Exporting work to other countries, calledoutsourcing? is the latest trend in business to reduce labor costs and maximize profits, and expedite the development of new products.
The outsourcing of high wage jobs from the United States to lower cost overseas locations is currently contributing to unprecedented levels of unemployment among American electrical, electronics and computer engineers. Offshoring also poses a very serious, long term challenge to the nation's leadership in technology and innovation, its economic prosperity, and its military and homeland security.
The main advantages of outsourcing are clear. Firstly, it allows a business to fix the price of supporting its IT, and secondly it alleviates the requirement to employ and maintain large bodies of IT support staff in house. Infant business use outsourcing as a way to cut costs and increase efficiency.
Outsourcing isn't a new concept. The US textile industry began in New England, but following the Civil War, manufacturers moved production to the Carolinas because of cheaper labour costs. After World War I, textile manufacturing moved yet again, this time to countries such as Brazil and China. .
IT outsourcing is becoming increasingly popular. The recent Holway Report into the .
UK IT services industry found spending on outsourcing last year grew by 15%, compared with 5% the previous year. Also the value of outsourcing deals doubled between 1999 and 2000, totaling over 3 billion dollars. .
Jobs in the manufacturing and customer-service sectors (technical support) were earlier targets for export, and now those jobs are most likely gone forever. The latest boom in offshoring has come in the high-tech industry. Many US companies are outsourcing work to places like India and Malaysia, where low-cost, often high-quality labor is readily available. Many in the US fear that now high-tech jobs are at risk.
This raises several questions: How far should companies go in the scramble for profits? When does offshoring threaten security? Where does the blame for the current trend lie? What does the future hold for American jobs and industry?.