Tuesday, October 04, 2005
Impact of Outsourcing on the US
Several recent studies have shown that the effects of outsourcing of work to India on the US are highly exaggerated. With its abundant supply of educated labor and low operational costs, India has become the prime outsourcing destination for countries like the US and UK, largely for their IT based jobs. As more and more jobs are allocated to Indian professionals, there is a growing fear and apprehension about loss of jobs and wages in the home country. This, however, is totally unwarranted.
In an effort to avoid the outsourcing of jobs to India, trade barriers were suggested by some. However, these will prove futile and only further aggravate the US job problem. The fact remains that till date, several large foreign companies are offering new job avenues in the US, owing the country’s R&D facilities. These jobs provide ample scope of employment to professionals in the US. Moreover, outsourcing of work is proving highly beneficial for the corporate companies based in the US, as the wage rate in India is about one third that of the US. The result is high quality work at less than half the price, a deal any business minded person wouldn’t let slip.
Studies have proven that the main cause of loss of jobs and wages in the US is not so much cause of outsourcing but because of the country’s monetary policies. Recent rising inflation, slow growth and high unemployment are some of the crucial issues affecting the job scene in the US. In countries such as the UK, high tax rates have propelled several companies to outsource their work to India. Because of this the BPO industry in a developing country like India has seen a sudden boom over the past few years.
It should be realized that outsourcing, when used wisely, is more beneficial than detrimental for any company, country and economy. Constructive monetary policies, which stimulate domestic demand should be implemented in order to prevent any sort of job and wage loss.
posted by Web Promotion Team 7:21 AM
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