Outsourcing and The New Labor Precariousness in Latin America

Outsourcing and the New Labor Precariousness in Latin America
Author(s): Dídimo Castillo Fernández and Adrián Sotelo Valencia

Source: Latin American Perspectives, Vol. 40, No. 5, NEW STRUCTURES FOR CAPITAL AND
FORMS OF RESISTANCE (September 2013), pp. 14-26
Published by: Sage Publications, Inc.
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Outsourcing and the New Labor
Precariousness in Latin America
by
Didimo Castillo Fernandez and Adrian Sotelo Valencia
The subcontracting and derealization of productive activities that characterize the

global capitalist economy are an attempt to reduce costs and exempt corporations from
their responsibilities to labor by delegating production to other companies, regions, and
countries and even to the workers themselves. Latin America is a prime destination for
this corporate outsourcing. Outsourcing has increased deregulation and labor flexibility
and introduced a model of high labor turnover and transience that creates fragmentation
and precarious employment in the working class.
La subcontratacion y la deslocalizacion de actividades productivas que caracterizan a

la economta capitalista mundial son un intento de reducir costos y eximir a las empresas
de sus responsabilidades, delegando los procesos de produccion a otras empresas, regiones
y paises, e incluso los mismos trabajadores. Latinoamerica es un destino principal para la
externalizacidn de las empresas. La externalizacion ha aumentado la desregulacion y la
flexibilizacion laboral e introdujo un modelo de rotacion de mano de obra y la transitorie
dad que crea la creciente fragmentacion y el empleo precario entre la clase obrera.
Keywords: Outsourcing, Precarious employment, Globalization, Subcontracting,

Overexploitation
In recent years, Latin America has become a prime destination for the off
shoring of foreign corporations' production and service sectors. Offshoring is
a form of outsourcing that involves transferring certain phases of production
to other countries, and today it is one of the strongest influences on the world
market. In an era characterized by increased trade and mobility of people,
objects, and information technologies, the service and manufacturing indus
tries have undergone drastic changes. Many nonessential or low-skilled pro
duction and service operations have been relocated outside of their countries
of origin while management functions remain behind.
Consistent with the strategies adopted by the capitalist classes to reduce
production costs and increase profits, outsourcing has increased in recent
decades in the United States and globally. It began in the United States during
the 1970s and increased notably during the next two decades with the rise of
neoliberalism. Neoliberal policies were actively promoted by the Reagan
Dfdimo Castillo Fernandez is a professor and researcher in the Department of Political and Social
Sciences at the Universidad Autonoma del Estado de Mexico. He is the editor of Estados Unidos:
La crisis sistemica y las nuevas condiciones de legitimation (2010). Adrian Sotelo Valencia is a profes
sor and researcher at the Centro de Estudios Latinoamericanos of the Department of Political and
Social Sciences of the Universidad Nacional Autonoma de Mexico. He is the author of Crisis
capitalista y desmedida del valor: Un enfoque desde los Grundrisse (2010).
LATIN AMERICAN PERSPECTIVES, Issue 192, Vol. 40 No. 5, September 2013 14-26
DOI: 10.1177/0094582X13492124
© 2013 Latin American Perspectives
14
Castillo Fernandez and Sotelo Valencia / OUTSOURCING AND LABOR PRECARIOUSNESS 15
administration and the conservative government of Margaret Thatcher in the

UK. The structural crisis of the capitalist system in the mid-1970s and the sub
sequent restructuring led companies to outsource some of their management
and production tasks to areas and countries with lower labor costs and stan
dards, particularly countries with dependent economies.
Generally, North American governments have discouraged outsourcing
within their own territories in favor of foreign countries. This has created a new
reconfiguration of outsourcing that transcends national boundaries. Latin
America has become a prime destination for this type of activity. Offshoring
has led to increased deregulation and labor flexibility and introduced a model
of high turnover and transience that creates fragmentation and precarious
employment in the working class.
THE HOW AND WHY OF OUTSOURCING

