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The Effects of Outsourcing and Migrant Workers on the World Economy

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  • 0:04 Outsourcing and…
  • 0:34 Outsourcing
  • 2:29 Migrant Workers
  • 4:44 Lesson Summary
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Lesson Transcript
Instructor: Christopher Sailus

Chris has an M.A. in history and taught university and high school history.

In this lesson, we discover two labor trends of the 21st century: outsourcing and migrant labor. Both of these trends help keep producers' costs down, but their effects will likely be debated throughout the 21st century.

Outsourcing and Migrant Workers

Do you have a job? Chances are, you can reasonably rest assured that the same job will be there tomorrow for you and likely in the same place. Every so often though, companies move, whether it's for legal, market, or tax reasons. Sometimes they move across town, but other times they move to an entirely different country! One reason why countries might go this second route is outsourcing. In this lesson, we'll explore 21st century business and employment issues, like outsourcing and migrant workers.

Outsourcing

Of course, moving the entire company is just one form of outsourcing. Any business operation that moves the operations of one part of or the entire company from one location to another or contracts an entirely different business to provide the service altogether is considered outsourcing. As such, outsourcing can take many forms.

For example, the moving of an automotive manufacturing plant from one country to another is considered outsourcing. Even though the auto company's headquarters and assembly plants likely remain in the home country, the manufacturing process is outsourced. This is generally done to save money; companies will happily move manufacturing productions from one country with high labor costs to one with low labor costs, as long as the cost of shipping back to the first country is not prohibitively high.

Alternatively, and more commonly, companies will outsource by signing a contract with a completely different company. Rather than spend the money on materials, labor, and the space it takes to create a certain product or provide their company with a certain service, companies will 'contract' out smaller companies specifically designed to provide that service. The idea is that a company specifically designed to provide, for example, car computers, can more quickly, cheaply, and efficiently create car computers than the automotive company who has to build the entire car.

Outsourcing has become more and more prevalent throughout the business community in the 21st century. This is particularly true in the wake of the 2008 financial collapse, when a global economic recession caused many companies to find ways to cut costs wherever they could find them. The ethics of outsourcing still draw considerable criticism from certain commentators, particularly those in western countries with higher minimum wages and better labor laws. Typically, outsourcing is seen as a way for companies to cut costs by moving operations to countries with less labor protections and lower wages while still peddling their products and services in these larger consumer markets.

Migrant Workers

While outsourcing tends to be a business practice in offices and manufacturing, another 21st century labor trend that has gained considerable attention is the plight of migrant workers. Migrant workers are usually low-skilled workers or laborers who travel from region to region or country to country in order to find work. Although people have always moved to wherever they can find work and undocumented migrant workers have been part of the agricultural industry for decades in many countries, it has only recently become a high-profile issue. Additionally, the advent of the globalized world has made migratory work for those even outside normal migrant worker-based industries more possible than ever.

Whether it's undocumented Central and South Americans working in the vineyards and fruit fields of California or migratory workers from the Balkans working construction and low-wage jobs in the rest of Europe, migrant workers exist in various forms in almost every part of the world today.

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