The Impact of Outsourcing

analytical Essay
1771 words
1771 words

Outsourcing has only very recently become an issue in the United States, and as a result it has become a very popular political issue during campaigns for presidency. Outsourcing is the idea that a company will subcontract to a third party, usually outside of the US, for various parts of its business structure. An example of this and perhaps the largest source of outsourcing is call centers for tech support, where a company will subcontract to a third party and that party will build up the call center and hire the workers for it. Many people have been affected by outsourcing since it started being used widely in the 1980s, and most would argue that outsourcing is not a good business model, that while it not only negatively affects them, it affects the whole economy. While there are some unmistakable positives to outsourcing, I would argue that as a whole, the negatives far outweigh the positives and outsourcing is bad for the United States.

There are many benefits to outsourcing, many reasons that company has to outsource some of its business. According to Robin Gareiss, “The No. 1 reason companies turn to outsourcers is to save money--64% say that’s the main goal of their outsourcing contracts” (3). Companies are able to save money because they outsource to another country, and the third party that is in the outsourcing contract, runs the business in that country and is able to pay wages in accordance with that country’s laws, which for the most part there are none. The business usually outsources to a developing nation, and as a result can pay much, much lower wages than if it were to stay within the US. This cost-saving idea has become a much strong reason for outsourcing since the economy has been in a recession, a...

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... negatives present, I feel that outsourcing is not a business model that many companies should follow, and if possible there should be some governmental restrictions put in place to protect workers from being displaced as a result of outsourcing.

Works Cited

Gareiss, Robin. (2002). Analyzing the Outsourcers. Information Week, 1-7.

Lim, W., & Tan, S. (2010). Outsourcing suppliers as downstream competitors: Biting the hand that feeds. European Journal of Operational Research, 203(2), 360-369. doi:10.1016/j.ejor.2009.08.006.

Kim, J., & Park, S. (2010). Outsourcing strategy in two-stage call centers. Computers & Operations Research, 37(4), 790-805. doi:10.1016/j.cor.2009.06.020.

Yamashita, N. (2010). The impact of foreign outsourcing on wage inequality in US manufacturing: New evidence. Economics Letters, 107(1), 46-48. doi:10.1016/j.econlet.2009.12.022.

In this essay, the author

  • Explains that outsourcing improves the quality of a company's product, and the credibility of the company behind that product. this is especially apparent when companies are looking for talent in the sciences or engineering.
  • Analyzes the negatives of outsourcing, such as the displacement of workers or the loss of jobs, especially during a recession.
  • Opines that outsourcing has a negative impact on the economy, and that governmental restrictions should be put in place to protect workers from being displaced.
  • Explains that outsourcing has become a popular political issue during presidential campaigns. they argue that the negatives outweigh the positives and outsourcing is bad for the us.
  • Argues that outsourcing results in a loss of skills and quality of product. they also point out the negative impact of outsourcing abroad.
  • Analyzes the impact of foreign outsourcing on wage inequality in us manufacturing.
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