Globalization is a growing phenomenon that is the result of various developments in the global environment, each of which deserves an individual analysis of its social impacts. For the purposes of this analysis, the focus will be on arguably its most controversial aspect, offshore outsourcing. Offshore outsourcing, or offshoring, is becoming an increasingly common business practice as a result of the combination of recent technological advances in the transportation and communications sectors and the increased competitiveness of the business world. From a business perspective, tapping into cheap labor from less developed countries is a very logical business decision to reduce costs and maximize profits. This has not only motivated companies to engage in offshoring, but has sometimes been critical to their survival in highly competitive environments. Before making judgments on the rightness of offshoring from different perspectives, it is necessary to evaluate its impact on stakeholders. Stakeholders and why it is a problem The very existence of offshoring is in itself proof that, at least in most cases, it is advantageous for companies to engage in offshoring. However, as is the case with most business activities, its externalities can affect various stakeholder groups both positively and negatively. From a societal perspective, stakeholders to consider are Canadian workers, Canadian consumers, competitors, shareholders and managers, citizens of other countries, and future generations. A primary stakeholder, and perhaps the most vocal of all stakeholder groups, is the Canadian workforce. Offshoring affects Canadian workers in two main ways. First, when businesses decide to offshore certain functions, they unite through income tax or GST, as they are all the ultimate benefactors of a socially optimal policy. Therefore, the tax would be reinvested to benefit Canadians. A perfect government would limit offshoring in a socially optimal way. However, whether the clear purpose of government is to act in the best interests of its citizens is a questionable assumption. It is reasonable to think that their political decisions to relocate might be slightly influenced by the motivation to stay in power. They could, for example, change their policies to be more restrictive of offshoring to relieve pressure from workers who publicly announce their discontent that their jobs have been lost to offshoring. Basing political decisions solely on grievances and without properly grounded economic reasoning is inherently flawed and deviates from what is socially optimal.