Outsourcing is the transfer of a business activity or function to an external supplier, which takes main responsibility to accomplish the work. Recently, because of globalization, outsourcing becomes much more widespread than before. Some developed countries such as the United States often have outsourced jobs for developing countries like India and China. Outsourcing has two sides, like everything. People hold different viewpoints about it; some are optimistic about the future of outsourcing while others are not. There are pros and cons; and it has certain influence on employment and wages in both domestic and foreign markets. In this essay, all of the aspects that have been mentioned above will be discussed.
Outsourcing entails an arrangement
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The incentive for most U.S companies to outsource is mainly because of the high tax rates and high opportunity costs. By contrast, those third-world countries such as India do not have to confront with those problems. They have relatively lower labor costs and less government regulation. For example, Microsoft is one of those U.S companies that have meaningful engineering and IT offshoring operations in China. The jobs that Microsoft offers in China are software engineers and programmers. As Fenske states in his article, Microsoft continues to employ thousands of new employees per year in Redmond, the pace of hiring has decreased. Meanwhile, it has increased working opportunities in China, India and other technology hubs (Fenske, …show more content…
The positive aspects of outsourcing are quite obvious. First, most companies use outsourcing as one of their business strategies in order to avoid paying certain costs. According to a research conducted by Brown, 26 of the largest U.S corporations paid more to CEO’S than they paid in federal taxes in 2011(2013). This numbers implies that developing countries like U.S need to pay more costs besides tax fee. However outsourcing can eliminate those cost. In addition, sometimes home-countries do not have enough resources for companies to utilize. Still use Microsoft as an example; U.S does not have enough domestic experts to meet the increasing demand of its IT industry. Also, as Brown states in his article, U.S does not enough workers to assemble IT products such iPod or Android tablets either. However, those developing countries have available resources for U.S companies to utilize. In this way, those business ventures can focus on their advantages and maximize the profit of the whole economy.
There are some implications of outsourcing for employment and wages in the labor markets. When it comes to the foreign labor market, it can lead to lower wages and unemployment for certain jobs. Correspondingly, there will be a growing number of people are who are underemployed in those foreign labor markets. In terms of the local labor market, it will result to higher unemployment rate as foreign workers take some jobs
For advocates of global business, the hope is that outsourcing will help lift the United State’s economic growth and development by lowering the input cost of services (i.e. labor and materials) and by opening new markets abroad. Mainstream economists believe that outsourcing will have ...
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”.
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.
The outsourcing trend continues to eat up the value chain from blue-collar jobs to white collar jobs3. The software industry is experiencing an outsourcing trend to countries such as China and most significantly to India. The proliferation of the Internet has opened easier access to information and collaborative environments. Previously communication costs and access to mind power was limited. The Internet made communication costs virtually free and collaboration with groups around the makes software engineering and collaboration tasks easier. In additional, liberalization of free markets across international lines has made it easier for companies to set up and outsource engineering tasks throughout the world. Business-process and software outsourcing rely on cheaper cost structure as found in East Asia with manufacturing4.
Globalization along with the rise of information technologies, have led to changes in the global business arena. Outsourcing is when a business hires another entity to perform their functions. It can be on-shore (in the same country) and off-shore (in other country), but this paper will be based on off-shoring since the Global aspect has to be taken in perspective. First off the emergence of outsourcing will be discussed followed by the reasons and scope of outsourcing. Then the paper will focus on the benefits and drawbacks of outsourcing.
In this paper, I will discuss the ethics of outsourcing manufacturing from my local community to a developing country. I will view this debate through three different frameworks: Utilitarianism, Pragmatism, and White’s biblical principles. I will also conclude my final view on outsourcing and the benefits of using a framework for making ethical decisions.
The significant level of outsourcing programs used across all business sectors is well documented in the literature (Bender 1999; Quinn 2000; Dun and Bradstreet 2000; Klaas, McClendon and Gainey 2001). Past research has progressed along several paths. First, some researchers have focused on motivations and reasons for outsourcing activities (Conner and Prahalad 1996; Greer et al. 1999; Sinderman 1995; Mullin 1996; Grant 1996; Frayer Scannell and Thomas 2000). According to this perspective, the global imperative for outsourcing accelerates as firms evolve from sellers of products and services abroad to setting up operations in foreign countries and staffing those operations with host countries or third party nationals (Greer et al. 1999). Most corporations believe that in order to compete globally, they have to look at efficiency and cost containment rather than relying strictly on revenue increases (Conner and Prahalad 1996). As companies seek to enhance their competitive positions in an increasingly global marketplace, they are discovering that they can cut costs and maintain quality by relying more on outside service providers for activities viewed as supplementary to their core businesses (Mullin 1996; Grant 1996).
Many people think that outsourcing is jobs that were held in this country going somewhere else. That is not entirely accurate. Outsourcing is actually one company paying another to do some work for it. Outsourcing can be as simple as paying a company to paint your building. Or it can be as complex as paying a company to control your human resources department.
Outsourcing is when a company or business decides to contract part of their services that they do not do well to an outside company. There is two types of outsourcing offshoring and nearshoring. Offshoring is where a company outsources abroad and, nearshoring is outsourcing within the home country. The reasons that a company decides to outsource varies from company to company but, the most common ones are cost reduction, increasing globalization, growth , tax incentives, government support and access to new markets. However there are some key challenges that come with offshoring and those key challenges are quality and labor retention. ( Bacon, 2007 p 38-39). Asian outsourcing began as early as the 1960’s (Espana 2013 p 3). Some people argue that offshoring is good for the economy even though it’s a well know fact that offshoring has a negative effect on the economy, there is wage differences and the unemployment rate increase.
In India, a company can hire ten engineers’ verses hiring one engineer in the United States; the reason is employee compensation. In the United States an engineer may be paid $80 thousand per year and receive company benefits and 401k plans. From an ethical perspective, taking jobs from the United States and putting them into another country lands citizens’ in the unemployment line. Most companies try to evaluate the consequences of outsourcing certain aspects of the business then make a uniform decision (Friedman, On Justifying Outsourcing and Offshoring, 2012). There are several pros and cons to outsourcing.
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?
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...
I believe that many people are against outsourcing because of the economic situation that it may have potentially put us at. The economy is able to stay healthy when jobs are being created, people are being employed, and money is circulating. The issue is that when America decides to outsource products or job it leads to businesses having to close down because there is no point in it's existence when there is a cheaper alternative in another country. When situations like this occur it leads to mass unemployment and this wounds the economy causing its condition to become worse. Others support the concept of outsourcing because they believe it causes results contrary to what those that dislike outsourcing believe. Outsourcing is preferred by
To conclude, after contrasting the advantages and disadvantages of outsourcing outside of our border we can see that it poses threats and benefits to companies, workers, and the economy alike, however, I still believe that outsourcing outside of Canada is beneficial and should continue. The main reason for this being that since outsourcing hinders the economy at first but then aids it in the long run, it in the end stays the same. So if we take the economy out of the equation we’re left with many more advantages than disadvantages and there are many more companies and businesses that are being created, prospering, and growing allowing for more job openings for Canadian workers.
Outsourcing has been around for many years. In this paper I will discuss some of the history of outsourcing, the goods things about outsourcing, and the bad things about outsourcing.