The Employment Effect Of International Service Outsourcing On Undertaking Countries

Since the1990s, with the deepening of the globalization and the rapiddevelopment of information technology, service outsourcing has become a main forceto promote the new round of industrial transfer. Service outsourcing is characterizedwith high information technology and added value, less environmental pollution andstrong absorptive capacity of employment. It has provided a new opportunity fordeveloping countries to participate in the international division of labor and promotethe development of its economy. Therefore, an increasing number of developingcountries have acceded to international competition of undertaking servicesoutsourcing in the past. As the world’s most populous country, actively undertakinginternational service outsourcing to play its economic effects, particularly theemployment effects, is of great practical significance to China.Using the combination method of theoretical analysis and empirical analysis, thispaper analyses the impact of services outsourcing on employment from theperspective of undertaking countries. First, this paper studies the three aspects ofemployment effect of undertaking international service outsourcing using relatedtheories: the employment expansion effect, productivity enhancing effect and wagegrowth effect. Then, this paper gives a descriptive analysis of China’s currentsituation of undertaking international service and employment. In the following part,an employment effect model is established. By using the time series data from year1998-2012and econometric methods such as Co-integration Analysis and GrangerCausality Test, this paper makes an empirical analysis to test the employment effectof undertaking international service to China. The results show that: the employmentexpansion effect, productivity enhancing effect and wage growth effect do exist inChina’ service industry.