Friday, January 6

Services offshoring increases wage inequality

First the paper:

The effects of offshoring on wages remain a hotly debated issue. This column explores the case of UK firms between 1992 and 2004, recognising that offshoring in one particular industry may also affect labour demand in other industries. It suggests that services and materials offshoring increase the wages of high-skilled workers and decreases the wages of low- and medium-skilled workers, thus contributing to a rising wage inequality.

But this is such a d’oh research. You don't even want to think about offshoring, the idea of competitive advantage will immediately impact every industrial or service value chain. zillions of years back, when we started getting services (whether it be religious services or legal services or journalism etc. etc.) from elsewhere even within the country, this phenomena was noted. At end of the day, services are value adding aspects. Offshoring, outsourcing will obviously drive down the overall cost of services. This will mean that the cost stack will change shape and since the majority of the resource cost is at the bottom in terms of FTE, they will try to reduce that.

But, well, I suppose its good hear this.


Noah Barn said...

There's nothing to debate about. Offshoring is emerging continuously. Sadly some countries is not favor on this.

Offshoring said...

I can see your point on this post. But we have to be more considerate on the effects it would bring. Some people use to thank offshoring industry, it’s because they do now have a job.