Offshore outsourcing kicked off in earnest with the administration of former American president Bill Clinton. At the time, the U.S had been trying to fight with inflation so as to revive the struggling economy. This brought about numerous changes in economic policies including the implementation of the North American Free Trade Agreement (NAFTA). This saw businesses using this and other means of staying a step ahead of their competition. Due to the high cost of American labor, offshore outsourcing became an option that many corporations had to consider.
Outsourcing has of course been considered by some as too radical a remedy for doing business. This is probably informed by the fact that it has led to many families in American and other Western nations being left jobless and with no source of income. This is because organizations are contracting other companies to render services that were previously handled locally such as payroll, software and customer service. Political interference and what might be perceived as populism has seen offshore outsourcing increasingly portrayed in bad light.
However, the counter argument is that the distribution of resources is important if productivity is to be increased. From this, economic expansion and job creation is inevitable albeit on a global scale. Despite what many might think, the idea of outsourcing dates back to the history of trade. It started with inshore outsourcing (or contracting as it is better known) which came into effect when the cost of in house labor continued to shoot up to high levels such that the profits of various companies saw a substantial drop.
Today, many companies view offshore outsourcing as a means of having an edge over their competitors. It helps bring down labor costs, lowers the payroll taxes the company must pay and get rids of additional costs of staff benefits and training. With the contracted companies taking over certain processes, businesses are in a better position to focus on in house matters such as the production of company reports and staff meetings.
Unions have been at the forefront of encouraging successive US governments to protect American jobs. Which is good. But ironically, some government policies meant to make more jobs available for locals might not necessarily reduce unemployment. For instance, the attempt to ensure that non-American employees are not allowed to migrate permanently to America but only to get training in America before they go back to their country. These are the same persons to whom US jobs will be outsourced through offshore outsourcing.
Daven Michaels Author of the book Outsource This!