If the multinational companies outsource many services to countries like India because of cheap manpower, what will happen to people living in the countries where the companies are located? Discuss.
When multinational companies outsource services to countries like India due to cheap manpower, people living in the home countries face significant challenges. Services that were previously provided internally or from within the country, such as legal advice, computer services, call centres, accountancy, banking services, and clinical advice, are now being handled by external sources in other countries.
This leads to reduced employment opportunities in the home countries as jobs shift to nations with cheaper costs and skilled manpower. Workers in developed countries may face job losses or need to acquire new skills to remain employable.
However, the context presents a debate — some scholars argue that globalisation is a threat as it reduces the role of government, while others see it as an opportunity that opens up markets to compete in and capture.
Explanation
This question tests students' understanding of the impact of outsourcing on developed countries. The textbook context clearly defines outsourcing as hiring services from external sources that were previously provided internally. While the text focuses on benefits to India (cheap manpower, skilled labour), students must infer the consequences for home countries — job displacement in service sectors. The 'Work These Out' section mentions the debate between viewing globalisation as a threat versus an opportunity, which adds depth to the answer.