The Uproar of Outsourcing - Essay Example

The latter sector constituted by men and women without reference to age and educational attainment, as long as they possess high quality of English proficiency and/or other foreign languages, depending on the destination countries.

This happens due to the decision of industrialized countries to concentrate on advanced technologies and thereby setting aside the communications side of their companies. Since the latter eats up much of the investment of companies and considering further that citizens of these countries demand high salaries, international companies opted to shift this demand for labor to countries where salaries are relatively lower. Since outsourcing requires a fixed cost for communications, it is on salaries that companies limit on the cost.

If the communication cost is below the critical level, outsourcing would increase the aggregate output of business services. Trade-in business services increase the productivity of semi-skilled labor in the consumer service if the number of business partners is greater than the percentage increase on the fixed cost. International trade in business services would increase the wage of semi-skilled labor by increasing the diversity of business sources. Its price is determined/set by the competitive condition.

This scenario led to the increase of salary scale of the semi-skilled labor which agitated the swift shift of both skilled and unskilled labor to semi-skilled, the former by lowering their standards as long as they earn, and the unskilled take extra efforts to learn in order to be able to suit the needs of companies handling outsourcing services. This situation however appears to be temporary as continuous inflow of semi-skilled labor would cause a decrease in the salary scale, based on the theory of supply and demand.

Oversupply of semi-skilled labor would send a signal to the outsourcing companies to lower their offer. The demand must be equivalent to the endowment, the factor that determines the equilibrium number of business services. Hence, the higher the endowment, the greater diversity of business services is. The demand and supply of outsourcing services determine the price in equilibrium where the demand for such services is determinable by income. In order to restore the equilibrium, the wage of unskilled labor should increase in the labor market.