Off-Shoring And Outsourcing

Abstract

Because of a dramatic decrease in transportation and telecommunication costs, the digital revolution, and the forces of globalization, off-shoring has accelerated in the past few years.  While there is little doubt that off-shoring has brought hardship to thousands of workers and communities, there is also little doubt that it has benefited many worker and communities.  Today, off-shoring continues to generate considerable debate on the long-run impact. Also, there is considerable misunderstanding about this phenomenon.  In this paper, the authors make a distinction among the terms outsourcing, offshore outsourcing, and off-shoring.  Off-shoring has been facilitated by a deconstruction of the value chain, allowing firms to evaluate all activities as potential candidates for being performed outside the firm.  Reasons for the acceleration of off-shoring are outlined.  An explanation of why off-shoring is not a villain for the developed economies is also provided.