Question

How does the globalization process promote the "outsourcing" of work from one country to another? Must the exporting of jobs to another country always cause economic harm?

Answer 1

Globalisation has promoted the growth of Technology and communication across the globe. Due to this technological development, many developing countries have experienced tremendous growth based on Outsourcing activities being done by them for the advanced world. Outsourcing is useful for a company when it is not able to conduct the same operations internally at a similar cost. Globalisation has promoted Outsourcing because the same task that companies in the developed part of the world were carrying, could then be completed by the countries in developing part of the world at a much lower cost because of their acquired Technology through globalisation. In this sense globalisation has resulted in numerous advantages for the developing part of the world and Outsourcing is one of them.

Outsourcing has been blamed for retarding the growth of many sectors in advance countries. It has been criticized for reducing the jobs in the domestic sector because the same jobs were being carried out by the cheap labour in developing countries.countries. Job losses would result in lower consumption and this would reduce the economic growth rate of the nation as the GDP is likely to be affected. However on the other side the cost advantages to companies has been used as an argument in favour of outsourcing. Moreover, it has been said that those workers who are not getting jobs in the sector in which Outsourcing is done can find jobs in the other sectors of that the economy so that the Welfare of the nation is not affected much. In fact it can overall increase.