The Role Of Outsourcing Customer Services Commerce Essay


During the recent years the whole world has seen a significant shift in the way the whole economy works and the world has truly become a globalized place where there are no boundaries and the only aim is to make the highest profit. This sudden change in the way corporations and countries think has led the industrialized nations to think of new ways of saving costs and compete with a highly competitive world. The biggest cost that the western companies were facing was the human capital cost as these nations had laws and rights protecting the people that work for them and therefore they had to be paid really high wages. The Western countries came with a solution to this problem by outsourcing the work to other developing countries where the costs were much lower and because of the difference in the living standards. Outsourcing was not formally identified as a strategy up until 1989 although most companies outsourced some functions of the organizations. Then slowly things evolved and the businesses started to outsource some functions of the company but none which were thought of as "the core functions".

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But discussing all of this still begs the questions, What is outsourcing? Outsourcing can be defined as "the strategic use of outside resources to perform activities traditionally handled by internal staff and resources". This is a strategy where the major functions of an organization are shifted to specialized units to achieve the best quality result with the lowest cost. There may be several reasons why companies outsource their functions.

The primary reason why companies outsource is to reduce the operating costs which are quite low in comparison to the developed nations as the pays are lower.

The company might want to gain on global experience and ingenuity as the skills offered from outsourcing may not be available in the host country

The company could want to free up internal resources and divert the internal resources to more challenging and pressing matters.

In some cases the resources available internally are ineffective and inefficient and to deal with this problem the company outsources these tasks.

The reasons for outsourcing have also evolved over the years; initially it was only the financial reason that leaded to jobs and tasks being outsourced but now companies outsource due to strategic reasons as the company can internally focus on their core competencies and become a more efficient organizations as a whole.

There are many factors which influence if outsourcing would be successful or not .

The primary thing is to understand the organizations goals and objectives and to take the decision about outsourcing in terms of the overall strategy the company wants to pursue.

Selecting the right people to do the job is very important as the goal should be to achieve the same or better quality with lower costs.

A contract that is properly structured is very important as it gives everything a proper direction and everyone know where they stand.

The involvement of the senior management is very important as it gives a sense of commitment and ensures that everything goes on smoothly.

At first many companies were skeptical of this new and unknown method of production as they thought that the underdeveloped and often under literate population would not be able to deliver the quality of work that was required of them. This myth was in fact quite untrue as the people in the underdeveloped nations were able to work with exceptional skill given the correct training and the result was so economical that the companies were able to raise their profit margins considerably without losing out on competitiveness.

Undoubtedly the area in which outsourcing has boomed has been the service sector and the Information Technology (IT). These two sectors has experienced unprecedented growth over the last decade as the costs of these sectors had steadily increased over the years and therefore compelled the need to find ways to reduce costs.

The primary reason for conducting this research is find out how this changing economic trend has affected the job market for the people in developed countries specifically the United Kingdom and on the other side how has it affected the job market in the developing world and what is the impact of such a trend.

Literature Review

How outsourcing started

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During the industrial age from the 1800's to the 1900's people had not yet heard of the concept of outsourcing, all these organizations were vertically integrated so everything from start to finish was being done by the company itself. Each organization took care of their of each and every part of the production stages, from mining to manufacturing, even the stores that sold the products were owned by the companies so there was no concept of outsourcing whatsoever.

It was not until the industrial revolution that organizations first thought about the outsourcing. The areas in which most of the outsourcing took place were insurance, engineering and architecture. This type of outsourcing took place in the same country. If we look at the history of outsourcing we find that it started from the manufacturing of items and evolved into the high tech items but ultimately the chosen path of the service sector.

