You have a long road to go trying to blame one certain administration for what has happened over decades. However, the common denominator is and always will be Corporations looking for all the avenues listed in the statements below.
istory of Offshoring: How It All Started
The
outsourcing and offshoring trend began in the 60s and 70s as large corporations transferred their manufacturing processes to lower-cost countries. General Electric was one of the pioneers of outsourcing at the time.
Other chief examples are US firms that moved production to factories in Mexico under the Maquiladora system. A maquiladora is a manufacturing plant or factory licensed to operate under Mexico’s Secretariat of Commerce and Industrial Development.
Maquiladoras were built in the 1960s to encourage foreign investments and ease unemployment problems in Mexico. Employment in maquiladora increased from roughly 200,000 in the 1980s to over 1 million jobs in the late 90s. Other countries soon followed and took advantage of the system. In fact, many manufacturing companies in Japan produced goods under the maquiladora system in the 1980s.
Over time,
offshore manufacturing moved to other lower-cost countries like India, China, the Philippines, and Eastern Europe. Despite the high costs of transportation, duties, docks, and brokers, most of these companies found that a 30-50% labor cost reduction is enough to compensate for these expenses.
Offshoring during the IT Revolution
In the 1990s, the world saw the boom of the Internet and telecommunications. The
IT revolution led to the rapid growth of IT-enabled offshoring services. The popularity of information technology made location less significant since data can be transmitted digitally.
The type of work exported around this time was more skilled and sophisticated than its predecessors. Global corporations like Dell and IBM began tapping skilled labor overseas to fill call center, financial, and IT jobs.
The costs of internet installations and telecommunication devices decreased over the years. With that, many businesses have warmed up even more to outsourcing some of their white-collar functions to workers abroad.
Crucial factors that drive
IT offshoring is the apparent disparity in salaries and cost of living between developed and less-developed countries. For example, the wages of Filipino
software developers are significantly less than their American counterparts because of the affordable cost of living and currency exchanges in the Philippines.
In addition, international talent may also improve innovation output within a company. For instance, that’s one reason why foreign markets that welcome global entrepreneurs and skilled workers often have denser and more successful start-up climates.
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