The driving factor behind the development of offshore outsourcing has been the need to cut costs while the enabling factor has been the global electronic internet network that allows digital data to be accessed and delivered instantly, from and to almost anywhere in the world.
The widespread use and availability of the Internet has enabled individuals and small businesses to contract freelancers from all over the world to get projects done at a lower cost due to lower wages and property prices. Crowdsourcing systems such as Mechanical Turk have added the element of scalability, allowing businesses to outsource information tasks across the Internet to thousands of workers.
This trend runs in parallel with the tendency towards outsourcing in larger corporations, and may serve to strengthen small business' capacity to compete with their larger competitors capable of setting up offshore locations, or of arriving at major contracts with offshore companies. See Freelancing on the Internet.
One issue offshoring of technical services has brought more attention to is the value of education as an alleged solution to trade-related displacements. Education may no longer be a comparative advantage of high-wage nations because the cost of education may be lower in the nations involved in the controversy.
While it is true that education is usually considered helpful to competitiveness in general, an "education arms race" with low-wage nations may not pay off.
For a new topic, outsourcing has produced a huge volume of research, not all of it worthwhile. Here is a sprinkling of some of the better stuff:
From the McKinsey Global Institute
“Offshoring: Is It a Win-Win Game?”, August 2003
“New Horizons: Multinational Company Investment in Developing Economies”, October 2003
“Can Germany Win from Offshoring?”, Diana Farrell, July 2004
“Exploding the Myths of Offshoring”, Martin Baily and Diana Farrell, July 2004
From the Boston Consulting Group
“China: The Pursuit of Competitive Advantage and Profitable Growth”, July 2003
“Capturing Global Advantage”, April 2004
Academia
“The New Wave of Outsourcing”, Ashok Deo Bardham and Cynthia Kroll, University of California at Berkeley, Fisher Centre for Real Estate and Urban Economics Research Report, Fall 2003
“Globalisation of IT Services and White Collar Jobs: The Next Wave of Productivity Growth”, Catherine Mann, Institute for International Economics, December 2003
From The Brookings Institute
“Offshoring Service Jobs: Bane or Boon - and What to Do?”, Lael Brainard and Robert Litan, April 2004
“Offshoring, Import Competition, and the Jobless Recovery”, Charles Schultze, August 2004
“The Outsourcing Bogeyman”, Daniel Drezner, Foreign Affairs, May/June 2004
“Hardheaded Optimism About Globalisation”, Amar Bhide, Columbia University, forthcoming
From the Bureau of Labour Statistics
“Occupational Employment Projections to 2012”, Daniel Hecker, Monthly Labour Review, February 2004
“The 1988-2000 Employment Projections: How Accurate Were They?”, by Andrew Alpert and Jill Auyer, Occupational Outlook Quarterly, Spring 2003
From Forrester
“3.3m US Services Jobs To Go Offshore”, John McCarthy, November 2002
“Low-Cost Global Delivery Model Showdown”, John McCarthy, August 2004
“Two Speed Europe: Why 1 Million Jobs Will Move Offshore”, Andrew Parker, August 2004
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