It was during the 1990's that the companies were searching for new ways and models to compete in the changing and evolving world economic market. This was a time when the market was saturated and the multinationals started to look for ways to reduce cost and develop new strategies until they came up with the idea of outsourcing. The idea which was initially taken with skepticism quickly took flight after many companies realized the advantages posed form such a strategy. ""&HYPERLINK ""printsec=frontcoverHYPERLINK ""&HYPERLINK ""dq=outsourcingHYPERLINK ""&HYPERLINK ""hl=enHYPERLINK ""&HYPERLINK ""ei=sw92TJKoDoqKvQPRr_XGBgHYPERLINK ""&HYPERLINK ""sa=XHYPERLINK ""&HYPERLINK ""oi=book_resultHYPERLINK ""&HYPERLINK ""ct=resultHYPERLINK ""&HYPERLINK ""resnum=3HYPERLINK ""&HYPERLINK ""ved=0CD0Q6AEwAg#v=onepageHYPERLINK ""&HYPERLINK ""qHYPERLINK ""&HYPERLINK ""f=false

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There may be several reasons as to why companies outsource. The reasons may vary according to the needs of the organizations and may include a variety of sides that influence that decision like …. Discussed in.. some of the reasons may be.

Organizationally driven reasons

To increase effectiveness by focusing on the strengths.

To adapt with the changing times and meet the demands of the constantly changing conditions.

To completely change the organiztions

To enhance the value given to the customers .

Improvement driven decisions

Improve the performance of the company.

To acquire certain skills and expertise that would otherwise be not available.

To acquire new and innovative ideas.

Enhance the image of the organization by associating with superior companies.

Financially driven reasons

To free up cash resources

Generating extra cash

Revenue driven reasons

Gain market access and expansion opportunities

To exploit the still that are already present

To expand the sales production capacity

Cash driven reasons

To turn fixed costs into variable costs

To reduce costs with the lower cost structure of the provider

Employee driven reasons

To increase the effort and commitment in noncore areas

Give employees a sense of direction

There may be three levels of outsourcing and would depend on the type and purpose of the organization. Outsourcing of individual activities means moving specific position out of the organization. This could vary from company to company and could consist of any job such as a managerial post. This type of outsourcing is generally done when the company feels that the best position cannot be filled by someone in the vicinity and that the jobs needs to be outsourced in order to find the best person for the job.

The next level of outsourcing is the functional level. Generally all organizations are structured in such a way that each function is separate from each other and inside these functions there are specialized tasks and responsibilities. When a function of an organization is not performing up to par then the organization may decide to outsource the whole function.

The last level of outsourcing is process outsourcing, in this type of outsourcing a whole process that the organization performs. This may be carried out due to several reasons. The firm may feel that a specific process carried out by the organization may be done in a more cost effective and efficient way by outsourcing the whole process. ""&HYPERLINK ""printsec=frontcoverHYPERLINK ""&HYPERLINK ""dq=outsourcingHYPERLINK ""&HYPERLINK ""hl=enHYPERLINK ""&HYPERLINK ""ei=sw92TJKoDoqKvQPRr_XGBgHYPERLINK ""&HYPERLINK ""sa=XHYPERLINK ""&HYPERLINK ""oi=book_resultHYPERLINK ""&HYPERLINK ""ct=resultHYPERLINK ""&HYPERLINK ""resnum=8HYPERLINK ""&HYPERLINK ""ved=0CFsQ6AEwBw#v=onepageHYPERLINK ""&HYPERLINK ""qHYPERLINK ""&HYPERLINK ""f=false

Organizations have always used external resources to help them out in certain business activities however in the recent times the scope of outsourcing has increased dramatically and the value associated with these activities has also increased radically. Outsourcing is a very costly process which is very difficult to take back once it has been put into place as it can be seen investigated by the Barthemely and Geyer(2000) it was found that it would take up to nine months to switch over to another service provider or to bring back the service in house.

There may be two different types of outsourcing to achieve two different types of objectives. It can either be used to maintain the strategic position of the organization or to act as a source of competitive advantage. Most of the organization outsource to reduce their costs but this serves a second purpose aswell because it helps in maintain their strategic advantage over the competitors. This majproly becoming the aim the organiztions as some studies have shown that now organizations motives have changed from cost reductions to technologic and strategic.


