In a world with ever increasing population and increasing level of education expectations, every individual is looking for a higher paying job. Government is certainly aiding this move, and why not? An educated nation ensures growth and independence for individuals, so whats the trouble? The trouble being changing economic scenarios with outsourcing and geographies which are being typecasted as manufacturing hubs or technology hubs and so on, although in reality each geography is still left with a big bunch of unemployed workforce and an inevitable economic recession which follows. What can be done? - Stop outsourcing? Create policies against outsourcing, educate workforce for higher level jobs? These are the few points which we have a look at and possible scenarios to improve the condition in coming years.
To look at the root of the problem created with outsourcing, everyone points fingers at the corporate firms. A pyramid can be used to describe the way corporate structures are globally and I find its uncanny resemblance to a food pyramid. The people most essential for the organization to work seamlessly are located at the base of the pyramid, the higher the level they are important and “good to have” but in lesser numbers. So obviously the workforce which is needed in abundance is located right at base and companies located at high cost regions need to shell out more to get same results as companies at low cost regions. Anyone with a bit of common sense would say, why not shift the basic operations to lower cost region, bring in higher revenue and specially when everyone is competing now on a global arena and global players in every market. A business at the end of the day is there to make money and alongside help the geographies it is located at,in a flat world today the benefits are no longer contained within national boundaries. There are no boundaries at all.
It is too late to stop outsourcing, it is almost as difficult as turning back time, with a global market scenario made of global players. The cost of operations go high because many a times government policies are in place to ensure better working conditions for everyone, which comes at a cost. Lower cost geographies work at times at inhuman conditions with very low wage structures. Changing local policies is not in the hands of the corporate companies so they decide to move basic jobs outside of the country. What makes accepting outsourcing difficult is that the common sense of deciding to outsource was made by 1/2% of the wealth makers or the top tier of a company. The workforce didn’t have a say and they are the one who also get unemployed.Being skilled saved the 1/2% of the world’s population who also possess the worlds 38% of the wealth? Looking at the skill pyramid we can make the following observations —
1. Majority of global population belongs to Tier 1 in the skill pyramid.
2. For Tier 2’s Occupational skills make them employable and in a better state but can become challenging depending on cost of living and willingness to work for lesser pay.
3. Tier 3 individuals survive irrespective of the geographic location. But it took time and effort to get where they are today.
So the countries where the jobs are being outsourced to are the lucky ones? Not really.The countries which are getting jobs from outsourcing might be thinking of outsourcing as a boon but in reality over the period of time -
– Teir 1 will soon ask for benefits and timely salary raise. The cost disparity will reduce over time for the companies.
– Tier 1’s children would aspire to move to Tier 2 and higher in coming years- reducing the workforce population.
– Inevitable rise in costs in 10-15 years will cause investments running dry as outsourcers will be looking for more lucrative locations and will move out to newer and cheaper destinations.
Something to worry about for the outsourced destinations is not to become dependent on the foreign investment for too long. They should invest in building infrastructure and support for independent growth in the absence of foreign investment as companies come and go as per their business convenience and the growth of a nation isn’t their primary concern. Its the concern of the government, they should make policies to aid development of the country and promote education and entrepreneurship.
So at the end of the day, who do we blame and point fingers at? No one as no one person is to blame. Education alone cannot be the solution,as higher education ensures better employ-ability and comfortable wealth conditions for individuals. Although definition of higher education has been changing over the years and double degrees and masters along with doctoral are fantastic for now but how about the future? The answer might lie with uniform global policies for trade etc.
1. For example, Uniform global policies for various industrial sectors to provide uniform ground for operation – although some might say some countries would not agree to global policies, but basic set of rules like ban on child labor which country in right mind can say no to that? Better working conditions for workers? Etc.
2. More jobs for basic skilled individuals? Encourage entrepreneurship, or run government aided cottage industries, upgrade skills of the basic workforce if they get unemployed instead of providing them with monetary aid, continuous education programs for new generation to promote education for all, offer jobs at outsourcing rates locally?
3.Businesses need to make profit but they are also accountable for the chaos created by them in the market. Companies who outsource should be encouraged to contribute in local job creation by either means of skill training or perhaps encouraging entrepreneurship and aiding educational development and in proportion to the outsourcing. When a 200,000 jobs get slashed for creating new jobs in other market, a slow transition to equip skills for the to be unemployed should be done.
This is a very raw summary of the various dynamics at work around the globe today. Constant struggle of the nations at reducing poverty and facilitating growth is making the gap wider among the rich and poor further. Collaboration is even further encouraged among the companies, governments and nations to encourage a balanced approach at growth, much similar to a diet of a human being.