Offshoring: The Future Of Our Economy

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Offshoring: The Future of Our Economy Outsourcing jobs to foreign countries or offshoring is often viewed as the demise of the American economy. A more accurate view of offshoring is that it is the groundwork for the future of our economy. By enabling businesses to conserve costs, grow and have access to a large untapped pool of talent, offshoring is essentially securing the stability of our economy by securing the vitality of our businesses. In order to remain or become competitive in today's economy, US based companies must outsource jobs to foreign countries. The cost savings that can be derived from hiring employees in underdeveloped countries such as India or China are astounding. According to Agrwa and Farrell (2003), "For every dollar of spending on business services that moves offshore, US companies save 58 cents, mainly in wages." The average salary for low level finance positions in 2006 is $58,500. (Report on Salary Surveys, 2006). By performing a simple calculation, we discover that by hiring offshore for low level finance positions, US based companies will save approximately $33,390 per employee. According to Jean Paul Vellotti (2006), a journalist for Business News, a typical offshore IT setup includes one technical lead, two senior programmers and two junior programmers. If the salaries of these five positions are added together, they equal approximately $100,000 a year. What makes this statement more telling is that this amount is the same as the salary of one senior programmer in the United States. In a 2005 survey conducted by the Financial Executives Research Foundation, 71% of businesses who sent jobs offshore did so for the cost savings (Sennett, 2006) On top of the savings from salaries, US base... ... middle of paper ... ...2006). Report on Salary Surveys, 1-14. Retrieved May 14, 2006, from EBSCOhost database. Agrawal, V. & Farrell, D. (2003). Who wins in offshoring. McKinsey Quarterly, 36-41. Retrieved May 13, 2006, from EBSCOhost database. Employee Benefit Research Institute. (2005). Compensation costs in private and state/local public sectors. Retrieved May 25, 2006, from EBRI database. Lewin, A. Y. & Peeters, C. (2006). The top line allure of offshoring. Harvard Business Review, 22, 24. Retrieved May 19, 2006, from EBSCOhost database. McGregor, J. (2006). The world's most innovative companies. NewsWeek, 63-75. Sinnett, W. M. (2006). Global sourcing for global markets. Financial Executives, 46-48. Retrieved May 14, 2006, from EBSCOhost database. Vellotti, J. P. (2006). Pros and cons of offshoring. Long Island Business News. Retrieved May 14, 2006, from InfoTrac OneFile database.

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