After worldwide: this means that a ton of jobs

After reading the recommended texts
about this new phenomenon of the outsourcing of services, my first impressions
are the following: outsourcing is having overall positive effects for both the
United States and India, although the media has being demonizing such practice.

The outsourcing of services implies
the loss of certain jobs in the US economy, which can be performed with lower
wages in other countries, increasing the efficiency and the productivity of the
job performance (both of outsourced jobs and the ones staying in its home
country). We are here referring to services such as computing and information
technology, business services, call centers, data processing, accounting and
mainly back-office operations; as stated by Amiti (2004).

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Nevertheless, trade in services in
developed economies is minimal. Some factors must be taken into account: as
those traded services (or products) are performed by lower-wage workers, they
will be sold at lower prices in the US market. Thus, demand will increase
between the US consumers. This may, in turn, lead to further job creation
within the US. Another factor that should be taken into account is that
companies will benefit economically from outsourcing, and they will be
investing those gains in expanding the business. Moreover, the US is the
largest exporter of services worldwide: this means that a ton of jobs are being
created there because of companies coming to the US to offer their services
abroad. The US received $121 billion of Foreign Direct Investment in 2004,
being the most benefited country from trade in services.

In Amiti’s article (2004), we can
appreciate that, in the aggregate, outsourcing does not bring net job losses,
because those losses are offset by jobs created in other industries. Also, as
stated by Farrel (2006), its effects on wages in the US are negligible;
actually, the IT sector has been creating employment in the US at a faster rate
than the average, and its wages have also grown at a much faster rate.

What about the US workers that have
lost their job? According to the Farrell (2006), the real challenge is to ease
the transition of those workers who have lost their job (due to outsourcing),
from declining industries toward expanding ones. Education, of course, will
help. But it is not enough. Job retraining credits and a minimum wage insurance
to displaced workers appear to be necessary. Provide workers with life-long
learning programs while letting globalization advance is much better than
struggling to preserve existing jobs and promoting protectionism.

As Farrel (2006) explains, in 2006, US
companies employed close to 1 million service workers overseas (white-collar
jobs), which were located especially in low-wage countries. The number was
growing back then at a rate of 300.000 job losses a year, which is an
insignificant figure in relation with the number of jobs created during the
same periods.

To calm down some worried mindsets toward
outsourcing, Farrel (2006) reminds us that only a small part of the services
can be offshored, because most of the jobs need a face-to-face interaction and
physical presence. Besides, 1/3 of the US companies are too small to afford
outsourcing; and many of the big ones do not even think about it due to the
complexities it implies.

In India the situation is quite
different. According to Tyler (WSJ, 2004), trade and outsourcing (especially
from ITs) are raising millions of people’s lives from poverty, while exposing
them to ideals of freedom and democracy (according to Sachitanand 2018, in
2017 India had a $150 billion outsourcing industry). This destination is among
the top preferred ones because of several reasons:  it is an English-speaking country with
massive population, its form of government is a democracy (which, in turn,
eases a more flexible regulation) and, most importantly, it has great of young
talent in the sectors around IT. By helping India develop into a prosperous
economy, the overall wealth worldwide will hugely increase and it will have
positive consequences in the future (an enormous market that will need to buy
and consume, a source of human creativity, and many others).

According to Farrel (2006) curbs on
outsourcing would bring new costs to the US government and companies. Actually,
it would have overall negative consequences to the life of millions, even if
some jobs appear to be saved. In conclusion, resilience is what American
workers need, in order to face this challenge. Globalization will, for sure,
bring new threats. If they are faced with a positive and assertive attitude, a
lot can be learned.