How Outsourcing Can Drive Economic Growth in Developing Countries

Published by Brandon Reviere on

In today’s global economy, outsourcing is one of the main drivers for economic growth in developing countries and can help businesses increase productivity and transform processes. When thinking of outsourcing, the first thing that often comes to mind is cost savings and enhanced business efficiency. However, outsourcing has the potential to drive significant economic growth in developing countries by creating jobs, increasing wages, and fostering new industries.

It’s no secret that outsourcing plays a crucial role in reducing poverty and promoting sustainable development. When a business decides to outsource services to a developing country, it means you are investing in the local economy by creating jobs and increasing demand for services. In turn, this can improve the standard of living for people in these countries as more money is circulating in the economy.

 Here are four ways outsourcing can drive economic growth in developing countries:


Job Opportunities

One of the biggest ways outsourcing services can drive economic growth in developing countries is through the creation of new jobs. Many businesses in developed countries such as the U.S. and Canada, outsource their customer service operations to countries like the Philippines and Ghana.

It’s found that roughly 300,000 U.S. jobs are outsourced each year. This is particularly important in regions where unemployment rates are high, and job opportunities are scarce. By creating new job opportunities, it not only advances the livelihoods of individuals and supports their families, but it stimulates economic activity and growth.


Increased Wages

 It’s not just the number of jobs created that is significant – outsourcing can also lead to higher wages and better-quality working conditions for employees. As many companies compete for talented employees in these regions, salaries and benefits increase, providing a much-needed boost for workers and their families as well as the economy.

Well-known and ethical outsourcing companies such as Fair Trade Outsourcing pay employees above the standard wage and offer an array of benefits like healthcare and financial support. This helps to progress the standard of living for employees, their families and the local community.


Improved Working Conditions

As outsourcing is becoming a standard practice, companies are complying with international labor standards and regulations, which means workers have access to safer and healthier working conditions than ever before.

Outsourcing companies in developing countries providing workers with access to training and development opportunities. Ethical outsourcing companies like Fair Trade Outsourcing, invest in employee training and development programs to improve their worker’s skills and qualifications. This helps to create greater business capabilities and opportunities, which in turn leads to higher wages and a more supported economy.


Reduced Poverty & Inequality

 It’s not rocket science that with more jobs and businesses comes more money and reduced poverty rates. As U.S. companies look at outsourcing services, particularly back-office and customer engagement services, developing countries are overcoming the poverty line and shifting people to middle-class wage earners. 

The International Labor Organization (ILO) reports that outsourcing helps to reduce poverty by creating jobs and increasing wages, which leads to better living standards for people in these regions.

As workers in developing countries take on tasks and responsibilities for multinational companies, they attain new skills and techniques to apply to their own business and industry. Therefore, this helps to drive productivity and competitiveness of local economies and minimize inequality.

Outsourcing has the potential to create high economic growth in developing countries by creating jobs, increasing wages, and improving working conditions. It’s clear that outsourcing offers more than tangible business benefits as it has an incredible impact on the economy of developing countries such as the Philippines and Ghana, and can lift millions of people out of poverty.