The Reason And Economic Effect Analysis Of Service Offshoring

Service outsourcing is a new strategy of ma nagement.Owing to the much drasticcompetition in the internationa l market,more and more companies are tend to chooseservice outsourcing.At present,the global service outsourcing which brings anunprecedented opportunity to the developing countries is developing at shockingspeed and is growing offshore.Under the circumsta nces,research on the motives ofservice off shoring is a significa nt task for the developing countries to seize the newshift of industries around the wrold both on academic and on reality.On the otherhand,it is mea ningful to study on the economic effects of service off shoring to theparent countries and the host ones respectively,because there are much fierce debatesbetween the two parties.The paper firstly analyses the motives on the basic of releva nt economic theoriesincluding the Theory of Internationa l Division of Labour,Theory of ComparativeAdvantage and Transaction Cost Theory and then specia lly focuses on reducing cost,heightening the core competence,dispersing the risks,the technology reason and themotives of American companies etc.We believe that saving cost is the ma in reason,boost the core business is the important one and the basic reason is the technologyimprovement.At las t of the part,we discuss the specia l reason of America that is,inone hand,more and more fierce competition in the field of R&D,in the other hand,that is the much more attraction from the developing economies' improving social andeconomic condition.In the fourth parts, the impacts are ma inly analysed.Firstly,we borrow a modelfrom Feenstra and Hanson,ma inly analysing the effects on the employment and thewage taken by the service off shoring.At last,we come to the conclusion that the service off shoring increases the relative dema nd and income of technology labour inthe both countries.In the five part,the effects are talked about comprehensively whichare concentrated on the situation in the USA and India.In the short term,America willlose ma ny jobs.But,in the mid and long term,America will get more profit than lossfrom the ma nagement of corporations,the labour market to the whole economy in theUSA.There are both positive points and the nega tive ones to the Indian economy.Thedevelopment of service off shoring accelera tes the speed of Indian economy,moderates the pressure of employment,upgrades the structure of Indian industries andincreases the export of service industry,earning much more foreign excha ngeetc.However,India depends the parent countries so much no whether on the marketdema nd or on the technology that the country is lack of own brand and coretechniques.Besides,because of poor support of other releva nt industries,the serviceoff shoring in India is confronted with ma ny challenges.At the last of the dissertation,we suggest that China should attach greatimportance to service off shoring,draw and implement proper policies to gain moreshares in the service off shoring market.