Outsourcing: Exploding The Myth By Manjotkamal Manu At Isnare.com Ezine Articles

A McKinsey Global survey on off-shoring / outsourcing has revealed that far from damaging US economy and that of other outsourcing countries, the trend enables companies to direct resources to next generation ideas and technologies, as long as government policies do not put an end to it.

With the digital revolution and international telecommunications experiencing a dramatic fall in costs, white collar jobs once shielded from global competition are now being performed off-shore in low cost countries like India, where labour costs are one-tenth of those in USA or Europe. As call centre agents, data processors, medical technicians and software programmers find their jobs going overseas, despite a recovering economy, slow job growth is getting blamed on off-shoring / outsourcing.

Ardent free trade enthusiasts are beginning to waver in their beliefs as critics warn millions of Americans could end up unemployed, and without any kind of rationalised thought, everyone has jumped on the bandwagon, vociferous against the trend. But, they are wrong to fight a trend that works to help USA retain a bigger portion of the economic pie, as well as, raise living standards by keeping in control consumer prices.

Off-shoring / outsourcing is a mutually beneficial trend that keeps US companies profitable, thereby preventing other job losses. Off-shoring / outsourcing works to raise productivity and allows companies to invest more in future ideas, next generation technologies that can lead to new job creation. Despite a trade deficit, USA’s innovatively flexible economy has run up a surplus in international trade of services, all because of off-shoring / outsourcing.

A McKinsey Global Institute (MGI) 2003 study shows the trend created wealth in USA, as well as, India, the country that captured the jobs. It reports that for every dollar spent on outsourcing to India, US economy reaped three-fourths of the benefits, gaining $1.14 in return. Far from being a zero benefits trend for USA, off-shoring is a mutual economic benefit.

Even though, it does lead to a few job losses, given the benefits, American labour and economy must become more flexible, in order to cope with the changes free trade ushers in. The following is a break-down of the benefits that US corporates and American economy accrue as a result of off-shoring / outsourcing.

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