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The Political Economy of Global Outsourcing


  • Sharma, Chanchal Kumar


What is outsourcing and why India is being considered as BPO destination of the world? Why jobs are coming to India and why there is a downturn in the US economy and loss of jobs in that country. Even though these are two different things that happened simultaneously, they sadly managed to be mixed up. Academicians are groping to understand the phenomenon and are still in the process of disentangling themselves from the wave of confusion that exists. Politicization of the issue has made the concept of outsourcing a highly debatable, perplexing and controversial. The debate has conceptual, moral, economic, political and policy dimensions. The debate centers on the theoretical issue of globalization verses protectionism. In addition, it has a moral and human dimension that compels one to ponder over the hopeless uncertainty and misery that has dawned upon of those displaced due to outsourcing in the developed countries. Apart from these, there are certain practical policy issues that have become part of the debate such as theft of crucial information by the offshore workers, threat to the safety of Intellectual Property and the concern over the quality of services being delivered by the BPO companies in India and other developing countries. Finally the political dimension of this contentious issue that has forced the federal government of USA to make a law against outsourcing of the government contracts cannot be ignored. A fall out of Globalization, outsourcing is being discussed around the world from a renewed perspective, sometimes with delight and at other times with fury, depending upon which side of outsourcing the person is supporting. Taking exception from the subjective and partial treatment as the supporters and opponents of the phenomenon around the globe are offering, like six blind men trying to expound the outlines of an elephant the paper deals with the theme in its totality, while avoiding the prejudiced approach of a religious enthusiast. To the supporters the problem of job loss is not very serious thus they oppose protectionist attitude of the U.S government. But the fact is that the problem of job loss is quite critical yet pursuing protectionism as stipulated by the opponents is not a solution. Supporters have relied upon the traditional ‘job replacement argument’ to dissipate the fears regarding job loss. But it has been argued that the problem of job loss is serious and no replacements are going to take place in near future to substitute the quantum of jobs being lost. Thus unemployment, intended or unintended, will be the consequence. But protectionism, far from solving the problem, will create the new ones. Paper suggests certain alternatives on the basis of the model of job-protection exemplified by the British government.

Suggested Citation

  • Sharma, Chanchal Kumar, 2004. "The Political Economy of Global Outsourcing," MPRA Paper 542, University Library of Munich, Germany, revised Jan 2005.
  • Handle: RePEc:pra:mprapa:542

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    References listed on IDEAS

    1. Bardhan, Ashok Deo & Kroll, Cynthia, 2003. "The New Wave of Outsourcing," Fisher Center for Real Estate & Urban Economics, Research Reports qt02f8z392, Fisher Center for Real Estate & Urban Economics, UC Berkeley.
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    More about this item


    Outsoursing; Bpo; USA; India; Political Economy;

    JEL classification:

    • Y8 - Miscellaneous Categories - - Related Disciplines
    • G0 - Financial Economics - - General
    • Z0 - Other Special Topics - - General

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