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Outsourcing and off-shoring - Research Paper Example

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In the paper “Outsourcing and off-shoring” the author analyzes outsourcing or off-shoring, which is considered to be one of the important business strategies in organizations lately. Some of the advanced countries of the world such as USA and Japan are seen to be undertaking outsourcing activities…
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Outsourcing and off-shoring
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Download file to see previous pages Jones (2005) has put forward the finding that outsourcing along with immigration can serve the purpose of raising the domestic wage rate of the home nation. However, there are ambiguous and contradictory implications of the impacts of outsourcing activities on the labor market of the home country. This was suggested by Eggar and Eggar (2005) (Yabuuchi, 2011, p.706). In this context outsourcing has been considered to be detrimental to domestic labor in terms of wages and jobs even though it can have beneficial impacts on the economy on the whole. Kohler (2001) has come up with an alternative perspective of the international fragmentation which is based on the specific factors model. He has shown that outsourcing can have a welfare loss on the economy. Recently research conducted by Batra and Beladi (2010), tried to explore the impactions of outsourcing on factor prices with the help of the two sector specific factor model along with intermediate outsourced inputs. Their finding was that outsourcing can have negative implication on the domestic market; however, it benefits the capital of the country. However it can have positive impacts of the domestic labor in case there is completely no production of the outsourced work or activity in the home country. However, the studies assume that there is full employment in the economy (Yabuuchi, 2011, p.706).
Problems of Outsourcing
Despite the numerous advantages associated with outsourcing in developed countries, certain problems have also been noted....
Kohler (2001) has come up with an alternative perspective of the international fragmentation which is based on the specific factors model. He has shown that outsourcing can have a welfare loss on the economy. Recently research conducted by Batra and Beladi (2010), tried to explore the impactions of outsourcing on factor prices with the help of the two sector specific factor model along with intermediate outsourced inputs. Their finding was that outsourcing can have negative implication on the domestic market; however, it benefits the capital of the country. However it can have positive impacts of the domestic labor in case there is completely no production of the outsourced work or activity in the home country. However, the studies assume that there is full employment in the economy (Yabuuchi, 2011, p.706). Problems of Outsourcing Despite the numerous advantages associated with outsourcing in developed countries, certain problems have also been noted. For example, researchers have identified problems related with outsourcing India which is considered to be one of the most preferred countries across the world for outsourcing. Companies making great investments in India have now been pulling back their investments. This is because of the dramatic escalating wage structure in the country. The attrition rates in the software firms in India averages around 50% per year. The larger American firms which had established their presence in India had been immune to this attrition for quite some time which now has changed. The smaller firms have been experiencing attrition rates of 100% in a year. Thus the focus has now been shifting towards Eastern and Central Europe ...Download file to see next pages Read More
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