Business offshoring implications on the labour market

Author:Serghei Margulescu - Elena Margulescu
Position:Professor, Ph.D., Faculty of Economic Sciences, 'Nicolae Titulescu' University, Bucharest, Romania - Senior Lecturer, Ph.D., Faculty of Economic Sciences 'Nicolae Titulescu' University, Bucharest, Romania
Pages:163-169
SUMMARY

In terms of economic policy, three new aspects are important in the current context of globalization which brings forward new strategies regarding the outsourcing and offshoring of activities and functions of the value chain. These aspects refer to the instant appearance of an offshore transferable function , to the unpredictability of winning and losing functions and to the lowering of... (see full summary)

 
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Serghei Margulescu, Elena Margulescu
163
LESIJ NO. XIX, VOL. 1/2012
BUSINESS OFFSHORING IMPLICATIONS
ON THE LABOUR MARKET
Serghei MRGULESCU*
Elena MRGULESCU**
Abstract
In terms of economic policy, three new aspects are important in the current context of
globalization which brings forward new strategies regarding the outsourcing and offshoring of
activities and functions of the value chain. These aspects refer to the instant appearance of an
offshore transferable function , to the unpredictability of winning and losing functions and to the
lowering of competition from the levels of sector, company or professional qualification category to
an individual level.. Of the three features, the most problematic for policy makers is the
unpredictability of the impact of globalization. For example, in Europe we can not reasonably
believe that workers in the most competitive sectors will be in a position of winners, nor that these
winners will be the most prepared or trained in analytical functions. Many European workers
currently work at prices fixed by the local market and not covered by productivity. But when the
competition on functions will expand through globalization outside the country or area, their choices
will be either a job loss or a reduction in salary. The question that will be raised ever insistently will
be the following: what jobs are more exposed to this new competition? On the one hand, offshoring
is on balance positive for Western economies, because it makes domestic companies more
competitive. At the same time the material outsourcing is, for most developed economies, much more
important than the outsourcing of services and the implications for labor market must be objectively
differentiated in the two sectors. On the other hand, if we take into account the amplification of the
effects that offshoring already has on the structure and distribution of labor, the socio-economic
European policy of labor orientation to the coordinates of a "knowledge based" economy and to the
jobs of the "information society" could be wrong.
Keywords: outsourcing, offshoring, labor market, competition, education
Introduction
In recent years, a host of famous economists in the study of international economics and
social issues, argued, in one way or another, the idea that globalization has entered a new phase. As
Professor Gene Grossman from the Princeton University said, this phase is so different from previous
ones, that its understanding claims even a new paradigm.
In an article published in 2006, Professor Richard Baldwin from the Institute of International
Studies in Geneva1 is trying to clarify the paradigms of the old and the new globalization, analyzing
the phenomenon as a long process, characterized by two major " unbundlings ".
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*Professor, Ph.D., Faculty of Economic Sciences, “Nicolae Titulescu” Universi ty, Bucharest, Romania, (e-
mail: margulescu@univnt.ro).
**Senior Lecturer, Ph.D., Faculty of Economic Sciences “Nicolae Titulescu” University, Bucharest, Romania,
(e-mail: elena.margulescu@univnt.ro)
1 “Globalisation:The Great Unbundling(s)” – article published in the report “Globalisation Challenges for
Europe” of the Secretariat of the Economic Council of the Government of Finland, march 2006.

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