Essay on Global Outsourcing and Job Loss

1953 Words 8 Pages
Global Outsourcing and Job Loss

Outsourcing has become a popular trend among United States companies within the last decade. American companies are feeling challenged to raise profits, lower prices, and put their products to market before the competition. International manufacturing is benefiting both consumers and producers in this regard. However, the question of whether or not offshoring is a positive or negative influence on the United States job recovery, in today’s unstable economy still remains. In this paper I will discuss the pros and cons of outsourcing in regards to manufacturing jobs and IT jobs within the computer industry.

Manufacturing Jobs

American manufacturers are pressed to compete at a global
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Europe, faced with this stiff American competition has now turned to offshoring services as well, especially British companies. European manufacturers determined that they would benefit from this trend because of the decrease in service costs by nearly 60% (Tyson, Laura D’Andrea).

While American and European manufacturing companies are reaping the benefits of global outsourcing, workers and communities that lose jobs due to this new business trend may be suffering considerably. The McKinsey Global Institute calculated that profit gains from U.S offshoring is based on the assumption that displaced workers will find new jobs within a year and that these workers will earn at least 96% of their former wages. These assumptions are based on the performance of the United States’ economy between 1979 and 1999. More recent data from 2000 to 2003 suggests that these estimates might be overly optimistic. According to the Mckinsey assumptions, nearly a third of American manufactory workers who lose their jobs will not find new ones within a year and the older workers with less education will suffer the most. (Tyson, Laura D’Andrea).

According to a survey report done by Ipsos- Public Affairs on consumer behavior in regards of outsourcing it was surprising to see that only 27% of consumers check to see if a product was made in the U.S or not. This same survey said that 69% of consumers feel that outsourcing hurts the economy, while 64% said that
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