OUTSOURCHING

The Problems of Outsourcing (Author 's Name Here

McCarthy , Dash et al (2002 ) reported in the article 3 .3 Million US Service Jobs to Go Offshore ' of the Forrester Research , that over the next 15 years , 3 .3 million U .S . Services Industry jobs and 136 billion in wages will move offshore , and the IT industry will lead the initial overseas exodus . According to them , a growing number of companies are shifting a range of IT , back office , customer service , product development and sales operations offshore to cut their costs by up to

br 50 . The impact will be on all sectors . The authors estimated that over 36 ,000 jobs in life sciences will be moved offshore by 2015 . The economics will increasingly favor the use of overseas services staff and the key drivers include cheaper cost of labor , low-cost bandwidth standardized business applications and net-based collaborative tools

Offshoring has been a critical issue since 2002 with the news that more than 3 million white-collar jobs would shift offshore by 2015 . The main advantages of shifting business operations to low-cost countries include a combination of lower wage rate , the improvement of the quality and price of international telecommunications . It is said that the shift of service jobs to low-cost countries has just begun and it promises huge benefits to consumers everywhere (The Economist , 2003

The New York Times had a round-up story on outsourcing in the aftermath of Gregory Mankiw 's comments . Jagdish Bhagwati , an esteemed trade economist at Columbia , was quoted . Based on the article , the presumptive Democratic presidential nominee , described executives who import services such as using lower-paid workers in foreign countries to handle customer-service calls and Internet queries from American consumers as "Benedict Arnold C .E .O 's

According to him , in objecting to moving service jobs overseas , Senator Kerry is wrong on two counts . First , his economics is faulty : the practice only adds to the overall economic pie and improves the competitiveness of American companies . In a world economy , firms that forgo cheaper supplies of services are doomed to lose markets , and hence production . And companies that die out , of course , do not employ people Second , Mr . Kerry is making a political error . By playing to the understandable but incorrect fears of American workers that outsourcing is "taking away " jobs from Americans , he is painting the Democratic Party into the wrong corner on trade issues

The most interesting part is Bhagwati 's point is that while many blame trade for job losses , it has far more to do with technological change This issue is further confused by claims that American jobs are being "transferred " abroad . This is usually not the case

The fact is , when jobs disappear in America it is usually because technical change has destroyed them , not because they have gone anywhere . In the end , Americans ' increasing dependence on an ever-widening array of technology will create a flood of high-paying jobs requiring hands-on technicians , not disembodied voices

In the June 30 , 2005 issue of The...