Offshoring and Its Impact on the Canadian Economy

Canada lags behind in offshoring as the firms have a conservative attitude. To survive in the competitive global market, certain policies have to change as offshoring benefits not only the nation’s economy but the world economy as well. Consumers benefit as the prices reduce, reemployment takes place, wages go up, and due to competing firms invest in technology. Both the government and the private sector in Canada have to act fast so that they are not isolated from the world market and continue to have access to the global market.Corporate restructuring, downsizing, and layoffs have led to fundamental changes in the workplace on a global basis. Senior executives and corporate leaders around the world agree that offshoring is good for the world economy. These executives also realize that offshoring can deliver more than just labor cost savings (Daga Kaka, 2006). High technology companies have been contracting out many of their software development projects to overseas software companies, particularly to India. Gradually offshoring is being done in more and more sectors. It is fueled by a combination of quality services at affordable prices both by the service providers and the consumers. The developed countries could venture into offshoring as the developing countries have demonstrated the required skills and upgraded the technology in communications (Sourirajan, 2004).Offshoring emerged in the late 1980s and early 1990s initially with tasks related to customer services but now encompasses a broader range of activities including software development, and other activities requiring high skilled human capital. This issue is politically charged as the number of jobs that could be relocated is large. It is expected to have a negative impact on wages and employment. However, economists argue that it has long term benefits and would increase the standard of living in OECD countries.

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