AND OFFSHORE INDUSTRY
In the strictest sense, outsourcing is not new; it has existed, albeit in

forms, since the beginning of capitalism. Originally it took the form of
tracting or piecework, but it has expanded and become more complex in
years. The best-known model is the one in which a company delegat
production, financial, business, or service tasks to another compan
though usually smaller, has the technical ability to perform them. The
directly contracts for the services of the second, specialized b
Alternatively, companies may use an employment agency to hire te
workers to perform specific tasks.1 Whatever form it takes, outsourcin
roots in subcontracting or piecework labor. According to Marx (1988), a
in these circumstances continues to be a laborer even when engaging
productive practices. Workers earn a wage and are not the owners
product. Part-time workers hired for specific production, trade, or
activities maintain their status as pieceworkers.
Outsourcing is not the only form of delocalized production. Globa
has converted the world economy, previously made up of national ec
into a highly integrated "global factory" supported by the facilities off
technological development and information and knowledge cont
maquila industry is another form of decentralization of production that
comparative advantages, following the same logic of capital relocatio
the core countries to the periphery in pursuit of expanded product
markets, and abundant and skilled but low-waged labor. Both are par
global restructuring of production promoted by international market co
tion and business demands for higher rates of profit. While the m
mainly restricted to manufacturing and trade and involves the reloc
installation of whole companies or parts of them in the periphery, outs
may involve "offshoring in a vacuum" with little or no foreign dire
ment, as increasingly happens in services, which are limited to the recr
of labor through specialized subcontractors.
The Harris Interactive survey (HRM Guide, 2010) and Capgemini, a
provider of outsourcing consulting and technology services, interviewed
16 LATIN AMERICAN PERSPECTIVES
than 300 high-ranking corporate executives and found that the th

attractive destinations for offshore activities were India (60 percent), C
percent), and Latin America (25 percent). Much of Latin America is
ized by weak and flexible labor laws. The working class has limited pow
labor laws often permit long work hours, few limitations on the length
short vacations, easy labor turnover, and substandard safety and em
conditions. Other factors that make Latin American countries attractive off
shore locations are geographic proximity, low-cost energy, and cheap and
abundant raw materials. The wage differential is not the only factor in deter
mining offshore relocations, but it is one of the primary variables. According to
the Harris Interactive study, North American corporations use the following
criteria to determine the viability of offshoring in Latin America: labor costs (69
percent), technology and infrastructure (49 percent), the availability of a quali
fied workforce (48 percent), economic stability (44 percent), and language dom
inance (41 percent).
During times of crisis, many countries look to foreign investors to generate
employment. They offer potential investors open access to infrastructure and
an easing of regulations so that companies will install their subsidiaries in
desired locations. The effects of foreign investment are quite diverse with
regard to employment generation, but it has had noticeable effects on working
conditions and the effectiveness of collective bargaining. One of the most perni
cious effects of offshoring is the commoditization of work, through which gov
ernments actually diminish workers' legal protections. Labor laws are made
more flexible, and this creates more precarious working conditions, low wages,
and a lack of social security. Furthermore, labor unions are often weakened or
annulled.
OUTSOURCING IN THE UNITED STATES
The period from 1945 to the mid-1970s is known as the Golden Ag

talism. It was characterized by sustained economic growth rates a
union activity in the United States and the world (Castillo, 2010; Ha
Kelly, 2010). This began to change at the beginning of the 1980s because
economic crisis and the adoption of the neoliberal economic model.
tion of this model to reverse the decline in capital accumulation rates c
crisis for labor unions and the working class; throughout the world, lab
affiliation and the strength of unions declined dramatically. In turn, t
a real loss of collective and individual bargaining rights and the abil
tect workers' previous economic and social gains.
To resolve the profound productivity crisis due to the failures of
and Taylorism, the neoliberal state and big business sought to subju
working class by introducing flexible working conditions. They began t
on the new forms of work organization articulated in the paradigm of
automation and the emerging Toyota system (Coriat, 1992; Dal Ro
Harvey, 2004), a set of Japanese business organizational principles
tices involving "a system of production organization based on an im
response to changes in demand, therefore requiring a flexible and i
approach to labor (including employees)" (Gounet, 1999:29). Big business and

