Globalization has revolutionized the way businesses operate, enabling them to tap into new markets and access a larger pool of talent. One of the key drivers of globalization is outsourcing, which involves transferring certain tasks or processes to third-party providers located in different countries.
Impact on Industry
One of the most significant benefits of globalization and outsourcing is that they enable businesses to access a wider range of resources and expertise. By outsourcing certain tasks or processes, businesses can tap into the skills and knowledge of experts located in different parts of the world, thereby enhancing their competitiveness and productivity.
For example, many companies outsource software development to countries like India and China, where there is a large pool of skilled developers at a lower cost. This enables these companies to develop high-quality software more quickly and at a lower cost, which can be a significant advantage in today’s fast-paced business environment.
Another way in which globalization and outsourcing impact industry is by enabling businesses to tap into new markets. By outsourcing certain tasks or processes to providers located in different countries, businesses can gain access to a larger pool of customers and expand their reach beyond their current borders.
For example, many companies outsource customer service to countries like the Philippines and India, where there is a large pool of English-speaking agents who can provide excellent customer service to clients located all over the world. This enables these companies to provide 24/7 support to their customers, which can be a significant advantage in today’s global marketplace.
Impact on Employment
While outsourcing has undoubtedly created new opportunities for employment, it has also led to significant job losses in some industries. For example, many companies have outsourced certain tasks or processes to countries where labor costs are lower, which has led to the loss of jobs in developed countries.
According to a report by the McKinsey Global Institute, between 2000 and 2012, outsourcing led to the displacement of around 3 million jobs in the United States alone. Similarly, in the UK, outsourcing has led to the loss of around 850,000 jobs since 2000.
However, it is important to note that outsourcing also creates new job opportunities in developing countries. For example, many companies outsource certain tasks or processes to countries like India and China, where there is a large pool of skilled workers at a lower cost. This has led to the creation of millions of jobs in these countries, which can be a significant advantage for their economies.
Case Studies
To illustrate how globalization and outsourcing impact industry and employment, let’s look at some real-life examples.
One example is the automotive industry. Many car manufacturers have outsourced certain tasks or processes to countries like China and Mexico, where labor costs are lower. This has led to significant job losses in developed countries, but it has also created new job opportunities in developing countries. For example, in China, the automotive industry has created around 10 million jobs since 2000, according to the McKinsey Global Institute.
Another example is the IT industry. Many companies have outsourced software development to countries like India and China, where there is a large pool of skilled developers at a lower cost. This has led to significant job losses in developed countries, but it has also created new job opportunities in developing countries. For example, in India, the IT industry has created around 4 million jobs since 2000, according to the McKinsey Global Institute.