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Effects of Outsourcing Companies Positions to Low Cost Countries Part 1




Outsourcing companies
, the meaning of them in the USA - the transfer of high wage U.S. jobs to lower cost overseas locations especially seen in Banking companies, is enabled by improved communications technologies and driven by the desire of companies to establish a business presence in potentially lucrative foreign markets as well as to take advantage of the lower costs of production and skilled labour in those markets. Forrester Research has projected that as many as 3.3 million white-collar jobs of all kinds and over $136 billion in wages will be moved from the United States to lower cost, offshore locations by 2015.

Although the initial emphasis has been on routine service and technical support positions, the trend is expanding to include more complex engineering and design services. It is abundantly clear that many of the jobs being sent offshore were formerly held by U.S. engineers, computer scientists and other information technology professionals.


The off shoring trend is particularly unsettling for American high-tech workers. The economy lost 3 million manufacturing jobs in the past decade. American high-tech firms shed 560,000 jobs between 2001 and 2003, and expect to lose another 234,000 in 2004. The Commerce Department reports that the number of U.S. IT workers employed in all types of companies has declined by 8 percent since 2000.

  • Although initially concentrated in the manufacturing sector and in low-skilled jobs, the Commerce Department says that "recent job losses have been widespread across most IT-goods and services producing industries, and across all IT skill levels." Some jobs are expected to return with a stronger economy, but the majority is probably gone for good. Offshore outsourcing will further compound that shrinkage.

The strong push for outsourcing of high-tech jobs also comes at a bad time for U.S. electrical engineers, computer scientists, and information technology professionals. Unemployment among U.S. electrical engineers, computer scientists, and information technology professionals has been increasing over the past three years, and reached historically high levels in 2003. The unemployment picture is further clouded by uncertainty about the numbers of high-tech workers who are currently under-employed, or who have left engineering or information technology for jobs in other fields


As we start to learn about outsourcing companies, its impact and the way it is perceived by society and the Information Technology industry, we come across some issues that seem to define outsourcing. Some of the issues are positive about outsourcing companies and some are negative. One negative issue has been identified as the problem statement for this study. The outsourcing industry in United States has been a target of political ideologues and a fair amount of fear. During the course of this study we will try to explain the social and political environment that affects outsourcing. Also, many American companies have suffered losses in outsourcing because the infrastructure in the host nation is not up to the standard. We will attempt to address that issue too.


Outsourcing Companies for Your Business?...Read More

Outsourcing Companies - Jobs in IT...Read More

Effects of Outsourcing Companies Positions to Low Cost Countries Part 2...Read More

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