Labor advisors have found that companies can relocate certain jobs overseas as a response to labor shortages and rising wages. Recently, many employers have realized that office jobs can be done from home. As a result, many companies are outsourcing jobs overseas due to the labor shortage.
A Result of the Pandemic
Millions of Americans worked from home during the pandemic. Many of them relocated to places like Austin, Phoenix, and Boise. Companies discovered that workers might be effective while working remotely thanks to tools like Zoom and Dropbox.
Therefore, those relocations were frequently requested by employees looking for a change of scenery, additional living space, or a cheaper location. Companies entered into these agreements primarily to keep workers in a tight labor market.
According to labor specialists, firms are already outsourcing jobs in response to ongoing labor shortages and remote work. According to a Federal Reserve Bank of Atlanta poll conducted in August, 7.3% of American senior managers claimed remote work was causing them to relocate more positions abroad. The demand for remote jobs overseas has skyrocketed since 2019 and will only continue to grow.
Overseas office job migration is still a slow process. However, it is quickening, and some economists believe it to be the start of a new age. An economist at Stanford University says between 10% and 20% of American service support positions could be exported within the next ten years. These include software engineers, human resource managers, and payroll administrators, which could be exported within the next ten years.
Effects of Offshoring
Compared to other countries, the United States has had similar trends to employers in France since January 2019 when looking at the number of remote jobs posted on Indeed. There is a surplus of jobs posted on Indeed in Germany and the UK, but the United States may join them shortly.
Offshoring is not entirely new. Call centers have long been prevalent in cities like Bengaluru, India. What has changed is that more businesses are sending their high-skilled job positions overseas. Many businesses find it difficult to hire in the United States. This is because of the labor shortage. It is also more difficult to hire employees coming from other countries due to immigration-bureaucracy backlogs and a scarcity of visas. An answer is to hire employees working overseas.
There are a variety of issues that may come with hiring international employees as well. Language barriers remain one of the difficulties of moving jobs abroad. It may be more difficult for dispersed teams to onboard new employees. However, by bringing in skilled people from abroad and reducing their pay costs, businesses can address the labor shortages in the United States while also adding to their workforce and reducing inflationary pressure.
Benefits for International Employees
As outsourcing spreads beyond traditional locations like India, places called “Zoomtowns” are emerging abroad. Cities like Tbilisi, Georgia, and Yerevan, Armenia, which have a large pool of qualified laborers, including many recent Russian refugees, are seeing an increase in recruiting from European companies. The benefits extend to Latin America, which shares time zones with the United States.
About 90 positions in engineering, product design, project management, and other sectors were recently outsourced to Mexico by Q2, a financial company with offices in Austin, Texas. According to Kim Rutledge, executive vice president of people at Q2, executives first brought up the notion in August 2020. Austin’s IT labor market was highly competitive, and Q2 had trouble filling open positions. The pandemic persuaded the company’s executives that certain jobs might be performed online. Currently, 20% of the company’s employees work largely in India and Mexico abroad.
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The Wall Street Journal. (2023, April 12). Next wave of remote work is about outsourcing jobs overseas. Retrieved from: https://www.wsj.com/articles/next-wave-of-remote-work-is-about-outsourcing-jobs-overseas-54af39ba.