Globalization: Outsourcing and Offshoring Software Creation Essay

Outsourcing emerged on the financial arena during the 1980s and has since then been spreading. Outsourcing production was furthered with the process of globalization which provided a new component leading to the strengthening of resources, skill and labor specializations across the world. The process of outsourcing is using the skill and abilities of a third-party to accommodate society on the foundation of labor. As stated earlier, it was during the 1980s that the process kicked off mainly due to the efforts of corporations when they began to hire labor forces across the world. Even though outsourcing has come out from its developing stages, there are still following effects on the US economy.

The phenomenon has created major suffering for many American and as this outsourcing continues to spread, Americans will demand action (R. Hira 2008, p-95). The book also adds that scholars Ralph Goory and William Baumol have shown that even when the basic model of the economics are used trade does not make both the trading partners better off. The trading in one country will have a negative impact while trading in other country will have a positive impact. The country with negative impact will definitely affect its economy. United States economy being the world’s largest economy; historically, it has maintained a stable GDP growth, a low unemployment rate, a high level of research and capital investment funded by both national, and because of increasing saving rates, increasingly by foreign investors. But offshore outsourcing has increased the unemployment rate dramatically in the decade. And so the economy worsened day by day.

It was clear to management in GSD that although these numbers are very compelling and give the company an opportunity to save a vast amount of money, offshoring would still be a very sensitive decision. Historically, the benefits of free trade had been premised on the logic of comparative advantage. Management at GSD wondered whether the concept of comparative advantage was losing its relevance as an argument in favor of free trade. The question was put forth that, if free trade simply transferred jobs, where would the new jobs come from to utilize the skills of highly trained displaced developed world workers who had grown accustomed to high levels of pay? In 2003, a newspaper article commented on a political debate related to offshoring jobs of radiologists from the hospital of Massachusetts General Hospital. It stated, “The hospital would beam images electronically from some scans to India, to be worked on by radiologists there”. As one would expect, US radiologists were up in arms over this. “Who needs to pay us $350,000 a year if they can get a cheap Indian radiologist for $25,000 a year?” (Who’s Reading Your X-Ray, The New York Times. Nov. 16, 2003). This is the exact view that GSD would not like to portray. Their reputation both internally as viewed

The most cited official projection outsourcing is by Forrester. It is estimated that outsourced US jobs will grow from about 400,000 in 2004 to 3.3 million (recenty revised to 3.4 million) by 2015 which seems quite significant. But on a yearly basis this accounts for about 250,000 jobs but in perspective the number is small compared to the total US employment of 137 million. It actually only constituate less than 2 per cent of 15 million Americans who lose their jobs each year . Goldman Sachs estimates that offshoring has accounted for 500,000 million lay offs in the past three years. A study by Ashok Deo Bardhan and Cynthia A. Kroll at the University of California, Berkeley indicates that up to 14 million Americans now work in occupations that are at risk of being outsourced . Forrester also estimated that 300,000 US jobs have been outsourced. While the Commerce Department 400,000 new jobs, which leaves a net result of 100,000 new US jobs . In addition, an Economic Policy Institute in New York announced that 144,000 new jobs were created in August 2004 . Summarizing the numbers, it seems that outsourcing will have a positive effect on the overall US economy.

Critics see outsourcing as impacting both domestic and foreign countries in a negative way. Domestic economics falters since business is transferred to outside sources, therefore local employment suffers, prices may rise, and people may lose their jobs. The United States loses about 230,000 jobs a year due to outsourcing and new jobs are not crated that frequently or rapidly, therefore local unemployment rises. At the same time, the US also loses skills due to outsourcing. Developing countries also experience global stratification where, even though the imported business upgrades social conditions, social demarcation and hierarchy occurs where the labor class is exploited by newly formed elite. This is called "Global stratification". Consequences may be disastrous not only for the country

Since outsourcing has begun effecting both party lines, Republican and Democrat officials will be interested because members of congress are self-interested. Congressmen who continue to evade the issue and avoid taking a strong stance on this issue will lose votes when it comes to election time and that doesn’t serve in the best interest for any politician. The other big player in this issue is big business. As labor is offered at cheaper rates overseas, it is very tempting for businesses to take advantage of that resource. Saving money is a great way to raise profits and stock values of companies. This brings up the hardest part of this issue. Americans own stock in the big companies that outsource jobs, if the company does well then the stock does well and it helps the investor. The average family makes between 33 to 45 thousand dollars a year. People in this bracket generally rely on their job to provide income and security for their family, not the value of stock. The middle class is taking the biggest hit and has the most to loose from outsourcing. The middle class has traditionally been the backbone of America ever since WWII. It has always been in any candidate’s best interest to appeal to this group of voters.

