Read the passage and answer the questions:
Outsourcing
Outsourcing has resulted in the opening up of a large number of call centres in India, China, Eastern Europe, Israel, Philippines and Costa Rica. It has created new jobs in these destination countries. Outsourcing is coming to those countries where cheap and skilled workers are available. These are also out-migrating countries. With the work available through outsourcing, the migration in these countries may come down. Outsourcing countries are facing resistance from job-seeking youths in their respective/home countries. The comparative advantage is the main reason for continuing outsourcing. New trends in quinary services include knowledge processing outsourcing (KPO) and ‘home shoring’, the latter as an alternative to outsourcing. The KPO industry is distinct from Business Process Outsourcing (BPO) as it involves highly skilled workers. It is information driven knowledge outsourcing. KPO enables companies to create additional business opportunities. Examples of KPOs include research and development (R and D) activities, e-learning, business research, intellectual property (IP) research, legal profession and the banking sector.
Which of the following is the main reason for development of outsourcing in developing countries?
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → Availability of skilled workers at lower wages
Option (1) International pressure — Incorrect. Outsourcing is a business choice to cut costs, not forced by other nations.
Option (2) Availability of skilled workers at lower wages — Correct. Outsourcing is coming to those countries where cheap and skilled workers are available, such as India, China and the Philippines. A company that gets the same work done by skilled workers at lower wages cuts its costs, so more and more of its work moves to these countries.
Option (3) Advancement in transport sector — Incorrect. Outsourced work travels over communication networks, not by transport.
Option (4) Decline in population growth rates — Incorrect. A fall in population growth would shrink the supply of workers, not draw work in.
NCERT (2025-26): “QUINARY ACTIVITIES … Outsourcing has resulted in the opening up of a large number of call centres in India, China, Eastern Europe, Israel, Philippines and Costa Rica. It has created new jobs in these countries. Outsourcing is coming to those countries where cheap and skilled workers are available. These are also out-migrating countries. With the work available though outsourcing, the migration in these countries may come down. Outsourcing countries are facing resistance from job-seeking youths in their respective countries. The comparative advantage is the main reason for continuing outsourcing. New trends in quinary services include knowledge processing outsourcing (KPO) and ‘home shoring’, the latter as an alternative to outsourcing. The KPO industry is distinct from Business Process Outsourcing (BPO) as it involves highly skilled workers. It is information driven knowledge outsourcing. KPO enables companies to create additional business opportunities. Examples of KPOs include research and development (R and D) activities, e-learning, business research, intellectual property (IP) research, legal profession and the banking sector.” |