Final answer:
Outsourcing is hiring an external company to perform tasks that could be done internally, often to reduce costs. Offshoring is moving company operations overseas to benefit from lower labor costs. Both practices impact job markets by shifting jobs and contributing to structural unemployment.
Step-by-step explanation:
Outsourcing is the practice of contracting jobs to an outside source, which can sometimes be in another country. It is a strategy companies use to reduce costs by transferring portions of work to outside suppliers rather than completing it internally. Outsourcing has contributed to a polarization of the job market, where the differences between high- and low-end jobs increase and middle-level job opportunities decrease. This leads to structural unemployment where there is a disconnect between job seekers and the jobs available.
Furthermore, offshoring is the relocation of a company's operations to a foreign country to capitalize on cheaper labor costs. Countries like India and the Philippines have become major destinations for Business Process Outsourcing (BPO). While outsourcing allows companies to remain competitive by cutting operations costs, it also shifts jobs from one country to another, affecting job availability in the originating country.