Ever since offshoring has been clearly visible on the map, it has become a solution to businesses. It made them experience favorable government policies and cost savings. However, along with the benefits are disadvantages. And one of the most argued about disadvantage is the increase in unemployment in the local economy. Since offshoring is when the office and work are done overseas, then the qualified candidates in the local area of the country get lesser chances of getting jobs.
However, a study titled “Does offshore outsourcing impact home employment? Evidence from service multinationals”, it has looked at the impact of offshoring from 1997 to 2016. The study involved 5,746 European multi-nationals, while the companies involved ranged from retailers and hoteliers to financial services and telecommunications.
The companies were able to offshore 9,416 subsidiaries in 87 countries around the world, having Germany, Spain, France and Sweden as hosts of 66 per cent of parent firms and followed by Belgium, Denmark, Finland and the UK.
The study revealed that 7,635 of subsidiaries were found in high0income countries, such as Western Europe, North America or Japan and Australia. According to Professor Nigel Driffield, of Warwick Business School, one of the people that conducted the study, said the companies that went to another country to offshore saw growth in employment in their home country. Other researchers are Vijay Pereira, of the University of Wollongong and Yama Temourib, of Aston University.
“Since the financial crisis these ‘information intensive’ companies have engaged in labor hoarding to avoid the impact of skill shortages,” said Professor Driffield. “The study also shows that is worthwhile policymakers encouraging ‘location intensive’ service firms to invest abroad, particularly in high income countries as that will generate more employment back home.
“It is possible that the effects of offshoring on jobs are being felt on the companies’ supply chain and this needs investigating. But our results suggest something of a breakdown of the traditional models of ‘job exporting’. In the short term, this is perhaps driven in the West by skill shortages, and the reluctance of firms to shed scarce labour. In the longer term, however, we may see a return to the pre-crisis norm, especially if higher levels of protectionism force firms to move nearer to their customers.”
With all the benefits offshoring has to offer, it has become a promising solution to businesses who want to save money and use it to make the company grow. It has also generated positive reviews from the ones who experienced it. There are countries considered the hub of offshoring and one of them is the Philippines, which has EZY Outsourcing Hub, a outsourcing company that offers offshoring solutions that will surely reduce cost, provide a reliable pool talent and easy access. For interested businesses, call 02-6571872 or email contact@ezyoutsourcinghub.com.
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