Monday, June 20, 2005

FOI: Outsourcing - is it a real threat ? - McKinsey

McKinsey Global Institute, a research unit known for its views on globalization says that the threat of outsourcing white-collar jobs from the United States, is actually being exaggerated.
Around 160 million service jobs - about 10% of the total world wide employment coule be moved to remote sites because these jobs do not requre:
  • customer contact
  • local knowledge
  • complex interactions with rest of the business modules.
Yet, after a survey conducted over dozens of companies in various sectors ranging from pharmaceuticals to insureres, it concluded that only a small percentage of this were actually willing to outsource. The report estimatest that by 2008, multinational companies in the entire developed world will have located only 4.1 million service jobs in the low-wage countries, which is only 1% of the total number of service jobs in developed ountries.

Some sectors like retail and health care will outsource very less or no jobs to poor countries. Even designers of packaged software which can be easily done by manpower in other countries, will outsource only 18% of their service jobs, becuase moving tasks to faraway sites is not as simple as it sounds.

According to McKinsey's study, it is very difficult to separate business processes into discrete chunks that can be sent away. Managers can be unprepared and unwilling to be working overseas. In some cases, the job might be too trivial to be outsourced. Above all, there may not be sufficient skilled workers in the developing countries available for competent tasks in multinationals.

So, the threat of outsourcing is not really a threat for the United States white-collar jobs.



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