Final answer:
Outsourcing is when a company hires an outside firm to perform tasks previously done internally, sometimes in another country. It, along with offshoring, has been a cost-saving strategy influenced by globalization and has led to shifts in the job market, including job polarization.
Step-by-step explanation:
Outsourcing is when a company hires an outside firm to help accomplish a task. This process can occur not only within the same country but also internationally, which is often driven by the search for cost savings and efficiency. While outsourcing involves contracting out tasks to external organizations, offshoring is the relocation of a business process or operation from one country to another, frequently to capitalize on lower labor costs. Both practices have significantly impacted job markets globally, contributing to a phenomenon known as job polarization, where the divide between high-end and low-end jobs widens, and middle-level jobs become less common.
For example, in the United States, the shift from manufacturing to service industries has been accompanied by the loss of manufacturing jobs, partly due to the globalization-related practices of outsourcing and offshoring. Both have been utilized since before the 1990s, but with advancements in globalization and trade agreements like NAFTA, these strategies have become more prevalent.