The Concept of Outsourcing in Contemporary Economy Literature review

The Concept of Outsourcing in Contemporary Economy - Literature review Example Critics admit that there are both pros and cons of outsourcing based on the unique nature of every industry and a current state of the economy. In cases where this is technically possible, the cost advantage of outsourcing will probably apply to component parts of production processes, leading to outsourcing by the developed economies. Indeed in the current period, the large growth in merchandise trade relative to merchandise produced in the less developed economies can be attributed both to the increased number of exporting final goods to the developed economies, and also to the growth of the latter's outsourcing. Both developments act to reduce the bargaining power of labor, especially union labor. When rules limit direct investment and outsourcing, both producers and labor want enforcement of labor standards abroad to maintain competitiveness for their product. Once the rules are relaxed, the interests of producers and consumers diverge, as low wages and lax labor standards make f oreign production more profitable (Cadena, 2007). The threat to move all or part of production abroad can be used at home to exact reductions in labor compensation (wages plus benefits). Moreover, the threat of significant job losses allows large firms to demand changes to labor legislation that further weaken labor. In addition to endangering jobs, wages, labor standards, and union powers, globalization also hastens the decline of social safety nets. Citing international competitiveness, business has been able to shift the tax burden to labor. But job losses and low wages will erode this tax base, reducing governments' ability to finance welfare programs. Globalization thus undermines labor strength, reinforcing the impact of higher levels of overall unemployment on capital's ability to control the workplace in the developed economies (Aalders, 2001). Such researchers as Cullen and Willcocks (2003) suppose that globalization and communication revolution (via the Internet) opens new opportunities for developed countries to outsource. Cheap labor and favorable economic conditions are the main factors of successful outsourcing strategies. The core places of outsourcing are India, China, Malaysia, the Czech Republic, and Singapore. With economic support, people will pursue careers to achieve stability, security, relationship with others, personal growth, and ultimately status, prioritizing these goals according to their personal value system. For much of the past century, when the drive for careers matured as a goal in offers of employment and in vocational development, this was a very tenable and fulfilling pursuit (Engardio 2006). Careers provided opportunities for individuals with potential and determination to aspire toward goals that enabled them to achieve comfortable economic status. It provided employers with dedicated employe es. As the new millennium approaches, the pursuit of careers appears to be in a state of flux. The turmoil in the industry brought about by global competition and industrial consolidation has shaken the concept of stability and the idea of lifelong employment in a single occupation for a single employer.