|
Although the German IT offshoring market is
still relatively small compared to the total German employment, IT offshoring
is likely to increase in the future as particularly labor-intensive IT services
(e. g., software development services) can be produced more cheaply in
low-wage countries like India or Russia. This development was primarily enabled by reduced telecommunication
costs and technological advances (e. g., the Internet).
Currently, it is still unknown whether
German companies have any other alternative but to follow the offshore trend in
the near future (Buchta et al., 2004). Companies, which choose to forego
purchasing services in low-wage countries, may no longer be competitive in
terms of price and quality. Therefore, the inclusion of offshore services could
turn out to be an essential requirement for becoming or remaining a successful
player in a globalized market.
According to an empirical study by
Eichelmann et al. (2004), European countries generally benefit from this
growing trend towards IT offshoring, even though negative influences have to be
taken into account. In respect of their research, potential positive effects on
the German economy are: Increased competitiveness, lower prices, repatriated
earnings, increased market share of service exports, etc. These benefits have
to be confronted with potential negative effects on the domestic economy: Increased
dependency on imports, job losses, downward pressure on wage levels, etc.
In summary, Schaaf (2004) predicts positive
effects on the German economy through IT offshoring. Although offshoring will
displace some workers, who may also experience lasting economic losses, it is
not likely that offshoring will lower Germany’s
employment in the long run. In fact, IT offshoring has the potential to improve
the average standard of living by moving displaced workers into more sophisticated
jobs and by protecting existing jobs.
However, in order to benefit from IT
offshoring, decisive structural reforms have to be launched in Germany.
In this context, according to Schaaf (2004), appropriate actions by Germany’s
political leaders are necessary. Positive long term effects can be expected if
German policy makers succeed in changing the structural conditions responsible
for Germany’s inability to create new jobs. Possible measures for this include:
Reforming the educational system, improving the flexibility of the labor
market, loosening product market regulations, and re-focusing on innovation
(Buchta et al., 2004). Additionally, policy makers should ease the movement of
resources from industries which are losing to international competition towards
industries which are gaining (Garner and Schwartz, 2004).
Finally, it has to be emphasized that IT
offshoring is more than a temporary fashion, but rather a result of global
restructuring (Farrell, 2004b). Therefore, according to Boes (2004), it does
not make sense to consider offshoring apart from other current developments. In
fact, it must be seen as a part of the worldwide restructuring process which is
currently taking part. Even though, this process will create new challenges for
employers, employees, policy makers, researchers, etc. in Germany
(Boes and Schwemmle, 2004), Farrell (2004a) regards IT offshoring as an
important opportunity for the German nation, and not as an economic threat.
However, as a precondition, Germany’s
political leaders have to take corresponding actions in order to prepare Germany
for a globalized economy. Countries like the United States are already prepared, now it is Germany’s
turn to catch up.
 References
|
