Block, SkipCaptcha
356
edits
Changes
Jump to navigation
Jump to search
Line 17:
Line 17: + + + + + + + +
Economics
It is important to note that there has been a strong backlash to this offshoring within the UK. Some British companies, including National Westminster Bank, RBS, the insurance firm Norwich Union, Aviva (repatriating 150 out of 7000 jobs) and Powergen have reversed their decision to outsource labor.
It is important to note that there has been a strong backlash to this offshoring within the UK. Some British companies, including National Westminster Bank, RBS, the insurance firm Norwich Union, Aviva (repatriating 150 out of 7000 jobs) and Powergen have reversed their decision to outsource labor.
== Economics ==
The main reasons for offshoring are minimizing costs<ref>Wadhwa, Vivek; Gereffi, Gary; Rissing, Ben and Ong, Ryan. "Where the Engineers Are." Issues in Science and Technology, Spring 2007. http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1015843</ref> and maximizing revenue (by increasing productivity<ref>"Outsourcing Innovation." March 21, 2005. Bloomberg Businessweek. http://www.businessweek.com/magazine/content/05_12/b3925601.htm</ref>), both of which are consistent with the behavior of a competitive firm in a [[free market]]. A more specific reason for offshoring may be the relatively high corporate taxes in the U.S. compared to other developed nations<ref>Tamny, John. "Hillary Clinton's Backwards 'Progressive Vision'." June 8, 2007. National Review Online. http://www.nationalreview.com/articles/221224/hillary-clintons-backwards-progressive-vision/john-tamny</ref><ref>Atkins, Chris and Hodge, Scott A. "U.S. Lagging Behind OECD Corporate Tax Trends." May 5, 2006. The Tax Foundation. http://www.taxfoundation.org/news/show/1466.html</ref>. Also, some think offshoring is being used as a way to break up unions<ref>"Outsourcing and the Unions." August 6, 2007. http://www.globalenvision.org/library/3/1712</ref>.
Although some have observed that offshored/outsourced workers are not always as productive as the workers they replace<ref>Preston, Julia. "U.S. Farmers Go Where Workers Are: Mexico." September 4, 2007. The New York Times. http://www.nytimes.com/2007/09/04/world/americas/04iht-export.4.7380436.html</ref>, if this is the case, the reduction in labor costs must outweigh the loss of [[productivity]], otherwise a [[capitalist]]ic firm would not take this action. Reducing costs by offshoring jobs increases firms' [[profits]], and this increases economic growth according to the [[trickle down theory]], for the same reason tax cuts do. On the other hand, offshoring causes economic hardships for the workers whose jobs are displaced, especially minimally skilled labor jobs<ref>"How Outsourcing Affects the U.S. Economy." http://www.dirjournal.com/business-journal/how-outsourcing-affects-the-us-economy/</ref>. It is debatable whether or not these negative effects outweigh the positive economic effects. In cases where the net economic benefit is positive, it can be thought of as [[creative destruction]], which is a necessary occurrence as [[technology]] advances in a free market economy. Indeed, it is technology (communication, transportation, etc.) that often makes it possible for offshoring to occur.
== External Links ==
[http://www.bcs.org/server.php?show=ConWebDoc.3960 BCS Site on Off shoring opportunities]
[http://www.bcs.org/server.php?show=ConWebDoc.3960 BCS Site on Off shoring opportunities]