Recently outsourcing has been in the news, especially during political election years. It seems to be a phenomenon that is causing much concern among the population. But exactly how is outsourcing effecting both workers and businesses? And is it as big of a problem as politicians describe?
Outsourcing emerged on the financial arena during the 1980s and has since then been spreading. Outsourcing production was furthered with the process of globalization which provided a new component leading to the strengthening of resources, skill and labor specializations across the world. The process of outsourcing is using the skill and abilities of a third-party to accommodate society on the foundation of labor. As stated earlier, it was during the 1980s that the process kicked off mainly due to the efforts of corporations when they began to hire labor forces across the world. Even though outsourcing has come out from its developing stages, there are still following effects on the US economy.
One effect of outsourcing is that it economically benefits American firms both domestically and abroad, and these benefits are the reason outsourcing is so prevalent in today’s world. In one research, it was found that, “Ten percent growth in American firms’ foreign investment is associated with 3% in their domestic investment” (Desai). In essence, this conclusion shows that when an American firm grows abroad, they also grow locally which benefits the firm everywhere. One study in 2004 from the McKinsey Global Institute demonstrated, “What happens when an American firm moves work that cost one dollar to India. Out of that dollar, India’s economy garners 33 cents in wages paid in India and profits earned by Indian firms. But 67 cents accrues back to American firms...” (Taylor). This research reveals that outsourcing benefits the American firms by reducing the wages they have to pay the workers and thus increases their profit margin. According to another article, “[Due to outsourcing,] return on sales was 5% and is now 6%--a net 20% change. Return on assets moves from 10% to 13.2%--an impressive 32% increase. And return on equity increases to 30%” (Lomas). This article excerpt ...
Outsourcing has been big political issue as highly educated and highly paid IT workers lose their jobs. In this competitive environment, companies have to concentrate on competency and they want to outsource everything to reduce cost so the trend toward offshore outsourcing is increasing. Outsourcing threatens that in future US will not have many technology people. As all the technical work will be ...
Both sides can agree that outsourcing can be desirable for a business do to the potential profit. It allows goods to be made cheaper, management to run smoother, and money to be made faster (Salanţă 270). Both sides can also agree, however, that U.S. jobs are lost as a result of outsourcing (Ahmed 192), as well as environmental damage being cause due to corporations taking advantage of loose environmental regulations (Marquis 39). Upon digging deeper into this debate, one can find that both sides present very convincing arguments.
157). In most cases, the organization will have positive consequences since they are the ones considering the outsourcing. Mintz says that benefits an organization gets from outsourcing include increased productivity and allows current management to focus on clients (2004, pg. 6-7). The current employees and families will have experience job loss. The current community will potentially lose tax income, increase unemployment, and families will leave the community. The potentially new employees and families will have new jobs that will provide wages and benefits. The new community will get increased tax revenue and population
When you think of outsourcing it is probably more accurate to think of it not as people's jobs that are going somewhere else but as a job, as in something that needs to be done, going to another business. For example if you have a company of forty people and you decide to get a new computer system for everyone. You may pay another company to do your IT and customer support for those computers. There for you didn't take away a job from someone you just didn't create one for the need. You paid another company to do it. They then can use one of there people who is familiar with the system already, or they take on the cost of training someone.
Jennifer, an American citizen, working for a big recruiter company, was sitting in her cubicle sorting out the resumes and suddenly manager calls in for meeting. She with her other colleagues went to the meeting room with a surprise. After discussing for a while, she came out with gloomy face. She found out that hers and other colleagues job was outsourced to India and she was no longer required in their office. A professor cum recruiter shared her life experience with the class which forces the class to think on outsourcing. It was not just the story of Jennifer, but of many Americans who were losing their jobs due to increasing outsourcing. This affects the purchasing power of the American public and consequently the economy of United States.
The purview of this paper is designed to encompass the outsourcing of jobs in the manufacturing sector of the United States' economy. Beneficial and disadvantageous elements of globalization will be exposed within the respective boundaries inclusive to the outsourcing of U.S. industry jobs.
...ect on the college graduates and younger children of today. Outsourcing has made nothing but trouble for the United States with the passing of free trade agreements. It will cause a lack of jobs that will run the economy into the ground, and ruin the lives of the citizens of the United States. All of that so a business can use its faulty practices to make a higher profit. Outsourcing has consequences that will haunt the average American and their families for the rest of their existence on this planet.
One in every nine American jobs is vulnerable to becoming outsourced. That adds up to over 14 million jobs in total.(Hira 2). The guarantee of protection from the approaching economic turmoil is not certain. According to the Merriam-Webster, outsourcing may be described as obtaining goods or services from an outside or foreign supplier. The origins of outsourcing can be traced far back as the first Industrial Revolution, when business moguls began to seek out new methods of increasing revenue while minimizing expenditures. By the same token, the business tycoons of the twentieth century continue to practice the same ideals of increasing profit per capita. Moreover, these techniques have evolved to evoke the epitome of the outsourcing vitiating today’s American economy. Although outsourcing may be viewed as a tactful business strategy by some entrepreneurs, outsourcing has underhandedly elicited an irreversible harm on today's economy by causing escalating unemployment rates, as a result of allowing avaricious corporations to take advantage of underpaid foreign labor, which has promoted globalization.
Not all outsourcing involves foreign workers or foreign countries. Many people today work as independent contractors providing services to businesses. Outsourcing is a growing popular trend that is not likely to slow down in the near future. No longer are the days when an employee works for ...
Cons: Outsourcing HR functions may have some positive changes, but those changes which are not necessarily ones might lead to negative effects.
Outsourcing is a technique for companies to reassign specific responsibilities to external entities. There are several motivations for outsourcing including organizational, improvement, cost, and revenue advantages (Ghodeswar & Vaidyanathan, 2008).
Kibbe, C. (2004, 07 09). Outsourcing: the good, the bad and the inevitable. New Hampshire Business Review, pp. 1A-21A.