Economics of Outsourcing


Background of Outsourcing

While outsourcing has recently become a favorite topic of economic pundits and talkingheads, it is hardly a new concept in the global economy. For as long as there has been trade between comparitvely advantaged partners, there has been outsourcing. Some research indicates that outsourcing began raising the ire of European guild workers  as far back as the 13th century.

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Outsourcing in the United States

Indian CallcenterNevermind that outsourcing has been going on within the United States for centuries, it wasn't until the last five years that outsourcing became everyone's favorite dirty word. The busting of the dotcom bubble lead many technology driven companies to search for less expensive labor outside of the United States. The high profile tech boom combined with a high unemployment rate, drove outsourcing to the top of every political agenda.
    As countries continue to drop trade barriers the concept of outsourcing will continue to grow. The ability of a company to seek out lower cost labor in comparitively advantaged countries will increase with the ever decreasing costs transportation and communication. This surely signals that the debate over outsourcing is nowhere near it's end.

For more on the Theory of Outsourcing click here or follow the "Theory" link to the side.

Quick Links

Wall Street Journal: Understanding Outsourcing - History of Outsourcing

Oil & Gas Journal: Origins of Outsourcing

Outsourcing Factoids

Europe is the beneficiary of nearly 25% of outsourcing money.

In a Zogby Poll, nearly 71% of Americans believe that outsourcing hurts the U.S. economy.