Case Study: India: The Employment Black Hole of Cyberspace - Term Paper Example

The Employment Black Hole of Cyberspace Order No. 270891 No. of pages: 2 1st 6530 From the perspective of American and European companies, analyze the advantages and disadvantages of outsourcing work to India. In 1947, India became an independent country and had established a government that was socially oriented which meant that it discouraged any kind of foreign investments. In lieu of such a situation, Westerners viewed India, as a poor and underdeveloped country as it had very little to offer the international business community.

India was faced with a serious financial crunch in 1991, which forced her to deposit her gold as collateral to obtain an IMF loan from London. To save itself from a bad crisis, India transformed the economy to become one of the best global competitors in the 1990s.Today outsourcing has become the buzzword and a ticket to financial security. To the American and European companies India seems a treasure trove where business is concerned because of its low end manufacturing and inexpensive delivery of service.

This scenario has worked to the advantage of both sides. On the international front serves the purpose of more work with cheaper labor and therefore better output for foreign companies. On the Indian front, Outsourcing helps to curb unemployment, cut costs from different angles and encouraging cheap labor and foreign exchange. It is highly advantageous to the service personnel in India as the payment is good and helps them to enjoy a much higher standard of living and a happier lifestyle.2. What would you recommend to Indian government officials to ensure continued job creation?

Outsourcing to India, was running on well oiled wheels until since of late some of the foreign businesses have withdrawn their companies from India. It wouldn’t take too long for other companies to do the same. Therefore India being an ambitious country, it is seeking out other ways and means to ensure continued job creation. Besides outsourcing work from companies such as AOL, IBM, Intel, HP and Microsoft, India has diversified its businesses, around the world. For example, India has managed to clinch job- work from the United States and Europe in IT consulting, software development, chip design, financial services, and also drug research.

Outsourcing in India has become commonplace, but how long it would last is anyone’s guess, therefore India has further diversified into preparing mortgage applications, doing legal and medical transcription and other such jobs. There is an increase in skill level jobs which save a lot of money for foreign companies when outsourced in India. Therefore India has opened state -of -the - art training centers for training Indians for skill level jobs. Greatest advantage Indians have is that they are educated; speak in English and not quite willing to work for foreign companies at a fraction of the wages paid to workers from the developed countries.3. Is it fair to workers of developed countries when companies shift work to lower wage countries? Explain.The issue of outsourcing has been debated both for and against all over the world.

While some critics believe that there’s more to gain than lose, there are yet to others who feel that it is not a good idea. When considering whether the issue of outsourcing is affecting the shift in wages for workers in developed countries, I would say that it is not fair for them to be paid lower wages because the standard of life is much higher than the standard of life in India. Trying to maintain or keeping up with a high lifestyle would be impossible with low wages. Hence, asking workers from developed countries to lower their wages is not fair.

Outsourcing work to countries like India, the Philippines, the Czech Republic, Romania and other countries has become a sort of sore thorn to workers in developing countries because they find it difficult to get jobs and unemployment is on the increase. Over the last few years, this has posed a great problem to the workers of developing countries who find it very difficult to get suitable jobs even though they are well qualified. The foreign companies are not willing to employ them because they have to pay very heavy salaries which they are not willing to do.

The study conducted by McKinsey Global Institute found that spending 1 dollar for outsourcing overseas would fetch them in return $ 1.25 which will not happen if they employ a worker from a developed country. Hence while some critics think outsourcing is an advantage, others are of the opinion that it is destroying the technical expertise and competition of the country.