Offshore outsourcing is the process whereby a company contracts a supplier that operates overseas to perform certain tasks or services that are part of the goods or services that the company provides. Offshore outsourcing has become a rising phenomenon in the United States for about the past 20 years, with jobs being transferred to Southeast Asia, South Africa and parts of Europe. Two hundred and thirty thousand jobs are outsourced each year, and one in nine high paying jobs at risk of being outsourced. Many jobs that are outsourced are in the fields of information technology, accounting and medical and legal services (Hira & Hira, 2005).
Companies outsource for several reasons. They maintain that outsourcing is necessary if they wish to remain competitive in today’s global economy. However, the main reason for outsourcing is the availability of highly skilled, well-educated labours at a much cheaper cost. On average, China graduates three times as many engineers as the United States, which leads to the creation of a talented, innovative and inventive labour pool. The cost of living is much lower in developing countries than it is in the US, so that companies can pay foreign labourers wages that are lower, but still enough for those persons to have the standard of living in their country that an American also has. In fact, a Chinese engineer can be hired for US$15 000 a year, one fifth of the cost of hiring an engineer from the Silicon Valley (Hira & Hira, 2005). Companies reduce their overall costs by 45%, and save up to 70% on their initial costs by outsourcing. Therefore, they can hire a larger workforce at a cheaper cost in foreign countries, which increases productivity and in turn, increases their chances of beating ...
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...oneer status once held in the field of technology, provide workers with the ammunition they need to remain part of the workforce and punish companies for abusing policies.
Works Cited
Hira, R., & Hira, A. (2005). Outsourcing America: what's behind our national crisis and how we can reclaim American jobs. New York: American Management Association.
Moore, M. (Producer), Moore, M. (Writer), & Moore, M. (Director). (1989). Roger and Me [Motion Picture]. United States of America: Warner Bros.
Office of Senator Joseph I. Liebermann. (2004). Offshore Outsourcing and America's Comepetitive Edge: Losing out in the High Technology R&D and Services Sectors. Washington, D.C.: United States Senate.
Wikipedia. (2012, January 28). Flint, Michigan. Retrieved from Wikipedia, The Free Encylcopedia: http://en.wikipedia.org/w/index.php?title=Flint,_Michigan&oldid=473640153
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).
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.
This report is extremely credible and qualified, as it was written by an author who is well-versed on the topic. The author was also the Assistant Secretary of the Treasury in the Reagan administration, making him even more authentic source. Throughout the article, the author discusses and examines the words of two other authors, Ron and Anil Hira, who are experts on the subject of American Outsourcing. These authors are also very credible; one is a professor at the Rochester Institute of Technology, and the other is a professor at Simon Fraser University. Additionally, the author refers to many case studies that were taken at different universities in order to justify his claims on why American Outsourcing is bad. The intended audience is
One of the hottest trends today for big corporations is outsourcing and offshoring. Outsourcing simply means a company based in one nation will hire from other nations in order to more efficient accomplish its goals. It makes sense on the part of the corporation, why pay a programmer in the US $80,000 a year when they can pay a programmer in India less than 1/10th of that salary, and make him a very happy man. This because even when he is earning 1/10th of the US salary, he is still earning more money than he ever hoped to get in that industry in India. It seems like a win-win situation1, but there is still a loser: The growing unemployed population of the US. As more jobs go overseas, more US citizens are finding themselves becoming obsolete.
Kibbe, C. (2004). Outsourcing” the good, the bad, and the inevitable. New Hampshire Business Review, 26(14), 1A.
The U.S. industries have been outsourcing manufacturing for several decades now. U.S. companies thought they were reducing costs by outsourcing development, manufacturing, and process-engineering abilities. Consequently, U.S. corporations’ knowledge, skilled workers, and supply chain, which are the necessities to producing advanced products, have vanished. For example, almost all notebook computers, cell phones, and handheld devices, which were once created in the U.S., are now designed in Asia. When a major U.S. company outsource, it pressures their rivals to do the same thing. They also lose the expertise of process engineering, which would interact with manufacturing on a daily basis. Minor companies and skilled workers go to where the jobs and knowledge networks are no matter where they are geographically in the world. This decline of trade in the U.S. has caused a negative chain reaction to their suppliers of sophisticated materials, tools, production equipment, and components. U.S. industries do not have a way of coming up with new ideas for the next generation of high-tech products...
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).
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.
Kibbe, C. (2004). Outsourcing: the good, the bad and the inevitable. New Hampshire business review, 26(14), 1A.
Kibbe, C. (2004, 07 09). Outsourcing: the good, the bad and the inevitable. New Hampshire Business Review, pp. 1A-21A.
Outsourcing raises an ethical issue, as so many blue collar workers, as well as well-educated white collar workers in the US have lost their jobs due to outsourcing. Especially, many who work in the field of technologically advanced services and software were exchanged for the workers in poorer countries for cheaper labor costs. Many of the multinational companies moved their manufacturing sectors to Mexico, China, or India. According to the article, "The Battle Over Outsourcing" (2004) by Bob Davis, et al. illustrates that many of the software programming work has been relocated to India over the years. Offshore outsourcing started with low-income jobs such as call center operators, and spread to high-paid computer ...
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.
When Americans hear the word “offshore outsourcing”, they automatically assume that Americans are losing their jobs to foreign countries. Most of these jobs that companies outsource such as the garment industry jobs are offshore outsourced because they are labor intensive jobs. According to Timmerman