International Economics - Outsourcing Research Paper

International Economics - Outsourcing - Research Paper Example The aim of offshore outsourcing is the transfer of services or goods between nations. Across, outsourcing has matured or grown and become an increasingly complex means of carrying out public services. The private sector has not been left behind in the practice of outsourcing. The origin of outsourcing is linked with the crude materialization of the 1980s when majority of the large-scale public segment outsourcing projects started to take place. In the 1980s, outsourcing occurred generally in the form of blue-collar tasks such as waste collection and grounds maintenance. Much emphasis was put on the lowest cost provider, and this is the individual who won the contract. In the United States, the off-shoring trend in the service sector became significantly prominent in the late 1990s. Between the year 1997 and 2000, various public services including the white-collar roles were exposed to serious competition. The notion of competition became dictated by the best value rather than just th e lowest cost. Best value is an equation, which includes both cost and service quality. It is worth noting that outsourcing was initially viewed as a way of reducing cost, passing clerical and low-level consumer contact duties to other businesses or nations. This happened at a time when industries had to go overseas to cater for the IT labor shortage caused by the excessive workload experienced in 2000, and the dot-com economy boom. This was enabled by advances in IT and influenced by the large cost savings, and thus, companies continued to offshore labor demanding IT services like low level coding and legacy software maintenance. At the moment, complex IT tasks such as XML, software management, software design, web applications development, and software architecture are going offshore. Additionally, an increasing number of United States companies are shifting their IT enabled business services (also referred to as Business Process Outsourcing) abroad. Insurance firms, credit card c ompanies, utility providers, airlines, mortgage lenders, and banks are among the companies that offshore outsource business practices such as low level processing, telemarketing, accounting, procurement, help desks, human resources, collections, customer call centers, and data entry. It is worth noting that concerns about job security had grown â€Å"due in part to increased global economic integration since the early 2000s, when off-shoring started spreading from the jobs of blue-collar manufacturing workers to those of white-collar service sector workers†. White-collar workers entail the majority of United States workers and most of them are employed in the service sector, which accounts for a major portion of United States jobs. This indicates that many people believe that their jobs are at a risk of being moved overseas if the organizations that they work for opt to offshore some of their services or activities. The Current Status of Outsourcing Along With Its Trends A ne w trend is emerging in the service industry; the increase in offshore outsourcing. Prior to the previous decade, it was not common for developing nations like India or China to export high-skilled or high-valued services. Researchers have offered several reasons for