capital were able to reinforce these policies amid the protracted crisis of the
following decade, which was particularly acute after 1997-1998. Since then, the
depressive tendencies of the new economy have become more pronounced and
contributed to the weakening of the intensity and duration of the boom cycles
in the capitalist economy as a whole. According to Brenner (1999: 24), U.S.
growth rates "have been—in terms of the principal macroeconomic indicators
of growth, production, investment, productivity, and real incomes—even less
dynamic than its predecessors of the relatively weak seventies and eighties (not
to mention those of the fifties and sixties)."
Dumenil and Levy (2007: 27) characterize the crisis of the 1970s as follows:
"Growth rates and technical advances were affected; record levels of inflation
were recorded in the advanced capitalist countries Salaries entered a period
of virtual stagnation; profit rates fell; and above all, full employment was
replaced with a wave of unemployment." They point out that this capitalist
crisis and the economic restructuring of the 1980s marked the beginning of
neoliberalism throughout most of the world. This gave rise to a pronounced
change in the patterns of capital accumulation and reproduction that had
existed since the immediate postwar period. In the 1980s there was a relative
recovery of profit rates at the cost of a decline in standards of living among the
working class. During the 1990s, however, strong profits no longer correlated
with the accumulation rate, and investment and job creation rates declined
(Dumenil and Levy, 2007: 51).
Capital's strategy for alleviating the profitability crisis of the 1970s focused
on regressive wage policies. In 2001, the real hourly wages of 80 percent of
workers had stagnated to 1979 levels. As a direct result, the United States and
the developed European countries were unable to stage an economic recovery.
Wage stagnation resulted in a historic decline in global economic growth rates,
causing a decline in earnings for the principal multinational and global corpo
rations. These corporations were the real architects of the development of
global capitalism during the late twentieth and early twenty-first centuries,
introducing wage cuts and increased productivity due to technological
advances, rationalization, and the increasing efficiency of labor as a result of
cuts and layoffs.
Through successive cycles of crisis and capital restructuring, the Toyota sys
tem became the dominant production model. Today it is found in practically all
the economies on the planet and is changing the dynamic world of work. It is
perfectly compatible with the current historical-structural context. Outsourcing,
then, represents an additional competitive advantage for business. It allows
companies to avoid investing in infrastructure and reduce operating costs and
to benefit from a less expensive labor force. In particular, they can increase
productivity by overexploiting labor in dependent countries.
Both during his campaign and as U.S. president, Barack Obama has rejected
externalization and outsourcing, blaming them for the high unemployment
rate in the United States, and sought to promote internal investment that will
create jobs for U.S. citizens. He has tried to create a domestic policy that is
favorable to internal investment (Obama, 2010):
One of the keys to job creation is to support companies to invest more in t

United States. For years, our tax code has given billions of dollars in tax br
to encourage businesses to create jobs and profits in other countries. Instea
tax loopholes that encourage investment in jobs abroad, I am proposing a m
generous offer: the permanent expansion of a tax credit that goes to resear
and innovation for companies that stay here in the United States.
Outsourcing aims to reconfigure corporations' organizational and

practices in the national territory of other countries, particularly
where wages are low and opportunities for flexibility and deregul
high and guaranteed by the state. Using this logic, the ability of the co
to manage its workforce flexibly—to hire and fire quickly at the lowes
economic and political cost—is one of the essential criteria in choosi
shore location. Although the number of displaced workers is small
with the size of the national workforce, they have begun to represent
threat (Anderson and Cavanagh, 2004). While this is not a new pract
increased significantly with the privatization of public services and
distance operations made possible by technological innovations.
The tendency to relocate service-sector jobs is an extension of the old
tice of subcontracting certain functions to smaller, nonunion companie
the United States. Today information can be sent quickly and easily thr
the world (Anderson and Cavanagh, 2004: 1). Approximately 14 mi
workers are susceptible to being incorporated into this labor model in a
to reduce service costs and increase productivity.
The effects of outsourcing on unemployment can still be considered l
compared with the magnitude of unemployment directly linked to b
relocating to other countries with cheaper labor. However, workers lab
the constant threat of being laid off or fired due to offshoring, and th
them in a vulnerable and disadvantaged position in the light of declinin
ing conditions and limited ability to negotiate. The decline of t
American manufacturing sector has coincided with the increase in outs
but massive displacement of workers cannot be assumed. While Ho
(2007: 1) argues that "the drop in manufacturing employment coin
outsourcing to domestic contractors, including staffing services, and an
in outsourcing of materials and services inputs to foreign companie
ates, commonly known as offshoring," she cites Kirkegaard to the e
"the heated public and political debate... has been vastly overblown"
statistics show that firing associated with outsourcing in the manu
sector is approximately 4 percent.
Offshoring and outsourcing have modified the roles of the old
peripheries in the framework of the global market and the internat
sion of labor. Thus, it is part of the new process of global economic res
ing. It follows the same logic as immigration but in reverse. According
(2000: 39), "People do not migrate, but rather jobs go to them." Ind
and Latin America have become privileged offshore destinations for
panies. Entrepreneurs and CEOs claim to have only two options: r
working conditions and costs in their home countries or permanent
their facilities (or parts of them) offshore (Brooks, 2005).
This process coincides with the adoption since the mid-1970s of relatively
new strategies for promoting capitalization and earnings abroad that have had
a noticeable impact on migration (and its restrictions) and the job market. The
percentage of U.S. foreign investment rose from 8.6 percent in 1973 to 18.7 per
cent in 2008. During the same period, it increased from 7.9 percent of the total
gross domestic product (GDP) to 15.7 percent, with a slight decline in 2009 as a
result of the economic crisis. These strategies have captured the imagination of
U.S. society. They seem to promise limited international immigration and bet
ter wages (with outside capital) for native workers. However, this is an
extremely fragile supposition given that the imperialist country must maintain
its position in the international system. In addition, it is possible that conces
sions will have to be made at the expense of foreign labor to benefit the domi
nant country.
LATIN AMERICA AND THE NEW PERIPHERIES

