Facts In relation to The Outlook Of Outsourcing

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There was a time, not too far in the past, that outsourcing of businesses was just a concern of factory workers in the US and Europe. While this is still factual, they are not the only ones that need to be worried anymore. Any work that does not require the worker to have corporeal contact with other members of the company is at risk of being outsourced to other parts of the world.

For decades now, processing of many products including textiles, toys, auto parts, and consumer goods have been shifted overseas to countries with lower waged workers. The change not only included the work but also the revenue stream. With this new found financial stability, more and more people have been able to educate their children to a higher degree than ever before. In countries like China, India, Philippines, and Pakistan, the number of students enrolled in engineering and IT schools has exploded.
Many of these students are attending classes and earning degrees in their homeland but there are an increasing number of them attending western universities. Because of this, many companies have found out that they can outsource more than just production to these developing nations. The shift to outsourcing the design phase of products to a freelancer firm in these countries is occurring more frequently than ever before.

In 2003, the Mckinsey Global Institute conducted a study that attempted to show that even with the outsourcing of projects to developing counties, America was still benefiting financially from it. For every dollar spent in outsourcing, over 3/4ths of the benefits of it were being returned to America with a net revenue of $1.14. This, on the surface, sounds wonderful but the reality of it is that the corporate heads and share holders are the ones benefiting from this large-scale outsourcing of jobs.

With the processing gone and now the design phases along with the accounting, the only projects not being outsourced to freelance firms is the management of businesses. The lack of business managers with experience is the reason most headquarters are still located in western countries. But with highly trained and educated professionals in the developing world willing to work for 1/5th the pay that their western counterparts need to survive on, it is only a matter of time before the transformation of outsourcing begins.

With more experts being educated in the developing world, there has become a reduction in unskilled workers. As with all things, supply and demand influence the price, with fewer persons willing to work for the extremely low wages in these countries. China alone has seen a wage increase of over 100% in the past few years. The economies of India and China have recovered far better than many western nations that could cost their prices to rise while the once powerful western nations have a large work force sitting idle. This will lead to outsourcing of work back to the western countries but at a reduced wage.

The equilibration of the average of living will never be fully reached, but the shift has already begun. This is the future of the global market place and how outsourcing brought it about.

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