Learning to love outsourcing

Based on article from 'The Economist - The World in 2005'

The West will begin to realize that part of its solution to its labour problems will lie in outsourcing.

People in American and Europe have been arguing whether the shredding of jobs in the rich West and hiring cheaper replacements in India, China and elsewhere is a good thing. A sharp increase in the amount of IT related jobs in India has coincided with a sharp fall in demand for IT among companies in America and Europe. These two events were taken together and a link was formed by commentators and politicians in America and Europe that companies were firing workers in the West for cheaper alternatives in the East. Many people were afraid that other jobs would also face the same fate as seen by IT workers in the west.

This analysis was soon to be found wrong as this analysis did not endure. IT firms in America, Europe and Japan have begun hiring IT workers once again. It is predicted that IT jobs will increase from 6.7m in 2004 to 10.6m by 2008. Labour shortages in IT related jobs in the west are beginning to show and are certain to grow. Similar scenes are produced in India as the amount of workers in call-centres is increasing as fast as they can teach their employees to aspirate their “P”s the American way.

As America and Europe push closer to full employment, a big change in the attitude towards outsourcing will come about. The rise of India should not be seen as a hindrance but a solution to its labour problems.

One of the major problems that developed nations face is the ageing population as a result of huge medical advances. The dependent population (in this case, the older generation) will increase the cost of the health system and also place the mounting burden on the working population. This will create labour shortages in Europe and Japan as working populations shrink. Outsourcing can help solve these problems.

Outsourcing some of the work to an IT firm in India will help Britons get more timely access to health-care services. Sourcing lower-value jobs will allow the rich economies of the world to mobilize their shrinking working population into more productive work in order to generate more wealth for the costly health care system to support an increasing amount of retirees.

However, some people will claim that outsourcing will exploit the poor. But this globalization will improve the livelihoods of those workers in poorer countries. Not only is it good for the West but it is also improving the quality of life of workers in countries such as India.