16 am

    I agree with Tara. Please make the causes and effects more clear. Possibly using bullet points. thanks

Leave a Comment