As the business environment started changing the businesses steadily strated becoming gloabal from local. There have been many changes in the world economy over thethe past decade which has opened the doors towards a gloabal market such as trade agreements and the the unifican of Europe with a single currency. Since the sixteenth century the world has witnesses very protected market with trade barriers and geographic barriers but with the innovation in technology and government policies we have seen the world market evolve into a truly united state without barriers. This trend in gloabaliztions has lead to a unimaginable increase in the competition which has lead to dreater economies of scale and and larger investments in research and development. This change has however presented the organizations with many challegenes as there is cut throat competition in the global market and to establise a presense in that market is a feat in itself.

In many markets the the consumers has become more aware and demanding as they hold greater knowledge of the key aspects such as price and quality. . customers are now demanding more innovative and specailzed products at lower costs because they have become expowered by the knowledge that they have gained. The loyality of the customers which so many organizations relied on is slowly decreasing as they now have a multitude of options since the advent to the internet market, they now can order anything from anywhere in thw world at the lowest cost with just a few clicks. In accordance with the loyalty the customers have also become very unpredictable as they do not only go on the traditional indicators such as pirce and quality but now expect newer thing which they associate with value such as conveincvne of purchase and after slaes services.

The changes in the business envrrionment have also lead to drastic changes in the way organiztions are run and managed. With the changining times orgazations not only have deliver the goods and servies at lower costs with fewer resoucres available they now have to produce those goods in an innovative way so as to get the best result. Innovations were done by organziations not only in making of goods but also the services they are providing as now the organiztions have to benefit the consumer more than the organization to stand a chance in market. As a result of these changes organiztions have begun to rethink their strucutes , if we look at the past most organiztions have either focused on the making the goods and services internally or outsouring their work. This strategy has however evlovled over time and the organiztions now are combining the strengths of both of these strategies and have developed a more organic structure with a flatter hieracry.

Outsourcing has now allowed organzitons to specialize and gve their business that competitive advantage that would dirve them forward. This specailiztions has also seen to have a positive impact on the workforce as it can have a positive impact on the carrer of an employee.

The risks of outsourcing .

There is some evidence which suggests that when companies outsource the effect on their average cost is totally opposite and it increases rather than what is traditionally thought of a decreasing trend. When orgazinations outsource and their main aim is cost reduction they primarily think of cost short term cash benfits and long term savings, they however fail to account for future costs that are associated with the management and running of the outsourcing process. For example some organiztions outsource because a particular divison is giving them a problem and they assume that if the division is outsourced the problem will be solved automatically as this might be a management problem and still exists even though so much time and effort was spent on outsouring the divison.

Another risk that the organzitons might incur is the over dependace on outside suppliers. This is become a big problem as the activity they were performing earlier might be outsourced and have several risks assocsitaed with it like the qulaoty, timing and the complete failure of the supplier. It is therefore sometimes advisiable that the company keep the activity in house to ensure the reliability it requires. Many organziations outsure because they feel that the outside supplier have large competiion and therefore would be able to provide the service more effiecently and effectively but they sometimes do not realize the going changes in the market which might change from a large nimber of supplier to a few consildated ones.

Outsourcing can also lead to a loss of important skills and the firms ability to explot the situation to their liking and strengths. If for example an organiztions has outsourced many of it vital activities it may be very difficult for them to innovate. The risk of this kind of thing increases when there are conflicts amongst the suppliers ideas and the organiztions ideas. This could lead to a deadlock which would be very unporducive fot the organziztion and would do them more harm than good. ""&HYPERLINK ""printsec=frontcoverHYPERLINK ""&HYPERLINK ""dq=outsourcingHYPERLINK ""&HYPERLINK ""hl=enHYPERLINK ""&HYPERLINK ""ei=sw92TJKoDoqKvQPRr_XGBgHYPERLINK ""&HYPERLINK ""sa=XHYPERLINK ""&HYPERLINK ""oi=book_resultHYPERLINK ""&HYPERLINK ""ct=resultHYPERLINK ""&HYPERLINK ""resnum=9HYPERLINK ""&HYPERLINK ""ved=0CGEQ6AEwCA#v=onepageHYPERLINK ""&HYPERLINK ""qHYPERLINK ""&HYPERLINK ""f=false

