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Macroeconomics Case Study

Case Title:

American BPO backlash: The Highs and Lows

Publication Year : 2004

Authors: T Phani Madhav

Industry: IT and ITES


Case Code: MEBE0032

Teaching Note: Available

Structured Assignment: Available

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Abstract: America has increased outsourcing exponentially over the last six months. The corporate top brass and experts however, have staunchlydefended their decision to outsource, stating that the job shifting to developing nations with well-qualified human resources is necessary for the American companies to retain their competitiveness. While the pain is real for the people who have been rendered jobless, some politicians have chosen the issue to playon theminds of the populace, accusing outsourcing as a potential source for recession and jobless growth.

Pedagogical Objectives:

  • To understand the relationship between comparative advantage and outsourcing
  • To analyse the advantages and disadvantages of outsourcing in the context ofUS
  • To debate whether outsourcing is the real cause of unemployment in US and whether adopting a protectionist approach will be beneficial for the economy or not.

Keywords : Outsourcing; Business process outsourcing (BPO); American backlash; Free trade; Unemployment; Job churning; Protectionism

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