OF THE GLOBAL ECONOMY
In recent years, offshoring to less developed nations has become

practice for large European corporations. They have moved their f
Eastern European countries such as Hungary, the Czech Republic, and R
to take advantage of low labor costs, access to raw materials, and
dies in order to become more competitive in the international ma
New peripheries have developed as a result of the fall of the form
Union in the 1990s (Sotelo, 2007), and they have experienced strong
political, and social pressure to accelerate the deindustrialization of
tries, regions, and localities. As the standard of living has risen
Europe, deindustrialization has led to the displacement of the axis
accumulation. In this environment, companies have considerable lev
power. In 2004, the German company Siemens threatened to move
production to Hungary, where the median hourly wage was 3.8 e
pared with 26.5 euros in Germany. Services, maquiladoras, remitta
raw material exportation have come to dominate the economie
industrialized nations of Latin America such as Brazil, Argentina, M
Chile. There is also strong dependence on the Chinese economy, es
the Southern Cone (CEPAL, 2009-2010; Sotelo, 2007).
New offshore locations have emerged to challenge the three prin
nations (China, India, and Malaysia) for outsourced production an
Mexico, Brazil, Chile, and Argentina are now serious contenders,
Rica, Panama, Uruguay, and Colombia have begun to receive offshore f
Multiple corporations and global entrepreneurs have invested in th
and now compete with local and regional companies. Offshore infr
and services in Mexico, Colombia, and Venezuela reached a total of US$683.8
million in 2010 (Frost & Sullivan, 2011).
Outsourcing is now part of the structure of the contemporary global econ
omy. It creates pressure on two fronts. On the one hand, capital and national
states are more structurally interdependent, and this has detrimental effects on
the industrial, service, and subsistence agricultural sectors of less developed
nations. Subsistence agriculture has been particularly hard hit, an