the conceot of IT outsourcing contrary to what many people think is now a new one. It was first developed in the 1960's when many of the organzitions that required compter work to be done could not afford the expensive machines to do it and therefore many computer beraures were established which sold time on their mainframes to orgainztions that needed to work on them. This trend howver changes in the 1980's and 1970's with the advent of the mini and mircocomputers which were much lower in costs and their costs were justified because of theamount of taks they perfomed. Form that time IT became a major source of competive advantage and they carried out a lot of non core activities. However during this time all this was done in hous ebeacuse it was thought that running operations in house was more beneficial because there was not a lot of competition in the service market and the organzioatns policies were such that they pursued vertical integration as the orgainztion wanted maximum control.

As the It industry involved so did its uses and it became to be seen a a nessesity rather than something that would privde a source of competive adavatage. The management began to see what impact in terms of effectiveness and effeicency IT could have on the work environment and this was the time when organiztions first began to see the idea of putpsurcing IT activities.

The first major source of outsourcing actuvuty that was given public attention was carried out in 1989 by Eastman Kodak when he hired services from outside to buy, operate and maintain it IT systems and the worth of the outsourcing contract was what got the attention as it was estimated to be around $800million. This new approach lead to the squakisng of old ideas as it was once thought that large organiztions were able to efficient prodice goods and services and allow for innovation as they invested in research and development. This idea however was no longer thohg to be as true as many of these large orgazntuons were now thought to be creatively ineffective and allow for breakthough ideas. Soon as the world economies globalized comapies beagn to realize that they would have to change their structure from inflexible organzitons to lean and flezuble one's what would give room for innoviation . this is where outsourcing came in as the companies thought they could now focus on their core abilities and improving their relationships with the consumers.

Intialyy when the comapies started outsourcing IT they outsourced the entire IT departments to a third party. The idea of outsourcing of services was given a major boost in the 1990's when the public sectors of the developed countires began functioning as private enterpirses in therm of effieceny. A major boost in the UK was when the government strated a progammed called "Market Testing" in which in house services were testing against outsourcing in terms of efficiency and costs. This resulted in the outsourcing of a major portion of the government IT services and the governemtn also set a time table for the local authorites to lay suit and put out their IT services to external contractors. Apart from the reason mentioned above the UK government outsourced because of a number of reasons namely

The government was facing difficulty in recruiting and training staff

There was pressure on them to acheve greater value for money

The govt was seen as ineffeicnt and they wanted to change their image by adopting a more flexible approach

The outsourcing of IT services has seen phenominal growth in the UK in the past decade and a half. It is worth nothing that the UK outsourcing market grew from 3.5 billion in 1997 to 7.0 biilion in 2001. This is an adstunding increase in just a period of four years.

As the years have gone by the expericnce in outsourcing has also increased with it and now a variety of sourcing models have evolved.

Facilities management

This is type of IT outsourcing where the organization owns the computer assets but hires a external company to run these computers at the orgazntions place or a place of their own. This includes alloperational and system tasks but this does not include the development of applications. This type of outsourcing is cometimes not thought of as true outosuring because the assets are owned by the organzition and there is liitle room left for the supplier to bring about innovatrion or change.

Selective outsourcing

This type of service outsouring is the most common but has grabbed less attention . several reaserches have indicated that this type of outosuring is likely to be more successfuk that total outsouring. The main advantage of this type of outosuring is that it is flexible and leaves enough room for innovation and changes in technonly. This type of selclective outosuring also reduces the risks often associated with total oursouring but the main drawback of this is that it can prove to be more expensive than total outsouring.

Tactical outsouring

This type of outsouring is adopted to solve short term problems and in accordance to a particular need. This type of outsouring is applied to specific problems that are not being resolved in house or they are taking a lot of time.

