Outsourcing - Employment and Wages

Abstract

The fact that the global market of outsourcing has been steadily expanding for the last few years indicates that outsourcing is an effective tool to increase the efficiency of enterprises. Among the effects of outsourcing of functions and processes, or their parts, are changes in the organizational structure and associated with them: reduction of employment and shifts in the division of work in the original location of the company. This kind of activity affects the internal job market through remuneration levels, as well as the external market as a result of restricted employment and dismissing staff. As research shows, there is no evidence of strong negative influence of outsourcing on wages or on unemployment rates. There is, however, a link between the quality of human resources, their remuneration and subcontracting of work to outside providers. The aim of this article is to address the question: What new phenomena have emerged in the labour market (with particular attention to the Central and Eastern European markets) as a result of the use of outsourcing in business?