farmers find themselves forced out of their livelihoods they are often
emigrate. On the other hand, labor in the central capitalist countries is
ploited. As the workforce becomes global, structural changes resul
wages, increased work hours, and a general decline in working co
According to Marini (1996: 65), "These changes have generalized to
system, including to the advanced centers. They have become a disti
ture (but not an operating one) of the dependent economy: the ge
overexploitation of labor."2
Outsourcing tends to create precarious labor conditions. Jobs that we
stable have become either temporary or part-time positions. This is
and complex trend that has occurred in developed economies (Casti
In the United States, companies like Nike and Dell outsource their p
to Third World developed nations such as Honduras, China, the Ph
and other Asian nations ("Outsourcing y offshoring," n.d.). In Jap
sourcing has contributed to weakening an employment system that
dominated by industry until recently. . . . The optimal employment sy
the tertiary sector differs from industry, where there is now a propen
latter to offer temporary or part-time employment" (Coriat, Geof
Rubinstein, 1997: 75).
Latin America and Africa are now the third-largest destinations for
ing facilities in the world, after Asia (with India and China leading) and
and Eastern Europe. Mexico, Brazil, and Chile are the countries in t
that are identified as the most important in the A. T. Kearney Glob
Location Index, which rates the 50 principal offshoring locations for p
and services. These three countries were rated sixth, tenth, and twelfth in
Kearney's 2011 publication, but the region had gained 20 positions in the rank
ing since 2005.3 Although the mobility of different Latin American countries
within the ranking has been uneven, Mexico has shown a significant gain, from
seventeenth in 2005 to sixth in 2011. In contrast, Chile went from eighth to
tenth, Brazil from tenth to twelfth, Costa Rica from twenty-first to nineteenth,
Argentina from twenty-third to thirtieth, and Panama from thirty-sixth to
thirty-fourth, and there were two new countries, Uruguay and Colombia,
ranked forty-first and forty-third.
The 2011 Kearney index has a section dedicated to Mexico and the advan
tages that it offers to investors. It states that Mexico is superior to many other
countries because of its high productivity and its developed industry and
because its workforce has a wide range of skills and specialties throughout the
country. In Mexico 84 percent of large private companies and transnational
corporations that utilize outsourcing do it to reduce production costs by 5-15
percent (La Jornada, April 2, 2010). Furthermore, according to a report by the
Universidad Autonoma de Nuevo Leon it is estimated that third-party hiring
involving outsourcing has cost the nation approximately 5 percent of the gross
domestic product, primarily because of the loss of tax revenue. Through pay
roll and income tax breaks, evasion, and loopholes, these companies failed to
pay more than 15 billion pesos between 2004 and 2010. More than 14,000 com
panies failed to pay their contributions to the Instituto del Fondo Nacional de
la Vivienda para los Trabajadores (Institute of National Housing Fund for
Workers) and Social Security and their value-added and income taxes (El
Universal, February 4,2011).
The importance of Latin America as an offshore destination appears to be
increasing. The principal reasons for this, according to the Kearney index, are
a favorable business climate, a skilled labor force, and worker availability.
Using these criteria (measured on a scale of 0 to 4 for the first factor and 0 to 2
for the latter two), Mexico has the highest rank in the region with scores of 2.68,
1.60, and 1.44 and an overall grade of 5.72. (The world leader, India, has a score
of 7.01.) Chile has a grade of 5.52 and Brazil a grade of 5.48. According to
Christian Callieri of A. T. Kearney, Argentina has a well-educated workforce,
but its political environment and the large fluctuations in the exchange rate
keep it from occupying a better position. Chile offers a "stable economy at Latin
American prices" and has a well-educated workforce and excellent infrastruc
ture. Its twin challenges have been its smaller population and its relatively
small number of English-speakers, but the government has instituted programs
for developing English-language skills in the labor pool. According to Callieri,
Mexico "is quick and easy to get to" from most of the United States, and cost is
another attraction. The country also scores high because of its breadth of qual
ity workers, although it suffers from environmental issues and economic stabil
ity (Rosenthal, 2010). A study by the Association of Experts in Customer Contact
Centers and Izo System has shown that in 2004 alone the offshore call center
market in Latin America grew by 47 percent, billing US$324 million. In
Argentina, in 2005, 50 percent of the revenue from call centers came from off
shore services (65 percent of it from the United States and 30 percent from
Spain) (S&T Consulting, 2005). Wage level is a determining factor in the dynam
ics of relocation from the core countries to the periphery. Empirical evidence for
this assertion comes from a bivariate analysis showing an inverse relationship
between median annual income and index of outsourcing with a Pearson coef
ficient of -0.417, p = 0.01.
Outsourcing has been significant in allowing companies to reduce produc
tion costs. It involves cost shifting from the primary company to subcontrac
tors. Wage and benefit responsibilities, which are usually limited, are shifted to
third parties. This has led to a global reduction in labor contracts and social
rights. Through offshoring and outsourcing, companies have effectively mod
ernized and increased the precariousness of working conditions. Workers'
rights have diminished with the reduction or elimination of collective bargain
ing. There is a direct correlation between the decrease in production costs and
the rise in corporate profits. Some writers characterize outsourcing or offshor
ing as a mechanism typical of "external flexibility," in which the corporation
has no responsibility to labor. Many nations have accepted offshoring job cre
ation and foreign capital investment uncritically, but it seems to us that the cost
of this investment should be carefully considered. Public policies that are
friendly to foreign investment but hostile to native workers cannot be justified.
This type of outsourcing in Brazil has been accompanied by pro-business
reforms, reduced wages, increased factory automation, and layoffs. Little atten
tion has been paid to the social consequences of this situation.
Outsourcing reduces employment and leads to deteriorating labor relations.
It "tends to polarize the division of labor between jobs with complex activities
and ones of simple assembly. The former implies stability, training