Strategic outosuring

This model of outsourcing into what needs to be outsourced in a wider context and the aim of this is to improve overall business performance rather than just cost savings. In this tyoe of outsouring callibrationg between the company and the suppliers is very important as both have to work together for the achievement of the same objective. The supplier have to realize for this type of outsouring to become successful that they have to work in ccording with the nneds of their customers and the benefit of the organziotion will result in their benfit. This encourages the supplier to be innovative rather than just do the job abd will have to realize the importance of keeping and maintiang good realtionships.

Transformational outosuring

This model encumoensates the outsouring of the the IT department with the reorganization of the whole firm. The companies that are involved in thos type of outosuring hope to transform the whole structure so that it becomes more effective and cost effeicent.

Transtionsal outsouring

Companies employ this type of outsourcing to introduce the major changes in the organiztions such as changing the whole platform of operations. This require many different process such as installing the new system, trainng the workforce or operation the new system of which any one all of them could be outsourced.

Business process outsourcing

As the trend towards outsouring increases many orgazntions are looking fow ways in which changes can be brought about to manage entire business processes. This type of outsourcing deals woth the putspuring of services such aas the whole of the IT department as well as services such as call centres.

Joint ventures

Sometimes the organzitons feels that istead of just transferring their whole departments and jobs outside they need to set up a joint venture with an external service provider that provides them woth new technical skills without loosing out on the control. In joint ventures both the suppier and the firm are responsible to meet the objectives set for the joint venture. ""&HYPERLINK ""printsec=frontcoverHYPERLINK ""&HYPERLINK ""dq=outsourcingHYPERLINK ""&HYPERLINK ""hl=enHYPERLINK ""&HYPERLINK ""ei=KWF4TOKTJdyPcOmuiZEGHYPERLINK ""&HYPERLINK ""sa=XHYPERLINK ""&HYPERLINK ""oi=book_resultHYPERLINK ""&HYPERLINK ""ct=resultHYPERLINK ""&HYPERLINK ""resnum=4HYPERLINK ""&HYPERLINK ""ved=0CEIQ6AEwAzge#v=onepageHYPERLINK ""&HYPERLINK ""qHYPERLINK ""&HYPERLINK ""f=false

Outsourcing of services

The outousrincg of services has received an extraordinary amount of attention from the media and the politicans in the recent years. There have been talks of countless jobs from the service sector from the UK moving towards less developed nations especially India and Pakistan. Icfact the fear has grown so much over the years that in 2004 alone there 380 reports about job outsourcing in UK newspapers. There are two varying review about this phenomena as some people argue that it just a normal part of the globalized economy and the evlovluton of the indeustires whereas other see it as something completely different and negative.

As discussed by Brouwer et al. (2004), reloacation process can be analysed in terms of neoclassical, behavioural and instituational theories. The neoclassical theory takes the assumption that the choice of the location tries to maximize the profits of the organization. If we see from this prospective then we can see that if the frim wants to outsource it sees the charterizistics of the host country in comparison to the home country where it is originally based. These charaterisitcs can vary and can be any or all from market size, wae levels and worker education levels.

The behavioural location theory explores the internal factors that play a role in the of a firms relocation. The factors that can influence this decision are many but the one's discussed by this literature are firm age and size.

The last thing discussed is the institutional theory and it states that the firms location is an outcome of a frim investment strategy and therefore is clearly influenced by external factors such as the growth of the economic activity.

in the recent years the bog concern in the UK has been the amount of jobs lost from outsouring IT and services to developing nations such as India and Pakistan. Now we need to see previous trends in order to establish

according to this articke a research conducted by a private consulting frim higered by the IT assosisation of America said that although outousricng of IT jobs resukted in short term U.S unemployment . the long term benefits outweigh the costs.

"The cost savings and use of offshore resources lower inflation, increase productivity and lower interest rates," Global Insight said in a statement. "This boosts business and consumer spending and increases economic activity."

