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A drawback of outsourcing is it doesn’t always deliver quality service to consumers. For example, you may phone an outsourced call center in another country and you find it hard to understand what the person on the other end of the line is saying. I certainly have. Outsourcing may also lead to poorer quality products, as companies that do not have as much presence where their new facilities are being built may have quality control issues to solve. In terms of how much outsourcing impacts the quality of products and services (how much it impacts consumers), sometimes the differences between an outsourced product are noticeable, like when you phone a foreign call center. Most of the time, however, things are transparent. Can you tell the difference between a book that's printed in China and Canada?

This business strategy, however, is sometimes not good for laborers, although it is good for Canadian capitalists. If we simplify today's economic situation and say our country is made up of just capitalists (businessmen) and laborers, the outsourcing of the labour laborers rely on has an immediate negative impact on the laborers themselves, but not necessarily on the businessmen. Outsourcing is affecting the domestic workforce in the short-term, obviously because jobs in other countries are replacing domestic jobs since businesses are able to save (thus, make more) money by purchasing labour elsewhere. This is especially true for high-tech workers when their white-collar jobs are transfered to other countries. So generally, in the short-term, outsourcing in the economy represents a threat to labour and contributes to worker insecurity. Workers are afraid their job will be replaced by a worker from another country that will work at a fraction of what they do. And Canadian workers have the right to be concerned, especially those in the IT/Electronics sector, as many of their jobs are being replaced because of outsourcing, causing frictional unemployment. And the IT industry has taken the largest hit - the majority of outsourcing in North America is IT outsourcing, which is taking many high-paying jobs from the economy.

As an example of the effect of outsourcing, Canada has lost 216,000 manufacturing jobs between November 2002 and the end of December 2006. Outsourcing is a threat to jobs in the technology sector and causes short-term frictional unemployment. However, some outsourced labour will allow companies in Canada to make a greater profit, which in turn will allow them to pay their workers more money, so laborers will benefit from this situation. But too much outsourcing may be dangerous, particularly when much of that outsourcing is comprised of high-paying jobs, like those jobs in the IT sector. The point at which there is too much outsourcing in an industry in an economy is rather difficult to define, but we could define a rough point at which a sector of the Canadian economy has outsourced too much labour as the point at which a laborer seeking work finds it difficult to locate a job elsewhere in the economy, for example, when the worker is displaced for more than 1.5-2 months if looking hard for labor.

There is a balance between too much outsourcing, therefore too much unemployment, and just the right amount of outsourcing: enough to benefit Canadian workers as to bring them better wages and to help strengthen the economy.

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