Job-Loss Due to Outsourcing, Overhyped!

Everyone loves to talk about globalization it’s a favorite topic anywhere you go from coffee shops to business schools. Workers complain about how their jobs are shipped to lower-wage countries.CXO’s are always excited about new overseas markets. Activists & NPO’s of various types are concerned with environmental damage or suffering that it may cause or does cause in third world countries. This raises most important question: Is Globalization the most defining trend of this decade for the West?


If we try 7 see local news & event's tend to occupy more mindspace in our everyday life than a Global. If we go on asking people, most people have a view's on whether their Mayor is doing a good job, is the serial killer caught by the County Police or realty prices in a particular area. Very few people have a view on the United Nations Secretary-General's job performance, or know his name even for that matter.

Call-centers in India are maligned, as the developed-country jobs being shipped overseas. But the number of jobs at stake is small relative to the overall work force. And their importance is also overstated.

We must ask this to ourselves how many parents in the U.S. dream that their kids will grow up to work in a call center? Hardly any!

Sometimes we tend to miss the bigger picture...Americans are worried about their job being sent to China? A cheap worker working in a shady sweatshop in China isn't necessarily their biggest threat. It's more likely that an average American worker will be replaced by better technology or cut by management trying to use one less worker & time.

Examining detailed data on changes in the U.S. the authors Bruce C. Greenwald and Judd Kahn have shown that job losses due to higher productivity greatly outnumber those lost to globalization, meaning here shifting production from Country A to Country B and then shipping the product back. Think of the large number of secretaries and office workers eliminated by the desktop computer..
Globalization and trade have helped countries that have made the tough local decisions to liberalize markets and unleash the powerful incentives of capitalism.
If this sounds counterintuitive, it helps to remember that "globalization" is just today's catchword for a phenomenon we've seen before. Messrs. Greenwald and Kahn compare our age of expanding global trade to the early 20th century and find a similar picture. Trade as a share of global output rose until 1920 due to advances in shipping, which helped build global markets for commodities like grains and coal.
This expansion of trade proved only partial and cyclical, however. Commodities became cheaper and thus a smaller part of spending. Households began spending more on manufactured goods, such as washing machines and automobiles that at the time were harder to globalize because they depended on local sales networks and tastes. That caused global trade's importance to shrink.
This time it will be services, which are harder to transport across borders. The desire for services will drive demand for managers, teachers, builders and nurses. These are exactly the high-skilled professions that are hardest to replace with technology or offshore workers.

PS: This article is inspired by a blog on Outsourcing by Mr Carew who covers M&A for the Wall Street Journal Hongkong, i have tried to add some Indian Flavor to it