Now according to this study the jobs create a ripple effect due to the reasons stated before and due to this many more jobs are created than were ever lost. " impact on india&f=false"&HYPERLINK " impact on india&f=false"pg=PA18HYPERLINK " impact on india&f=false"&HYPERLINK " impact on india&f=false"dq=outsourcing+impact+on+indiaHYPERLINK " impact on india&f=false"&HYPERLINK " impact on india&f=false"hl=enHYPERLINK " impact on india&f=false"&HYPERLINK " impact on india&f=false"ei=ZeJ4TLzaLs6JcIjI6JQGHYPERLINK " impact on india&f=false"&HYPERLINK " impact on india&f=false"sa=XHYPERLINK " impact on india&f=false"&HYPERLINK " impact on india&f=false"oi=book_resultHYPERLINK " impact on india&f=false"&HYPERLINK " impact on india&f=false"ct=resultHYPERLINK " impact on india&f=false"&HYPERLINK " impact on india&f=false"resnum=2HYPERLINK " impact on india&f=false"&HYPERLINK " impact on india&f=false"ved=0CDMQ6AEwAQ#v=onepageHYPERLINK " impact on india&f=false"&HYPERLINK " impact on india&f=false"q=outsourcing%20impact%20on%20indiaHYPERLINK " impact on india&f=false"&HYPERLINK " impact on india&f=false"f=false

according to the book … in the start of this millenuium was that the mass media pounced on the off shoring of several IT and call center jobs from the UK and the US to India. Now why this was a news item that required so much attention was simple, the roles of the east and west were thought to be reversed for the first time and the westerners felt anxious due to this new phenomon. Though the system of outsourcing works on the basis of inequality the salaries and jobs offered by these compaies to residents of undernations is quite high in comparison to their existing economic circumstances.

Research methodology

In this chapter we will undertake the task of understanding the strategy of using methododly and how the study of the all the relvenat data was conducted . now in this paper the methods that were used to collect data were both primary and secondary. The reasons for collecting and the way that the data has been collected will be further discussed in this chapter.

The term research has been defined by several experts and the deifcnitons are listed below

Clifford Woody says that research comprises of defining and rededining problems, formulating hypothesis or suggested solutions, collecting, organizing and evaluating data , making deductions and research conclusions and lastly listing of those conclusions in accordance to the hypothesis.

According to Redman and Mary research is systemizied effort to gain new knowledge.

Advance learner's dictionary lays down research as " a carefull investigation or inquiry specially thoruoghout search for new facts in aby branch of knowledge.

Research is therefore anything that contributes to the advancement in knowledge along with the existing stock of knowledge.

In the research that I have conducted about outousring and it effects on the job market in developing world the primary concern was collection of relevant data. Now in oder to conduct this research both primary and secondary was required.

Now the purpose of this research was to establish the link between outsourcing of jobs to other countires and its implication on the host as well as the other countries. For the purpose of the research I had to come up with specific questions that needed to be answered which according to me were of relevance to the topic. The purpose for choosing this question was the chaging economic times that we have witnessed since the collapse of the world economy in 2008 and its implications on the developed nations. We have seen from the 1990's that there has been a trend towards outsourcing of jobs to other countries. This trend has slowly increased over the years and suddenly boomed when it came to the service sector. The companies present in the UK and US pounced on the ideoa of strategic imporvment and cost saving relating to service sector specially the IT and call center service.

Now many people were skeptical of the impact it would have on the job market in these developing nations and how will it affect the job market of the developing nations such as India and Pakistan. As all the focus of the world is on the job looses that have resulted from the financial crisis and how they would affect the economy and the people I thought this was a very relevant research topic in the midst of the financial crisis.

The question that I had in my mind when I strated my research paper was to guage the impact of this strategic policy that so many companies had employed and its implications. The first question that I wanted to find an answer to was the impact of outsouring on the job market of both developed and developing nations. The question itself covered such a vast array of statisitcs and research that the task of finding an answer to this was a feat in its own. The shear amount of work that needed to be done in order to find the answer was so overwhelming that I began to question the appropratieness of this question in the research . nonethe less I knew that in order to conduct a solid research I needed to do extenxive research for this question.

