American jobs will be increasingly vulnerable to competition from the cheap labour pools of the developing world, but even if millions of tasks can be done by cheaper labour on the other side of the planet, businesses will not rush to move every job to wherever the cost is lowest, says the New York Times.
In a new report, researchers at the McKinsey Global Institute conclude that only a small fraction of service jobs will actually be sent away. Researchers estimate:
Researchers say many factors will keep businesses domestic. For example, many business processes are difficult to separate and many insurance companies use complex information technology systems that would be difficult to manage remotely. Furthermore, managers can be unwilling or unprepared to work oversees and sometimes the tasks that can be sent offshore are too small to make the move worthwhile.
Source: Eduardo Porter, True or False: Outsourcing Is a Crisis, New York Times, June 19, 2005; and The Emerging Global Labour Market, McKinsey Global Institute, June 2005.
For text: http://www.rit.edu/~930www/News/inthenews/2005-06/2005-06-19_NYT_outsource.pdf
For McKinsey reports: http://www.mckinsey.com/mgi/publications/emerginggloballabormarket/index.asp
For more on Trade: Globalization: http://www.ncpa.org/iss/tra/
FMF Policy Bulletin/ 5 July 2005