value while the latter implies low-skilled, unstable employment" (E
2010: 30). Since the end of the 1980s, outsourcing has reduced the
industrial workers in Brazil, shifting the focus to the service secto
created a negative balance between lost industrial positions and jobs
other sectors. Service-sector jobs tend to have lower wages, leading to
in labor conditions and rights. Furthermore, Brazilian workers have se
collective bargaining power diluted and fragmented in small comp
corporate and state power has increased. According to Pochmann (
ing the Lula administration (2003-2010) the jobs created were mainl
temporary, and precarious.
Although Mexico has not experienced labor reform in the strict sen
force management strategies have greatly changed. Neoliberal stra
reducing production costs have resulted in the loss of workers' rig
ing working conditions, and a systematic reduction in wages. This tre
to structural adjustment and has intensified during periods of n
nomic crisis. The Instituto Nacional de Estadistica y Geografia
Institute of Statistics and Geography— INEGI) points out that bec
sourcing almost half of the employees of large corporations in fin
vices, insurance, information services, and the mass media have no
direct relationship with their true employers. According to the IN
nomic census for 2010, outsourcing is especially prevalent in these
which 48.6 percent of employees are subcontracted as compared wi
cent of workers in general (La Jornada, October 4,2010).
An important example is the case of banking. According to Mexi
(January 18,2010), from January to September 2009 banks created 8,6
percent of them via outsourcing. Subcontracted employment grew
percent) than that generated by the institutions themselves (4.8 perce
period in question. One of the major banking groups in the country, B
generated jobs only via outsourcing. According to the 2009 annual
Grupo Financiero Inbursa, another important banking group, "the
solidated subsidiary that has its own personnel is Inburnet Outso
Given the rapid growth of outsourcing in the country it would not be
ing if the number of workers subcontracted by this mechanism, in
tion of federal labor law, far exceeded the nearly 300,000 estimated by
agency's auditors {La Jornada, February 5,2011). The final results of a
by the Latin American Network for Research on Multinational Co
(Puig, 2011) indicate that there are more than 50 million outsourced w
Latin America and that outsourced workers constitute 30-40 perce
formal workforce in Argentina, Brazil, Mexico, and Uruguay. In
Ecuador, and Peru the estimate is even higher, 40-50 percent.
Public policies have been developed to deal with this probl
designed to protect workers have been passed in Chile, Peru, and E
Ecuadorian law, a constitutional amendment, is the most radical b
only limited success. While many workers had to be rehired or gi
nent jobs, the majority received a pay cut and/or a lower startin
addition, the majority of workers reported that companies did not re
benefits such as seniority and adequate pensions. In addition, comp
developed new forms of outsourcing that are not yet regulated by the law. Since
the law was passed in 2008, more than 200,000 Ecuadorians have become per
manent workers. However, many workers have been given one-year contracts
and then laid off. Thus, companies have been able to reinstitute the precarious
labor conditions that the law sought to avoid. On a positive note, many work
ers have become part of the national social security system for the first time,
and several thousand outsourcing companies have been closed down. Perhaps
most interesting is that the law seems not to have had negative effects on for
eign investment. To date, not one foreign company has left Ecuador.
Transnational companies in Ecuador actually seem to have adapted better to
the changes than Ecuadorian ones (ICEM, 2010).
According to data from the fourth annual "Nuestra America" labor union
conference held in Nicaragua in 2011, outsourcing is the principal problem that
300,000 Nicaraguan workers face. Factories have sought to eliminate labor
unions, creating more precarious labor conditions; some 100 factories have
been able to eliminate the unions at their plants in the past four years. At the
macro level, the countries identified as having the greatest labor instability are
Mexico, Guatemala, and Honduras (El Nuevo Diario, August 30, 2011).
It seems clear that the challenge is to create instruments and practices to limit
the precarious labor conditions that outsourcing brings. The Ecuadorian law is
one alternative that, in principle, benefits workers, but its results are currently
unclear. Meanwhile, it is necessary to promote alternative development strate
gies in the region without neglecting or degrading working conditions and the
collective rights of workers.
FINAL CONSIDERATIONS
The international division of labor has assumed new forms and created new
social relationships. These new forms require institutional mechanisms for
their implementation. Changes in employment, wages, qualifications, and out
sourcing should be crystallized in legislation to maximize benefits for all. In
other words, the state needs to play a fundamental role. Historically, it is the
state that has been charged with instituting business, labor, and economic reg
ulations. Currently, the welfare state is in crisis almost everywhere, leaving
workers powerless and unprotected.
Outsourcing has paved the way for this crisis. It is a powerful tool that allows
companies to survive, expand, and even bypass transcend national laws at the
expense of the working class, which has had to bear the brunt of the capitalist
crisis and corporate oppression. Workers have been attempting to develop new
organizations representing their interests and demands in the face of a struc
tural transformation in which outsourcing is a mechanism for weakening orga
nized labor.
The contemporary capitalist crisis is opening a new historical conjuncture in
which it is possible to shift the balance of power back to labor. Workers have
been struggling with exploitative corporate strategies for reducing wages and
benefits. The overexploitation of labor and increasingly precarious working
conditions are directly linked to outsourcing worldwide. A fundamental task
of labor movements and unions is to organize these millions upon millio

