Offshoring and Jobs: Zyme, Dyson, and Some General Lessons

In this chapter, we discuss two examples of companies who practice off-shoring, shifting activities into so-called developing (or low-wage) countries. This is widely criticized for allegedly being done for reasons of cost reduction alone, and off-shoring companies are frequently accused of destroying jobs at home. However, the examples in this chapter demonstrate that proactive strategic off-shoring is not simply done for reasons of cost and can create both value and jobs at home. The lesson for companies is not to use outsourcing in a purely defensive manner, focusing on cost-cutting for existing activities. That is a losing proposition in the long run. Outsourcing can be used proactively to widen the range of things that a company can do, and increase competitiveness. At the end of this chapter, we provide evidence that off-shoring can indeed lead to job creation (although to be sure, some low-skilled jobs will inevitably be lost to Eastern Europe and the Far East). First we review the examples of Zyme and Dyson, in the USA and the UK, before returning to the central themes of the off-shoring debate and the perceived contradiction between company competitiveness and job creation in the surrounding economy.