Now after answering this question what I needed to do was to focus my research on the service sector specifically the IT and customer service sector. The reason as to why I opted for these sectors is the shear number of jobs that have been outsourced to these two sectors alone and these are the kind of jobs that are usually assiscted with developed antions rather than developing ones. This question was very important in my research as it was the question that really judged the impact of outsourcing in the global economy in terms of jobs. This question too posed a lot of difficulty in answering as

Data collection and analysis

According to Forrester research note (2004) it is predited that by 2015 3.3 million US service jobs would have been lost to offshore outsourcing. This information is unlike most others is backed by strong empirical evidence which is suggestive of its impartialty and trustworthiness.

The US berua of Labor statistics (BLS) collects data about the unemployment by sector and reason since 2004. The program uses data that has been extensily collected from the unpmloyment recorsds and interviews.


In the earlier years offshoring were only being conducted in the manufacturing sector. This was ot a problem in the begengins as the manufacturing jobs were thought to be menial and most of the people unemoplted from there traded up to jobs in the service sector. However this all changed when the jobs in the service sector became more tradable and thus the need was arised to investigate the matter further.

Now service sector as a whole encopmastes a huge number of occuptions and the need to weed out the ones that made the most impact was vital if the research had to gain some credibility. This however was to pose a big problem as all the data that had been collected before was on the basis of sectors and not specific jobs as this is a new and often un researched area.

The authors Bardhan and Kroll (2003) estimated that 11 percent of US employment had been affected by offshoring in 2001 and Farrell and Rosenfeld (2005) made an estimate that 11 percent of US service ssector employment has been affected by outsourcing.

Levy and Murnane (2004) do not put a specific number on the service sector jobs that will be affected by offshoring but say that a majority of the jobs relocated in the future will belong to the service sector.

As we can notice by the trend nost of the authors indicate that the number of jobs lost to the service sector will be signifactly higher than the number of jobs lost ot offshoriong of the manufacturing sector.

Now as it has been noted by numerous authors that the vast increase in the tradability of the IT jobs has been primnaryl due to the advances made by technonoly in the recent past however there are several studies which indicate that this techinolgical change may lead to imopact and changes in the labor market.

Several authors such as Falk and Koebel (2004)has indicated form their studies of data from the US that the increase in computers in the non manufacturing industry has been explicitly linked to declines in the demand for low skilled worker with mundane work.

Now ifwe look at the table abpve we can see some compelling evidence of the above stated argument. The table shows the net employment in low and high end US it related jobs from 1999 to 2005. The forst thing that we notice os the drmartic difference in these trends. Now we can see from the data that IT related jobs lost a lot of employment in the areas that were thought to be at lower end like call centers, data entry and trying. The jobs losses over this six year period are very high, about 750,000 jobs were lost during this time. On the other hand if we take a look at the employment for the highy skilled IT professionals during this time, such as software enginerring we can see that the amount of jobs increased by an adsotouding 19 percent.

Now from the trend we can judge two things about the employment and the imoact of outsouring. The assumption can be made that the number of jobs being lost to realtievely lower skilled IT workers is far more than the same loss in jobs in the manufacturing sector and on the other hand the jobs that were created for the highly skilled labor force showed and amazing increase. It is however worth noting here that all the jobs lost in the low skiiled areas were not due to offshoring but some of it was caused by innovations In techonoly which made the jobs obsolete. while this may be true we can safely assume that jobs were also being lost to offshoring in the highly skilled IT sector but may not be evident here because of the positive trend that US had witnessed over these years. The job increases could have been much higher than the figures showed the figures of high end job outsourcing.

Now that the figures have been seen there needs to be an investigation on how much of these jobs were truly lost to the offshoring due to increase in tradibilty during this time and how much was lost because the IT "bubble" has burst in early 2000 and there was just no more room for underqulaitfied people who had entered the IT industry in the boom stage.

If the data is internpreted more accuratelya trend can be seen, this trend mimics the often cyclical trend of the labor market with its ups and downs due to supply and demand. Granted that a huge number of people had lost their jobs in the service secotr industry but these number can be interpreted as just short term market fluctaions rather than complete disappearance of jobs In the IT sector.

With the advent of outsourcing and offshoring we can see a definite trend towards the deplection of low skilled jobs the US, however the jobs lost to offshoring