Outsourcing is a business trend that has shown great growth over the last few years. Outsourcing in the United States dates back decades, but did not become a major movement until the 2000’s after NAFTA was formed, with the biggest growth seen in recent years, as stated before. Outsourcing is defined as an arrangement in which one company provides services for another company that could also be or usually have been provided internally. Outsourcing happens for a variety of reasons. Among them are ; Reducing and controlling company cost, improving cost company focus, gaining access to world-wide capabilities, freeing internal resources for other purposes, insufficient resources are available internally and sharing the risk with a partner company. Despite how many of the above reasons for outsourcing do look entirely beneficial, there are many negative side effects of outsourcing that trouble the American workforce. More and more Americans are starting to fear that their jobs might be at risk due to outsourcing. In the beginning, outsourcing was used for menial, factory jobs that offered low pay and had a strenuous schedule. However, in recent years, jobs that are more prestigious have been outsourced as well. For example, many engineering and computer technician jobs have been outsourced. These computer technician and engineering jobs are jobs that require a four year bachelor’s degree in engineering, computer science or computer information systems. It does not just end with those fields, either. Dr. Paul Craig Roberts of Globalresearch states: “In what might be an underestimate, a University of California study concludes that 14 million white-collar jobs are vulnerable to being outsourced offshore. These are not only call-cente...
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...llectual capital. Jobs that are crucial to the progression United States’ economy are being outsourced simply because it cost less than hiring American workers would. Whereas, emerging economies of other nations are working rigorously at building their own intellectual capital. Perhaps the worst of all these is the semi-permanent unemployment. The jobs that are outsourced, rarely, if ever return to United States. This, coupled with no new jobs being created to replace the outsourced jobs causes unemployment to continuously rise.
Overall, any positives that outsourcing may have had on the United States are largely outweighed by the numerous negatives,
Works Cited
http://www.globalresearch.ca/the-offshore-outsourcing-of-american-jobs-a-greater-threat-than-terrorism/18725
http://voices.yahoo.com/offshore-outsourcing-negative-effect-american-10623051.html?cat=3
Offshoring American jobs have positive and negative consequences to the American community. Some of those consequences of offshoring American jobs include Amer...
Mankiw and Swagel (2006) argue outsourcing is not as large a phenomenon as the media describes. Their research indicates outsourcing accounts for very little of job loss in the United States, nor has it made a distinct contribution to the slow rebound of the labor market. They go on to propose that increased overseas employment has actually contributed to higher employment in parent United States companies. They reported that while 30,000 jobs were lost per month in 2004, two million job changes per month were happening as well. They reference the Bureau of Labor Statistics when they report that in 2015 there are expected to be 3.4 million jobs outsourced, but 160 million jobs gained here in the United States. They also claim that there is a rise in net US income by 12-14 cents per dollar of outso...
Outsourcing is a complicated and a multifaceted subject that involves a “business[’s] purchase of parts or labor from another company rather than maintaining a sufficient enough number of its own employees to do the same work in the country where the company is already based” ("Outsourcing"). The first practice of outsourcing was in medieval times when “nation-states called in soldiers-for-hire to help their own military forces during ongoing conflicts” ("Outsourcing"). Many think of outsourcing as a one way trade of production facilities moving outside of a companies locale but in actuality it is a two way trade that also involves companies from other areas moving their factories to local areas where conditions are beneficial for the specific business. Outsourcing has evolved but the main idea has remained the same. The recent increase in outsourcing “was initiated by Wall Street pressures on corporations . . . . for increased profits . . . in the production of goods and services marketed in the U.S."(Roberts).
It is difficult to determine whether offshore outsourcing has a positive or negative effect on the U.S. economy. It may actually depend on which perspective you take on it. As stated by Hira and Hira (2005), outsourcing in the services sector is a major shift in how the economy operates and will have serious impacts, both positive and negative, on the trajectory of economic growth, distribution of income and the workforce. However, there are many factors to take into account when considering globalization. Companies must familiarize themselves with the various rules and regulations of global business, tariffs, trade agreements and barriers, and decide how to go global; global consistency or local adaptation. All of these issues affect a company’s plan to move forward with offshore outsourcing.
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.
Since the concept of outsourcing was introduced it has been a subject of debate between politicians and citizens of the United States. Remarkably, it was the United States who supported outsourcing and now it is the United States that feels its economic progress is being threatened by outsourcing. One may argue that the financial situations that existed two decades earlier are not the same as they are today, thus the change of time, business priorities of economies have also changed.
