Question

In: Economics

Search the term "reverse outsourcing." In a paragraph or two identify what reverse outsourcing is and...

Search the term "reverse outsourcing." In a paragraph or two identify what reverse outsourcing is and summarize the article. Include the link in your post please.

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Expert Solution

Gone are the days when outsourcing meant moving a steady stream of jobs towards India. Now the trend is to build employment for Indian businesses in the west. This recent phenomenon is known as reverse outsourcing, or the pattern of Indian IT and BPO firms opening offices in the US and Europe to hire locals there. It's estimated that this reverse outsourcing generated nearly 300,000 jobs in the US. It is good news for Indian IT and BPO businesses as they are grappling with the negative outsourcing perceptions that are seen as a trend that sucks away employment rather than generating them.

It makes sense for Indian companies to open offices and branches in low-wage countries such as Ohio in the US and the Czech Republic in Europe where they can benefit from lower costs while generating employment for local citizens. This double whammy gain has indeed raised the profile of Indian companies and has given Western companies' CEOs something to cheer on, especially when they have to appear before political committees and commissions to defend outsourcing

The other factor here has to do with Western companies choosing to do business with near-shore firms, or the growing near-shoring phenomenon. What this means is that many Western companies want their back office activities outsourced to locations that are closer to their headquarters and therefore Indian firms are gradually opening offices in places like Mexico and Ireland to cater for European customers and the United States. While Indian companies have always had a large proportion of their on-site workers, the trend of recruiting local rather than sending Indian workers on-site is picking up.

Reference- Financial Times


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