Satisfactory Essays
The term outsourcing refers to the act of contracting out business activities and procedures to a third party. The act of outsourcing sometimes involves the transfer of assets from one organization to the other. The term is also used to describe the act of handling the control of public services to the private corporations. Outsourcing mainly involves both the local and foreign contracting. At times, the term is used to describe relocation of business organizations to another country which is a also known as off shoring. This term is very popular in the U.S especially in the 21st century (Davies, pg. 21). The main motivation for the activity of outsourcing is the financial saving due to the reduced international labor market rates. The opposite of outsourcing is in-sourcing which is the act of bringing the business process that are handled by the third party back to in-house or the local areas instated of contracting it to another country.
The issue of outsourcing has been one of the major component that is affecting the labor market and the economy of the U.S as the big companies that which employees a large population of the United State employees has now shifted their operations oversees where they can find a large demand for cheap labor and low taxes. This issue has complicated the situation of the U.S economy considering that the rate of unemployment is increasing day by day. The issue of outsourcing must be behind the increased rate of unemployment in the country as this jobs that are outsourced to the foreign countries would have been occupied by those skilled Americans who can now find no job or end up getting jobs that which do not fit to their skills (Hira, pg. 63). There is a relative demand for skilled workers in t...

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...g to service oriented market. The impact would be adverse if no precautions are taken to balance the rate of outsourcing and in-sourcing as well as strengthening the local service industries such as health services, education, transport, communication, technology, entertainment, social and economical services. However, outsourcing will have little impact on the overall labor market as it will ensure there is stability in the employment sector. This is because, it is causing decline of the manufacturing sector and at the same time it is associated with increased labor stability in the service sector. Therefore, outsourcing will affect the individual workers who will have to redirect their skills from manufacturing or technical to serve industries. Consequently, the semi-skilled and non-skilled will have quit the labor market or acquire the skills that are in demand.
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