Offshore Outsourcing

Jobs outsourced to China have subsided American employment opportunities and have helped contribute to wage erosion since 2001(Peralta). Between 2001 to 2013, 3.2 million American jobs were lost and three-quarters of those jobs were in manufacturing (Peralta). When you outsource jobs to different countries because it is cheaper, you are helping destroy your own country and could even be supporting slave and child labor and companies do this because they are greedy and want to make more money even though they could be getting low quality, brand damaging products

The debate over outsourcing in the U.S. is controversial among citizens and economists alike. There are many economists who believe that outsourcing is the next, most logical step in a free market economy (Mankiw & Swage, 2006). These economists believe that the market shifts according to supply and demand. An inherent feature of a free market economy is the free competition of goods and services where the goods and/or services go where the demand is the greatest. According to this view, there is a high demand for labor at a reduced cost and there is an almost endless supply of cheap labor overseas. An example of this would be that a call center attendant would be paid anywhere between twenty and twenty-five thousand dollars a year in compensation whereas the same worker in China would be paid approximately five thousand dollars in compensation per year (Mankiw & Swage, 2006). As anyone can see, there is a large difference between U.S. compensation and overseas compensation. These

Most specifically is China. In fact, “If it were a nation, in and of itself, Wal-Mart would be China’s eighth trading partner” (Matusitz and Leanza 192). This is because wages in China are far less than the typical wages in America, resulting in much cheaper product costs. Smith says, “suppliers have told us that they have felt real strong, particularly opening price point, pressure from Wal-Mart that has effectively forced them to make decisions to move overseas” (26:37). Wal-Mart’s suppliers are forced to manufacture products so as to make a profit. This has consequently resulted in the loss of American manufacturing jobs. Not only have American jobs been affected but jobs overseas have been affected as well; “even bringing about the apparently stunning spectacle of Wal-Mart caving in to unionization in China, globalization has only weakened the chinese working class” (Blecher 275). Workers in China now have a union but are still paid very little. Although they are paid very little, they have come to rely on whatever small amount it is that they make. In an interview with Frontline, Donald Hay, owner of Hay’s factory in China, says, “They[Chinese factory workers] want to work. They want to earn the money. They want to get forward. And they will do anything to move forward” (Smith and Young 30:49). Earning much less than a dollar per hour, the workers are motivated to work harder so they might be able to move

Again China cheap labors not only they are stealing American workers jobs, but they're also exporting their product to Americans on a daily basis.

“Outsourcing refers to the practice of contracting workers outside of a company or business for work duties or services previously performed by company employees or “in-house”. This practice is also often referred to as offshoring due to the increasingly prevalent use of “non-U.S.” service providers for these outsourced duties. However, strictly speaking, outsourcing can and does refer to the use of contracted labor provided by individuals outside of an organization, but still within the U.S.; whereas when these same services are provided outside the U.S., it is both outsourcing and offshoring.”

“It (outsourcing) is not a our father’s traditional foreign trade. Goods are not being traded. Offshore production is not a case of US making good X and trading it (to another country) for good Y. It is a case of the US ceasing to make X in the US and making it (in another country) instead” (“Outsourcing champs say India critical to their success”). This quote leads to the differences between outsourcing and trade. Trade is a matter that had threatened the unskilled people in the labor force, which encouraged many of them to learn some sort of skill. Unlike trade, however, outsourcing is a threat to skilled workers. It is true that outsourcing had been around for many years and that it is no new matter.

Cheap labor in China can be hard. Workers are only making 75 cents an hour. Migrant worker typically earn less than $130 a month. Once a person gets older they have to stop working since most work in the factories will be hard for them. It is also hard to find mid and senior level managers. Since most of China’s university grads leave within the three years of them working.

Over the past decade, many companies from North America have moved to foreign countries. This migration is known by many names – “runaway plants”, “outsourcing”, “global sourcing” and “offshoring” ("Outsourcing: What's the true impact? Counting jobs is only part of the answer."). According to Investopedia, outsourcing is “a practice used by different companies to reduce costs by transferring portions of work to outside suppliers rather than completing it internally” ("Outsourcing Definition | Investopedia"). Companies outsource primarily to cut cost. This mostly helps them to reduce their cost by 60 percent since labour in many Asian countries like China and India is very cheap. Even though offshoring is benefiting companies, it has negative

Opponents of outsourcing do not take this information with a grain of salt. They see outsourcing as a significant problem contributing to job loss, increasing wage gaps, and negative impacts on low-skill workers. As outsourcing is essentially free trade, some opponents blame job loss on the North American Free Trade Agreement (NAFTA) in which Mexico, Canada, and the Caribbean Basin do not pay tariffs on exports to the United States. By not imposing tariffs on exports, opponents of NAFTA claim companies will jump at the opportunity to cut costs by manufacturing products in a lower wage-paying country and exporting them to the U.S.,

The impact of offshoring is not a new topic in the global business world. Offshoring has matured into a high-profile argument over the last few decades. As a result of offshoring, countries like the United States have exported countless jobs to foreign countries. As technology improves as well as the modernization of countries such as China and India higher numbers of service jobs will be moved offshore (The Next Industrial Revolution.) Although offshoring has delivered enormous economic benefits, it also has created a heavy political toll. Offshoring has led to increased amount of jobs and rising standards of living in for laborers in low-cost countries, rich-world workers have been able to leave the grunt work to someone else, and companies with lower labor cost have brought higher profits. Western consumers

Disadvantages of outsourcing are quality risk, quality service, language barriers, and legal compliance and security. First of the advantages is a quality risk, quality risk is an outsourcing can expose the companies to potential risks and legal exposure.

Many developed countries have been outsourcing as a result of which, it has become a common act. Global outsourcing became majorly popular amongst organizations since the introduction of communicational advancements in the late 90s. Now communication ideas and keeping a check on an outsourced office in any third world country is as easy as turning on the light. Sharing of production is not as limited as it seems that organizations now disperse various services and functions worldwide in order to take an advantage in the cost and resources of the market.

In the past decade the topic of outsourcing has become a heavily debated subject on if it is ethically correct to outsourcing jobs to foreign countries. Outsourcing has become more and more an option for many companies and not just an economic fad. The decision to outsource is a difficult one for any company to make because there are many advantages and disadvantages to consider. The decision to outsource affects many people, communities, and industries so if a corporation decides to outsource they must consider how it will affect human dignity, the common good of the economy, and subsidiary.

• Decrease infrastructure costs by utilizing a more specialized, third-party staff. • Experience cost-savings during the 2nd year, but face increased expenditures during 1st year. • Maintain availability and performance through SLAs with the vendor. • Ensure a smooth transition through a formalized change-management program. • Mitigate risks by documenting procedures and improving employee awareness.

Green, Aaron. (2007, September 17). “Part 1: Offshoring basics: definitions, benefits, and challenges.” Retrieved from www.boston.com/jobs/on_staffing/091707.shtml