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

Serghei Margulescu, Elena Margulescu

163

LESIJ NO. XIX, VOL. 1/2012

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BUSINESS OFFSHORING IMPLICATIONS

ON THE LABOUR MARKET

Serghei MRGULESCU*

Elena MRGULESCU**

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.