In a recent paper “Does offshoring reduce industry employment?” it was found that offshoring has no effect or a slight positive effect on local employment.
It may be surprising for some, but cost cutting is often not the main driver for offshoring. Almost two-thirds of recent survey respondents said their primary objective was to expand their overall team. Reports have shown that nearly 80% of businesses using offshore resources had retained or increased their local staff (with the average increase in their domestic workforce of more than 200%).
Offshore outsourcing is fueling business growth for SMEs and leading them to invest more in their onshore and offshore staff. Leading companies are focusing less on the cost savings alone from offshoring and focusing more on the total service improvements possible by growing an offshore staff. These service improvements allow them to increase sales, grow as a company and also increase their domestic workforce.
By using affordable staff offshore companies are able to reinvest the savings to grow other divisions of their business. Actually the large productivity gains and increased sales as a result of offshoring are creating new local jobs which are completely offsetting the jobs lost from the original offshoring.
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