As the problem of job outsourcing becomes more of an issue in politics, elected officials like the President and Congress will no longer be able to ignore the dilemma. The war in Iraq has been at the forefront of the presidential race but the importance of outsourcing American jobs seems to have been slightly overshadowed. If the issue of outsourcing is not watched carefully and a definitive plan hammered out, a trickling down of negative effects may occur within the U.S. economy. However, there is a polarized opinion on the effects of this “phenomenon”.
The world is growing increasingly competitive, with newer technologies making the earth seem to shrink in size. Now this isn't literally of course but figuratively. Information can be shared faster, and at a fraction of the cost that it used to. Therefore this newer technology has flattened out the world, Thomas L. Friedman stated that “ Every young American today would be wise to think of himself or herself as competing against every young Chinese, Indian, and Brazilian.”. Globalization makes it easier for people to connect and share their ideas. It also makes it easier for people to travel to work and connect with their co workers who may be hundred of miles away. Globalization is bringing the world closer. When competing for a job one may be competing with an Indian or Brazilian and whoever has the most education will get the job. Moreover it isn't local competition anymore it’s now on the global level, whether its offshoring the job or having the employee move. Friedman stated that “…data entry to securities analyst to certain forms of accounting and radiology that were once deemed non tradable are now tradable.”. More and more jobs can easily be off shored to a Chinese, Indian, or Brazilian who is more qualified than an American. Furthermore the likely hood of offshoring is increasing and so is the level of education one needs to have the job they want.
This article revealed how outsourcing manufacturing damaged U.S. industries’ competitiveness and innovative abilities. There were several problems that affected the U.S. economy, like the decline of trade, lack of research and development funding, and poor managerial decisions. Several government and businesses’ recommendations were made to restore U.S. industries’ competitiveness and innovative capabilities. Simply by restoring U.S. innovative abilities will the industrial commons bounce back and there will be economic growth.
Do you ever wonder what our nations underlying focus is? The answer is simple and should be fairly easy to guess… Money! Outsourcing originated from someone coming up with the idea that we can make products for practically nothing in other countries and make very high profits. Although it seems like a great idea to businesses, it negatively affects our country. American consumers are buying these products that are made in other countries and the companies profits are continuing to rapidly increase. At the same time, people that are in the production field of work in America are losing their jobs because producers would rather pay foreign workers to get the job done for a much lower wage. When it comes down to it, one of the reasons our economy is suffering is because of outsourcing. Basically, it all comes down to money. The consumers don’t pay close enough attention to where the products are made. Therefore, consumers are spending extra money and are causing outsourcing to thrive. The lack of knowledge Americans have on the subject of consumers affecting outsourcing is leading our country to economic stress but if we begin to recognize the issue, the jobs we could potentially save may be our own.
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
Kibbe, C. (2004, 07 09). Outsourcing: the good, the bad and the inevitable. New Hampshire Business Review, pp. 1A-21A.
Outsourcing has been around for many years. In this paper, I will discuss some of the history of outsourcing, the good things about outsourcing, and the bad things about outsourcing. Outsourcing is important because many companies rely on it in order to get many different products and services to their facility on time and in good shape. Outsourcing is a huge part of the business industry today. Any business can be affected by outsourcing.
Large corporations seeking the extra dollar to pocket are willing to spend whatever it takes to reduce the cost of production and increase profit margins. Doing whatever it takes in some instances can help men moving operations overseas to developing countries who are glad to be working. These developing countries unemployment rates are extremely high, so any job that pays is great to have. Americans lose jobs to foreign workers because the American economy is one of the largest in the world and its citizens enjoy great standards of living, when juxtaposed with a city of the same size in Taiwan. Labor costs play a huge and crucial role in corporations, which in turn pay the profits to the corporate giants who run, manage, and own the businesses.
We say that we are heading toward a more global economy because of the fact that competition in today’s markets is global. This means that corporations in the United States can compete in foreign markets and vice versa, therefore U.S. corporations and foreign corporations become interdependent and thrive off each other. This can have a good impact on the United States because it allows U.S. corporations to seek materials and labor outside of the U.S. in countries such as China, India, and Mexico, where workers are paid a lot less money than U.S. workers, thus allowing them to sell their products for significantly cheaper than if they were produced in the U.S.; however, the tradeoff is that many American workers in the industrial sector lose jobs due to this shift of labor to overseas. In the long run this will be beneficial for the U.S. and although some percentage of workers are losing work, new jobs in the services sector, in fields such as computer technology, telecommunications, and language skills are opening up and experiencing growth because of this change.