What Is The Effect Of Outsourcing On The Canadian Economy?

What is the effect of outsourcing on the Canadian economy?
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Outsourcing is the contracting or subcontracting of non-core elements to free up money to places where the processes are then executed more efficiently by corporations in other countries. Outsourcing is now a common business strategy, used to a large extent by companies in developed countries to increase profitability for those with links to companies in low wage countries there is establishment of business alliances between countries and this has been linked to increased growth. Nonetheless, there are still controversies on whether this approach is beneficial to Canada in the long run. There are winners and losers in outsourcing, and it is the smaller businesses that operate on low margins and low wage earners in Canada who suffer the most (Baatartogtokh, Dunbar & Van Zyl, 2018). There are mostly positive changes in the Canadian economy resulting from outsourcing is as there is greater efficiency, profitability and competitiveness among Canadian firms, but there is also job losses in low wage sectors and lack of real wage growth.
The logic of outsourcing is that companies increasingly require greater flexibility to remain competitive in the domestic and global markets. Flexibility is applicable in the service industry production methods, and getting the inputs, while human capital remains inflexible.
Even as there are automated production methods, human capital remains one of the most important aspects of growth in companies and the economy. Firms without human capital face challenges to grow, but outsourcing has grown as an area that has spurred creativity and innovation. Companies may also face more difficulties trying to reduce labor requirements without affecting productivity, yet it is more flexible to reduce expenditure on other inputs. In any case, outsourcing is linked to improved collaboration in supply chains, which improves efficiency and economic growth as there is more productivity (Bernhardt, 2016)
The jobs that are outsourced are mostly low-skill and low-wage where low cost jurisdictions have advantages because of lower cost of operations. Many of the crevice job outsourced would still be uncompetitive if still in Canada. On the other hand, there has been greater emphasis on improving research and development to improve the quality of jobs available that are high paying. In any case, when companies outsource the low paying jobs it is easier for the Canadian companies to hire more Canadian workers if they get savings from outsourcing (Baatartogtokh, Dunbar & Van Zyl, 2018). What should be prioritized is retaining the workers who lose their jobs so that they can be competitive in a more competitive digital economy.
The most profitable and efficient firms have continued to grow even after outsourcing as there is greater need to maximize efficiency. Canadian firms that have outsourced have focused on value addition and reducing costs, which makes them more competitive and efficient outsourcing then can help to promote growth and creation of local jobs, with the companies operating nationally and expanding internationally (Baatartogtokh, Dunbar & Van Zyl, 2018). Growth in the international market is lin...