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Offshoring: The Next Industrial Revolution? Essay

1200 words - 5 pages

International Human Resource Management and Organizational Behavior I
29th of March 2012

The next industrial Revolution?

Summary The article consists of the idea that the third industrial revolutions is coming within the next couple of decades. Economists believe that this in merely an international business as usual, and that it will improve each nation comparative advantages. This revolution will not include shifts from the agriculture to the manufacturing, nor the manufacturing to the service sector, but will consist of offshoring of service jobs from the richer countries to the poorer ones, since the labor is cheaper there. The article takes Blinders thesis, and ...view middle of the document...

He states that this will take place within the next two decades and defines the service jobs where there is no direct contact between the service provider and the customer as the jobs that are under the risk of being offshored. Blinder looked a lot to India as the main country, since the wages there are lower than in the US market, and there is growing number of English speaking graduates there. Blinder wants that the US to change the educational and labor policies now, so after two decades the children now / graduates then, would have jobs that exists after 10 – 20 years. That requires training more workers for personal services and fewer for many impersonal services and manufacturing. His thesis has been a much-debated

one among people. The economist Jagdish Bhagwati for instance says that offshoring will make higher living standards for Americans and for instance Indians. He states that the offshoring is just one more dimension of an open trading system, and the contributors observe that America will adapt to the changes when they will come as they have done with the two other industrial revolutions. So many jobs will not be offshored they say, and also some other nations will offshore people to America. (Foreign Affairs, 2009)

Critical reflection of the core thesis - Chinas recent economic progress The core thesis from Mr. Blinder might be right in some ways, but his plans are vastly exaggerated. He overstates the number of jobs that are likely to be offshored, so he overestimates the number of jobs that are tradable. He also overestimates the share of those jobs likely to be offshored, and he skips the increase that comes instead in the service sector jobs from expanded exports. (ITIF, 2006) Let’s look at some facts and try to adapt the idea that USA service jobs will be offshored to China, while looking at their recent economic progress. Firstly if the service sector jobs would be offshored there, there will have to be some requirements that China has to fulfill. They will have to have excellent English speaking skills, they will have to have lower salary than in the USA so it will pay off, there has to be a demand for impersonal service jobs at China, and since China is largely a manufacturing country that might be an obstacle to overcome. According to China’s twelfth five-year plan to reorient growth and implement short and longterm efforts toward balance and sustainability they have implemented that they will raise wages there in the coming years, which will not good for the offshoring from the USA. (Brookings, 2011). Also regarding the English skills, according to EF...

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