Does globalization create a ‘level playing field’ through outsourcing and brain drain in the global economy?

Rapid globalization driven by the development needs of transition economies, economic reform in developing countries, and unprecedented productivity growth owing to lower unit labor cost, Information and Communication Technology (ICT) revolution, and international movement of labor has posed a challenge for maintaining a sustainable economic growth worldwide. Using qualitative analysis based on data from various secondary sources, we note that both outsourcing and brain drain have intensified over the years as more and more countries are now embracing globalization as a strategy for higher economic growth and development. While the benefits of globalization can differ across countries, it seems that outsourcing and brain drain can bring into play some offsetting forces that are likely to bridge the gap between advanced and developing countries by creating a ‘level playing field’ in the global economy. While the developing and emerging economies are losing skilled labor through ‘brain drain’ to the advanced nations, they are gaining remittance earnings from those nations. At the same time, outsourcing from the advanced countries has created new employment and other opportunities in developing and emerging markets. Although the final impact of outsourcing is debatable, it is very likely that companies will intensify such activities in future due to strong evidences in support of significant cost savings. The outflow of skilled manpower, popularly called brain drain, from developing countries is also likely to increase due to growing demand for ‘replacement migration’ from advanced countries. Increasing job gains from outsourcing and the associated benefits on the economies of developing countries are likely to cancel out the perceived negative impact of brain drain, argued in this paper. The implication is that developed countries should ideally target the relatively poorer countries in their plan for outsourcing, because they are still deprived of the benefits of job creation, though these countries are losing their high-skilled manpower through brain drain.