workers to fight against and overcome the capitalist earnings strategie
have limited and reversed social and labor rights for the working class.
challenge is to create instruments that limit the insecurity that such practi
produce and promote alternative development paths that protect the wo
conditions and collective rights of workers.
NOTES
1. Outsourcing has permeated various production and service sectors and subsec
Mexico. Vega Garcia (2008) suggests that the impact of outsourcing on the national finan
has resulted in "the pronounced loss of benefits and other labor conquests" and led to m
carious working conditions.
2. The neoliberal strategy tends to generalize the overexploitation of labor through th
sion of the law of value. Similarly, it weakens and disarticulates production systems thr
corrosive action of the capitalist crisis, leading to political instability, deindustrialization
creation of sweatshops in large areas of the world. At the same time, neoliberal practices re
commercial, scientific-technological, and financial trade dependency. In countries with
hegemony, the state and capital are creating a system to reinforce labor overexploitation th
seek to implement in dependent nations (Marini, 1996). Thus overexploitation becomes t
that connects new systems of work organization such as post-Fordism, Toyotaism, and c
reengineering.
3. Since Uruguay and Colombia were not considered in the previous index, we assigned them
position 50 for that index, which would mean an increase of 9 and 7 positions, respectively.
4. Although the federal labor law has been the object of several partial modifications, it has
remained largely unchanged since 1970. Recently the Institutional Revolutionary Party (PRI,
2010) has proposed an overhaul of the statute the objective of which is to legalize outsourcing.
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Outsourcing and The New Labor Precariousness in Latin America

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Outsourcing and the New Labor Precariousness in Latin America

Author(s): Dídimo Castillo Fernández and Adrián Sotelo Valencia

The subcontracting and derealization of productive activities that characterize the

La subcontratacion y la deslocalizacion de actividades productivas que caracterizan a

Keywords: Outsourcing, Precarious employment, Globalization, Subcontracting,

administration and the conservative government of Margaret Thatcher in the

THE HOW AND WHY OF OUTSOURCING

In the strictest sense, outsourcing is not new; it has existed, albeit in

than 300 high-ranking corporate executives and found that the th

OUTSOURCING IN THE UNITED STATES

The period from 1945 to the mid-1970s is known as the Golden Ag

approach to labor (including employees)" (Gounet, 1999:29). Big business and

One of the keys to job creation is to support companies to invest more in t

Outsourcing aims to reconfigure corporations' organizational and

LATIN AMERICA AND THE NEW PERIPHERIES

In recent years, offshoring to less developed nations has become

nations. Subsistence agriculture has been particularly hard hit, an

and ones of simple assembly. The former implies stability, training

of labor movements and unions is to organize these millions upon millio

Anderson, Sarah and John Cavanagh

Coriat, Benjamin, Patrice Geoffron, and Marianne Rubinstein

2010 "Outsourcing to Latin America." http://www.hrmguide.net/international/latin-am

PRI (Partido Revolucionario Institutional)

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