The Economic, Ethical and Cultural Effects of International Outsourcing

Abstract

This study focuses on the economic, ethical and cultural effects of international outsourcing, particularly in India. Outsourcing has been castigated in the press for being a domestic job killer in the US. But such a conclusion is one-sided because it only looks at the job-loss side of the coin. Outsourcing also creates jobs by increasing economic efficiency. Another economic effect of outsourcing is to put downward pressure on prices, which benefits consumers. Part one of this paper uses economic analysis and ethical theory to examine various aspects of outsourcing. Part two examines cultural aspects. Traditionally, economic activity in India has been influenced by its caste system, which strictly limits the progression of a person from one caste to another. However, as wealth has improved the economic wellbeing of many families, parents have been able to educate their children, breaking this social barrier. This phenomenon creates a problem, as uneducated parents of educated children often see their children move from the countryside into the cities where jobs and opportunities are more available. This exposes the children to more Westernized lifestyles, creating a new rift among the families.