The University of Rhode Island Change Assessment (URICA) is a self-assessment tool designed to measure the level of an individual’s readiness to modify their behavior as they progress through a process known as the stages of change (McConnaughy, Prochaska and Velicer, 1983). In this research, the stages of change included pre-contemplation, contemplation, action, and maintenance phases. The stages of change is the predominant construct of the Transtheoretical Model of behavior change (TTM). TMM model of behavior change is a combination of key concepts that can be utilized in the application of conduct modification a variety of instances (CITE). The URICA is a self-assessment tool which was developed by McConnaughy, Prochaska and Velicer (1983)

“Starry Night” is one of the most popular canvasesin modern-day philosophy along with being one of the most simulated and pursued after images. This painting was done by Vincent van Gogh when he was at an asylum in Saint-Remy in 1889.It is said that this painting is a view out of Van Gogh’s asylum window. The painting shows swirling clouds in a starry night and a bright crescent moon, overlooking perhaps a village. This shows a contrast between the bright night sky and the silence of the village which is supposed to be Van Gogh’s hometown Netherland. The painting also consists of a cypress tree which is typically found in graveyards . This might have something to do with the artist’s perception of the inevitability of death and how close

Supporters argue that outsourcing has a minimal effect on job losses, and has increased economic growth in some cases. In actuality, outsourcing has decreased the domestic economy by decimating job opportunities and lowering wages. Steven Pearlstein, economics columnist for the Washington post reaffirmed arguments that outsourcing has decreased employment availability and stability of the economy by saying “There are growing numbers of people who think that what started as a sensible, globalized extension of sending some work outside a firm to specialized companies may in fact be creating long-term structural unemployment in the United States, hollowing out entire industries”. (Pearlstein 3) The IT industry has been especially affected by outsourcing, with many jobs moving overseas to India and Bangladesh, leaving employees in the United States without a job, unable to compete with lower wage offerings. Supporters of outsourcing argue that this business strategy increases everyone’s productivity, raising everyone’s income, and boosting economic growth. Many such studies tend to focus on large multinational corporations, for which the data and anecdotes are more readily available. And indeed, during the 1990s, the data seemed to show that for every one job added abroad, companies added almost two new

Sir Francis Drake was a sailor and was the first to travel around the world. Drake was a Vice Admiral, he was second-in-command of the English fleet. He lived in america where Queen Elizabeth was. Drake and the queen were really close to the point that they had a relationship. Then one day the Spanish Armada said that they were gonna kill the queen. So what she said to get rid of them and to be back in 6 months. Sir Francis Drake went on the voyage to defeat the spanish for the queen.

Many businesses in United States manufacture their product overseas. This involves manufacturing products outside United States where the labor cost is cheaper. Because of cheap labor, it is often more economical for a U.S. company to manufacture overseas and pay the shipping costs than to manufacture in the United States. For a company, the savings may be substantial. However, there are negative impacts on U.S. employment, as many jobs in the United States are being outsourced and replaced by overseas positions. The manufacturers outsource production projects to save time, money or resources. The manufacturing is outsourced so as to remain competitive and maintain a steady work flow. Without outsourcing, manufacturing costs could escalate to the point at which no product would sell and all employees would have no work. Outsourcing comes

In the upcoming years, many jobs in the service sector will be lost to workers overseas. Countries overseas can do the same job but in return they provide a lot less pay. The cost of living in other countries is far less than in America, in return American manufacturing workers stay competing with the millions of people that reside in Europe and Asia. Expanding service sector trade in the United States is not providing any net gains, but rather the so called transition. This transition may take a generation or more and US wages may

Offshoring attracts much more criticism when it comes to outsourcing. When a business considers leveraging offshore outsourcing in order to gain a competitive advantage there are a few definitive reasons. Many of those reasons revolve around an inability to hire domestic labor for the required job as mentioned above. The U.S. has high living standards along with strict health regulations that don’t exist abroad. China’s lack of environmental standards is another differentiating factor that gives their workforce a competitive advantage. As a result, China is able to keep their wages so low that it’s ultimately incomprehensible for business owners to justify not hiring there.

To the opponents of outsourcing these statistics correctly state why outsourcing is a negative solution to cost cutting and affects the dignity of the people who used to work these jobs. To the people who have lost their jobs their dignity has been partially lost because they are now with out a job that they have worked for most of their lives and now they can’t provide for themselves and their dependents. Also for the companies that have outsourced these jobs they don’t provide adequate services for their employees who’s jobs are being outsourced. To the companies that outsource should help their former employees find other jobs. This would be beneficial to the worker and industry because the worker would loose a means of income and the industry would regain workers. On the other side the supporters of outsourcing say that it helps the dignity of workers who receive the jobs from the American corporations. An example of how outsourcing helps dignity is if you have an industry like web-design and you don’t get a job over a cheaper outsourced company you will have the extra motivation to improve your business or product (Business, ethics, morality).

The American Outsourcing Case is a compilation of factual information for the purpose of provoking debates. The authors present both the pros and cons of outsourcing, and avoid inserting their personal bias. The case clearly defines outsourcing and then focuses on outlining its existence in China, Mexico, and India. The evolution and U.S. involvement in the Maquiladoras of Mexico is described first. The implementation of NAFTA and the creation of Maquiladoras were major catalysts in the growth of free trade between the U.S. and Mexico. China, in an attempt to attract foreign investors, created Special Economic Areas, which designated geographic zones that were enabled to operate under their own laws. With great tax benefits