Offshore outsourcing

Criteria

The general criteria for a job to be offshore-able are:

    * The job does not require direct customer interaction;

    * There is a significant wage difference between the original and offshore countries;

    * The job can be telework;

    * The work has a high information content;

    * The work can be transmitted over the internet;

    * The work is easy to set up;

    * The work is repeatable.

The driving factor behind this development has been the need to cut costs while the enabling factor has been the global electronic internet network that allows digital data to be accessed and shipped instantly, from and to almost anywhere in the world.

Countries involved

Some of the major countries/districts that provide such services are India (Programming and IT), Bangladesh (Programming and IT), Russia (Programming and R&D), Pakistan (Programming, Customer Support, Call Center), Bulgaria (Programming and R&D), Ukraine (Programming and Design), Belarus (Software development, Design, Engineering), Romania (Programming and IT), the Philippines (Data Entry and Customer Support), Egypt (Customer Support and Programming), China (Programming), Latin America (solution providers) and many others.

The widespread use and availability of the internet has enabled individuals and small businesses to contract freelancers from all over the world to get projects done at a lower cost due to lower wages and property prices. This trend runs in parallel with the tendency towards big corporations' outsourcing, and may serve to strengthen small business' capacity to compete with their bigger competitors capable of setting up offshore locations or of arriving at major contracts with offshore companies.

Source of conflict

There are different views on the impact on the various societies affected, which reflects the attitude of Protectionism versus Free Trade. Some see it as a potential threat to the domestic job market in the developed world and ask for government protective measures (or at least closer scrutiny of existing trade practices), while others, including the countries who receive the work, see it as an opportunity. Free-trade advocates suggest economies as a whole will obtain a net benefit from labor offshoring, but it is unclear if the displaced receive a net benefit.

One issue offshoring of technical services has brought more attention to is the value of education as an alleged solution to trade-related displacements. Education may no longer be a comparative advantage of high-wage nations because the cost of education may be lower in the nations involved in the controversy. While it is true that education is usually considered helpful to competitiveness in general, an "education arms race" with low-wage nations may not pay off.

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