Jobs Overseas and the Effect It Has Essay

Excerpt from Essay :

Jobs Overseas and the Effect it has on Employees in the Financial Industry: A Correlational Study

After globalization

Global changes in the banking and financial sectors have cause flow of not only work but finance to countries that were unreachable like China and Indian have opened markets globally owing to the international and U.S. pressure after globalization. The need to invest in these countries stem from the fact that Indian market is very lucrative especially with the Forex and commodities. These changes have resulted in the introduction of information technology, networking, the way work is done, and qualifications has caused the outsourcing of jobs to foreign countries and thus has become the biggest economic issues of recent years. Thousands of American jobs are lost each year resulting in a fall of pay for workers around the world thus: "We need taxation on companies that export jobs and incentives for those that keep them here." (Marschall; Clawson, 2006)

Things that were inconceivable like mobile phones, and internet and the resultant social media all have made the whole globe a village and today a company's reputation depends on the social media which can be the best source of feedback to the company. The use of blogs and the dissemination of the information through blogs and other media can bring in the actual perceptions of the user more clearly. (Cox, 1991) Secondly there has to be trained personnel, hardware and system configuration to meet the modern needs. This is paramount because responses from the system have to be instantaneous. All these have added more jobs, more opportunities and it is true for the domestic business as well as for the multinationals.

Current Trends in Offshoring:

It encompasses both the manufacturing workers, and white-collar jobs with relatively high wages. The financial industry is very volatile and the financial market is always at risk and this could bring about a drastic failure if there was no risk management procedures and methods of counter-responses and the third is the fact that the risks are multiple in various segments and the major risk is the lack of risk awareness among the employees. This is serious and has to be corrected. To manage that the organization must create a risk profile with the risk drivers and the role of the employees and have the policy of goading managers to break through inertia and take action across organizational boundaries. The major risk being the innovation and the investment, and the problems created leads to drop in revenues and rising costs. The risk control method chosen by the company and the declared policy of strategic risk management objectives and its actual risk actually influence its stakeholders, and these risks have to be minimized for the stakeholder. (Culp, 2001)

Some elements of the industry ought to be considered to see what could go wrong. It has to be noted that there are dangers in this type of investment and this can be noted in the financial crisis of 2007 -- 2008 that nearly wiped out the hedge fund sector. (Lo, 2010) Some research studies indicate that the impact of the increase in the mobility of U.S. investment capital on labor market outcomes in the U.S. And abroad. Instead of focusing on relative wages of skilled and unskilled workers, we examine three other labour market outcomes: Total labor compensation, wages and employment. It shows that globalization is eroding the bargaining power of labor relative to capital, leading to downward pressure on wages, employment and labor's share in national income. (Harrison; McMillan, 2004)

Edge for the outsourced country:

Some features peculiar to countries that were colonies now come as an advantage. Thus English fluency rates currently give some countries an edge in the offshoring market, the mix of factors that attract investment and offshoring into a country is complex -- a reality reflected in the reverse offshoring and multishoring trends. (Schramm, 2004) All companies that have implemented the IT solutions have had to contend with the cost issues and performance issues. The need to catch up with the changing technology and the issues of introducing computing to the hitherto manual sections are also problems that have been dogging all industries. Some solutions that provide relief to one set of situations themselves create other problems that have to be solved. The second fact is that the creation of a system undergoes many stages, with the definition of the business strategy, and the mission and needs of the organization, which is then analyzed as to its functioning model which can be called the environment of business and the way the work is to be accomplished and the transactions involved. (Lagana, (2004) The real problem is the change in the way work is handled.

Work place changes:

Globalization has brought with it a lot of diversity. It is observed that there is diversity in terms of gender, race, ethnicity, and nationality. Diversity causes potential benefits and aids in the decision making, "but there are lots of issues in training and communication on account of cultural differences within the workforce usually increase costs in higher turnover, interpersonal conflict, and communication breakdowns." (Acton, 2011) Changes have occurred both in technology and international trade. The competition is also growing with alternates being sought by firms. Learning at the speed of change therefore is imperative and learning modules become redundant fast. Thus employers seek learning-oriented employees who are aware of the innovation and change. Because the modern era has ushered in the learning economy, competencies can be developed only by innovative learning strategies and trying to solve problems as experience. (Archibugi; Lundvall, 2001)

Therefore learning and a willingness to go the extra mile is very necessary. However one of the causes of outsourcing was the fact that at home no one was willing to go the extra mile. Financial services businesses driven by operational slack and cost consciousness is now outsourcing and off shoring are effective tools to move towards these goals, and achieving cost reductions. Today outsourcing is an opportunity for financial services firms "refocus on their core competences in order to add more value, while getting best-of-breed services for daily operations from a professional specialist." (Corvo, 2012)

In the case of offshore development, the role of the developer here could be fixed price contracts, or time and material type contracts. The fixed price contract fixes a price on the proposed software and the work is completed as per a single norm. This is not applicable in this case because of the requirement of frequent changes. The time and material type comes closer to this type of contract where services of the developer in terms of time and cost are valued. Thus this could be the ideal type of contract. (Hirschheim; Heinzl; Dibbern, 2009)

The economy has suffered due to outsourcing

While concerns about job relocations were fueled by the slow job growth during the recovery, the belief that U.S. workers are losing jobs to foreign competition has a much longer history: Indeed, the current concerns echo those voiced in many earlier periods about the impact of international trade on domestic workers. Because e consider both the U.S. jobs embodied in the goods and services imported to the United States and the U.S. jobs embodied in the production of the country's exports, our estimate of jobs lost to trade is more balanced and complete than the estimates presented in earlier studies. The 'Business Employment Dynamics' data issued by the Bureau of Labor Statistics do show that the rate of job destruction shot up briefly during the recession, from 7.5% in the second quarter of 2000 to 8.3% in the third quarter of 2001. (Harrison; McMillan, 2004) Still there is no evidence that offshoring has produced rampant job destruction or that industries heavily exposed to trade have, as a group, lost a disproportionate number of jobs. (Groshen; Hobijn; McConnell, 2005)

Thus the current situation has improved. There is an argument that outsourcing would be good for these industries in the long run. (Hargreaves, 2012) "The Obama administration has slammed Romney for outsourcing American jobs while he headed Bain Capital, and Republicans have fired back, accusing President Obama's stimulus program of outsourcing energy jobs. But economists say criticizing the practice is absurd, because outsourcing ultimately does more good than harm." (Hargreaves, 2012)

It is argued that it results in cheaper prices for consumer goods without adjusting for inflation. Financial sectors are likely to suffer as a whole unlike the IT sector because of the current move to curb it and cut costs. Thus individuals will find their credit rating cut and borrowing that money could get more costly and "Sequestration is going to cut $375 million from FEMA's disaster relief budget. Even non-carnivores are facing bad news: After a $206 million cut to its budget, the FDA will have to cut back on most of its food inspection programs. Many public services may be cut back or closed." (Watson, 2013)

Outsourcing has become by itself a very lucrative industry…

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