What Outsourcing Actually Means For Local Jobs

Clare Anderson
26th March 2021

Proponents of outsourcing will know that it connects smart people in developing countries (giving them meaningful work) with businesses solving global problems. That it also changes lives for the better, gives access to a bigger and more diverse talent pool and provides a competitive edge to business. All this in addition to the significant cost-savings it brings to the bottom line. However, very few will not have heard one of the most strident objections to outsourcing - the perception that it takes local jobs overseas. Let’s take a closer look at this common misperception.

Whilst it is true that global and remote talent might be considered for some local jobs, bear in mind that many high level, tech skills, in particular, are in high demand and short supply globally. Often the locals just aren’t there for jobs that are outsourced in the first place - and when they are, they’re expensive. Read our blog on Why Specialist Tech Talent Outsourcing Is The Key To Your Digital Transformation or our blog on Three Reasons You Need To Go Global For Tech Talent or our blog on How Are You Addressing Australia’s IT Skills Gap for further evidence of this.

Also bear in mind that most of the world’s largest economies are dynamic and have been through job losses before. They demonstrate remarkable resilience and are fully capable of generating new jobs in new areas. Arguably, economies like the United States are able to create jobs faster than offshore outsourcing eliminates them. Not only this but outsourcing creates wealth for developed country companies and consumers - which is why companies choose to outsource in the first place. It is an innovation that keeps developed economies at the leading edge of competitiveness. The more companies innovate, the more competitive they become and the more benefits are passed on to consumers. Remember that failure to reduce costs, increase efficiencies and ultimately become more competitive ultimately leads to a business becoming unprofitable and ceasing trading. The impact of this scenario on the local economy is far more detrimental than a few jobs being lost to outsourcing. In fact, an exponentially greater amount of jobs will be lost if the company folds.

Furthermore, a more competitive local business will be more appealing to potential investors - and investment ultimately drives greater growth in the local economy as the business expands. These investors may even be foreign, so outsourcing benefits will have come full circle and further boosted the local economy. Local businesses that don’t improve efficiency through outsourcing or cease trading as they are no longer competitive may be forced into considering operating overseas. Driving local businesses to foreign countries will damage the local economy as jobs are lost, skills will eventually fade and local government is unable to recuperate anything through taxation.

Of course, there will always be examples of where outsourcing has not worked well - this is true of any business practice. There is bad accounting or inefficient HR or unskilled team leadership, but these project failures are not an indication that accounting or HR or team leadership themselves are to blame. Rather, it’s the people that misapplied them. There are many examples of successful, collaborative, win-win outsourcing partnerships which significantly positively impact a company’s bottom line, power the local economy and enrich the lives of many - worth bearing in mind the next time someone shouts loudly ‘OUTSOURCING TAKES AWAY LOCAL JOBS!’

If you’re looking at outsourcing not only as a way to benefit your bottom line but your local economy too, download our eBook '30 Essential Questions to Ask a Provider Before You Outsource’. It will ensure you're informed and have the right questions to ask when considering the next step.

 

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