Five ways Ethical outsourcing/Offshoring can lead to growth in developing economies. 

When companies decide to outsource or offshore it is often an economic decision. It lowers barriers to entry which means smaller businesses can be viable in a market that's hard to break into. Offshoring and outsourcing can often promote competition. It can be used to lower a company's overall costs, and it can provide a larger talent pool. Offshoring is a tool businesses primarily use to grow their companies, however, when it is done correctly it can stimulate economic growth, not only for the economies that hire offshore, but also in places that struggle with economic stability. 

Today we are going to talk about five of the big ways offshoring or outsourcing work can help achieve economic stability within developing economies.

1. Job creation 

Creating more jobs in a struggling economy is important. This is because economic growth often positively correlates with job creation. When a company offshores or outsource’s employment they boost the job creation in that area.

When an offshore employee or contractor takes a job this causes an economic ripple effect. Think of it like a long line of people trying to get up a staircase. When one person takes a step up the person behind them can step up into that vacancy, then the person after them can do the same, and so forth. Having more jobs creates competition in markets, both locally and globally, which is vital to the success of any economy. 

1. Wages 

If outsourcing and offshoring are done correctly and ethically it can lead to increased wages for workers in developing communities. This is primarily due to the fact that companies offshore are more likely to pay a higher salary or price than someone might locally. Employers or contractors are able to pay a high, competitive wage due to the price of living in developing countries. []\Meaning a company can offer high wages for a worker whose cost of living is low, while still saving money. This creates a win-win situation where companies save money, and economies are boosted through international investment and jobs. 

1. Currency Circulation

In economics, there is something called the wealth effect. The wealth effect essentially means when people feel wealthier or make more money, they are more likely to spend that money. This means people who are getting high wages will take the money they earned offshore and spend it locally, which will stimulate the economy. 

Economic growth is driven by a currency that is in circulation, that is actively being used to boost an economy. Which can lead to more local employment opportunities, more business development, and increased economic activity. 

1. Skill development 

The more and more companies outsource, or hire offshore, the more people working in developing economies will want to invest in the skills necessary to accrue that kind of work. This can lead to higher interest in skill development in areas, which in turn can lead to more education investment, both from people in the community and the government. This is important because the more an economy grows and the more successful it gets, the more investment will the economy and the education systems. This can help grow the economy, but on a macro level, it can also help better infrastructure and education. 

1. Economic diversification 

Economic diversification is a strategy used to shift an economy that is dependent on a single income source to an economy that has a variety of income sources by creating a growing range of markets and sectors. It’s an extremely important part of growing a developing economy. When outsourcing and offshoring are done correctly it can help with the diversification of an economy by bringing in more jobs. 

Conclusion

Outsourcing/offshoring is a tool that has the ability to both help or hinder economic development. However, when it is used correctly, with proper ethics in mind, it has the power to stimulate and grow economies in major ways. Job creation, high competitive wages, circulation of currency, skill development, and diversifying an economy are all vital to the success and growth of a developing economy. Offshoring and outsourcing are able to provide the stimulation needed to help developing economies continue to expand and succeed.