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Consequences of outsourcing the workforce to low-cost countries

Due to massive improvements in telecommunications, transport and the growth of capitalist economies in recent years outsourcing has become an issue related to the use of low paid workers in poor and developing countries. Whereas in previous centuries low cost labor was imported through slavery and then immigrant or migrant labor, nowadays the whole operation or parts of the operation can be moved to another country and the rules and regulations safeguarding workers' minimum rights can be bypassed. Exploiting low paid labor is nothing new, but we are starting to pay attention to the issue because rights, which we have fought hard for, and jobs, which we have striven to make more secure, are all simply blown away when companies outsource in poor developing areas where workers are paid a subsistence wage and rights and standards barely exist.

Economists would argue that outsourcing can raise the standards of living in developing countries whilst providing those of us in richer countries with affordable products and services, thus benefiting both parties and ensuring greater profits for companies. This may be true but there is another side to the coin. By using poorly paid workers large companies often invest less in developing technologies to improve productivity. They may use larger numbers of poorly paid laborers than machinery because the labor costs are so low as to make this the most cost effective method. This can lead to stagnation in development, the methods of production going backward rather than forward.

From the point of view of the workers any benefits from outsourcing are not secure, in poor countries outsourcing may provide jobs in the short term but there are no guarantees that this employment will continue especially as no investment is being made by the parent companies in development. If cheaper labor presents itself elsewhere the company will simply move its production there. Furthermore the outsourced labor can replace indigenous products and services leading to a lack of growth in a poor country's own developing production. In this way local and traditional ways of life are destroyed as new industries such as call centers grow, but the economies thus created can collapse as easily and quickly as they have been built up.

Outsourcing also affects the economies of the developed countries from which it emanates. As jobs are lost, demand for the products and services falls and companies are forced to lower prices even further. Where


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