In an article entitled The great mismatch, the author suggests that employers from rich nations are now hiring freelance workers from developing countries due to a lack of quality skilled labor in their local job market. Several benefits these employers derive from outsourced labor are: lower wage expense, flexible staffing, and higher quality work.
My close friend builds websites for a living. He called me today suggesting that he plans to stop building sites using local labor and start using freelance labor from India for a fraction of the cost. He feels that the savings derived from using freelance labor will allow him to lower the cost of his services and increase his profit margin.
What economic results are likely to occur in the local economy when he spends more money personally from increased earnings but removes jobs from the local market? How does the market compensate?