What is multi-point production?

Using the IT industry in the USA as an example, explain the current

rapid loss of software and services job to less developed countries such as India.
A phenomenon has arisen in the IT industry in the USA: there is currently a rapid loss of software and
services jobs to less developed countries such as India. In this essay, I will first define and explain multipoint production, then explain and elaborate on the reasons behind the above phenomenon.
Multi-point production is a method of production often evident in multinational enterprises (MNEs), which
are large corporations with employers and businesses around the world. MNEs have their company
headquarters and research & development activities geographically separated from their production
activities. Product production is carried out in a number of separate plants which may span across the
globe in different areas or even countries. Multi-point production enables MNEs to take advantage of the
benefits of different sites in order to cut production costs and increase profits.
Since the 1980s, production bases of the US IT industry has been shifting to plants in less developed
countries. However, software and services jobs have also currently been shifting to less developed
countries such as India. The software and service industry includes businesses for development,
maintenance and publication of software, as well as services such as IT consulting services. The
reasons behind the above phenomenon are as follows:
Firstly, MNEs are shifting software and services jobs to less developed countries to increase production
efficiency and cut production costs. Take India for an example. IT wage costs are a fifth of those in the
USA. The proximity of the software and services production stage to the hardware manufacturing stage
further decreases the gap between the two stages, decreasing costs needed for communication whilst
making communication even more convenient and rapid than having the software and services stage in
more developed countries such as USA. This increases the rate of production and makes the overall
process more efficient.
Secondly, as less developed countries progress, their workforce are gradually becoming more educated.
There is also an abundant workforce in India well-educated and proficient in English. As mentioned
above, IT wages in less developed countries are a fraction of that in the USA, and hiring more people
from these countries (eg. India) can help cut production costs greatly. Hence, many US IT firms have set
up back offices on software and services sectors in India.
In conclusion, the reasons behind rapid loss of software and services jobs to India is that this shift
enables MNEs to increase production efficiency and cut production costs, whilst utilizing the welleducated and English-proficient workforce in less developed countries.