Offshoring
When one hears
"offshoring" the common notion is the shipment of U.S. jobs overseas
for cheaper labor. This is in fact, a fallacy perpetuated by way of basic assumption. Several different types of similar transactions occur: 1) Offshoring 2)
Outsourcing 3) Homeshoring. More often than not, people confuse offshoring with
outsourcing.
Offshoring means the
movement or relocation of a job to an outside country (Contractor et al 2011).
When one speaks of examples such as relocating IT services and call centers to
countries like India, more specifically the city of Bangalore, it refers to
offshoring. It is only offshoring if one did not lose their job to this call
center. Had Dell (hypothetically) never had a call center service before, or
perhaps a small call center in the states but realized how much cheaper that
same service would be overseas, and created a center overseas without the loss
of current jobs in America, this would qualify as offshoring. The discrepancy
between offshoring and outsourcing, in my opinion, lies in the loss of jobs if
there were any at the expense of the move. In time I may prove myself wrong, but from what I am reading now, it seems like job loss is the distinguishable factor among the two. While most people scoff at offshoring, some believe it actually increases productivity in America as well as the skill level of work because the jobs that are conducted overseas are ones involving a low skill level (Khimm 2012).
Outsourcing occurs when
jobs are handed to outside or foreign contractors that were previously upheld
by company-hired employees (Contractor et al 2011). In the Bangalore case, had
an entire call center in the states shut down and employees were left jobless
due to the move, this would be outsourcing. We see this is in many avenues of
business, not just technology. An obvious example is any good that is created
in a factory. When factories in the Midwest United States shut down in the past (primarily the automotive industry), they did so to move out of the
country for lower labor costs. Some of you may have seen the devastating effects of outsourcing
in Flint, Michigan with General Motors shutting down their plants. Controversial
director Michael Moore highlighted this problem in his 1989 documentary Roger & Me. He records the
emotional, financial, and social effects of GM’s relocation to Mexico. Just in
this film nearly 30,000 people lost their jobs and the crime rate skyrocketed. In
such instances, outsourcing gets its bad rap and I am not quite sure where I
stand on it. It is indeed a very controversial topic because it has entirely
different impacts depending on the angle in which you approach it. As a
businessman I would not think twice about having cheaper costs, as a working
class citizen I would hate it, but the goods I buy would be cheaper as a result… This is a double edged sword if I've ever seen one.
The
Wikipedia definition of homeshoring is "the
transfer of service industry employment from offices to home-based employees
with appropriate telephone and Internet facilities. Homesourcing is best
thought of as a combination of outsourcing and telecommuting.” In this
case we see external contractors just like outsourcing, however the jobs
generally stay within the nation. Outsourcing includes shipping work to another
country because the labor costs are lower. We are seeing a greater trend in
homeshoring just with the growing involvement technology has in the workplace.
There really is no need for a “work place” in some cases. As long as one has an
Internet connection and a laptop, they can carry on as if they were in an
office.
All
three of these types of job transfers are important to know because they happen
every day. There is a growing pattern occurring with transferring jobs, looking
for greater efficiency, and incorporating technology more and more. In the next
few blog posts, I will focus on offshoring more in depth as it has a global
effect. It involves multiple economies and affects a great number of people
both positively and negatively.
Works Cited
Contractor, F. J., Kumar, V., & Kundu, S. K. (2011).Global outsourcing and offshoring, an integrated approach to theory and corporate strategy. Cambridge, UK: Cambridge Univ Pr.
Khimm, S. (2012, July 12). Offshoring creates as many u.s. jobs as it kills, study says. The Washington Post. Retrieved from http://www.washingtonpost.com/blogs/wonkblog/wp/2012/07/12/study-offshoring-creates-as-many-u-s-jobs-as-it-kills/
http://en.wikipedia.org/wiki/Roger_%26_Me
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