Labor and Offshoring

Conceptual Overview

The trend of offshoring arises out of profound changes in the world economy. Since the late 1960s and early 1970s, the United States, for example, has engaged in de-industrialization whereby manufacturers relocated “shop floors” to regions in the domestic south and to international locations in order to profit from low-cost labor and nonunion workforces. Supported by shifting U.S. and world political and economic ideologies, multinational corporations' (MNCs) cost-cutting efforts were heralded as part of the natural evolution of market capitalism and were facilitated in conjunction with international financial institutions' (IFIs) push to liberalize (or even eliminate) trade and labor laws in developing countries of the global South. The establishment of free trade or export processing zones (EPZs) in indebted countries further institutionalized a ready pool of cheap labor for MNCs seeking to offshore business functions.

The microelectronics industry was one of the first to employ offshore labor in EPZs. As early as the 1960s, South Korean and Taiwanese workers were employed by U.S.-based firms to produce integrated circuits, while other high-tech firms, also lured by the benefits of doing business in a free trade zone, set up maquiladoras along the U.S. and Mexico border. Over the past four decades, networks of offshore production have developed across manufacturing, textile, service, and finance sectors.

The latest development in offshoring stems from what some have labeled the third industrial revolution or the Information Age. With the advent and proliferation of information and communication technologies (ICTs), the trade of services is now facilitated through wire or wireless connections across the globe. Digitized information assists, for example, Indian call center workers in Bangalore serving UK and U.S. customers seeking to make purchases from catalogues, contest parking tickets in their local communities, or manage their credit reports. Other services include data entry and other back-office business-processing tasks.

Importantly, the varied types of offshore labor—from production to services—challenge traditional analytic categories of high-skill and low-skill employment. For instance, while child care providers and [Page 764]doctors' jobs demand face-to-face interaction (often referred to as “personal services”), radiologists', accountants', and even security guards' work can be offshored, because the tasks do not demand a physical presence (a.k.a., “impersonal services”) and can be easily delivered electronically. In fact, jobs across the education, health, business, hospitality, financial, information, and utilities services have already been offshored. Some commentators argue that the practice of offshoring labor has yet to come to fruition, and many more formerly deemed personal services can and will be subject to global electronic commence and trade. Take for instance American fast-food establishments that use call center workers abroad to take drive-thru customer orders in the states; alas, face-toface contact has been deemed nonessential for the provision of burgers and fries. The challenge thus arises for researchers and practitioners trying to paint a representative picture of offshore laborers who are diverse within and across occupation, industry, and nationality as well as race, class, and gender.

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