While there are controversies related to the impact of global companies on the developing countries used in outsourcing processes, there are benefits stemming from this relationship. Many European and American firms have opened facilities in Asian and African regions to keep their production and service costs lower due to weak local economies. Outsourcing practices of Western companies have a positive impact on such countries as India and China, in which salaries for workers whose skills are required by such firms have been growing by 10-20% annually (Minute MBA by OnlineMBA.com, 2013, 0:53). The cost of labor in such places is cheaper, although companies may expect difficulties with direct control over the actions of offshore facilities.
The transfer of wealth is more apparent among higher hierarchical positions, whose close connection to the company makes their expertise as valuable as any other firm’s leader. For example, senior Chinese managers now have salaries similar to American employees in similar positions (Minute MBA by OnlineMBA.com, 2013, 0:59). In the globalization era, international organizations provide a unique opportunity for people across the world to achieve significant financial gains even in places where the economy remains stagnant.
In conclusion, workers from developing countries who are employed by offshore divisions can greatly benefit from this process, as their expertise becomes valued higher than what could have been offered by local firms. These countries themselves experience a significant boost to their economies due to the influx of investments as long as the costs of running offshore facilities in such locations ensure a competitive advantage for Western firms. This transfer of wealth lifts poorer nations to a standard of living that would have been impossible in the same time frame.
Reference
Minute MBA by OnlineMBA.com. (2013). Why outsourcing is bad for business [Video]. YouTube.