Outsourcing : Effect Of Outsourcing

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

Today most of the companies wants cost cutting in their business. Nowadays outsourcing helps to achieve such goals. According to the internet, (www.flatworldsolutions.com), outsourcing can be to as the allocation of specific business processes to a specialist external service provider. Outsourcing is an arrangement in which one company provide services for another company that missing or don't have a specialist in the certain area of expertise. Most of the times, an organization cannot handle all aspects of a business process internally. Additionally some processes are temporary and the organization does not intend to hire in-house professionals to perform the tasks.

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.

While outsourcing may be beneficial to some of the companies partaking in it, the general consensus is that it ultimately proves to be harmful to the American workforce. The act of outsourcing and shifting many company call centers and technical support teams, or “low skill service jobs,” to foreign countries reduces jobs for those that could truly benefit from them within our own country. The unemployment rate has dramatically increased, and continues to rise, compared to what it has been in years past; yet there are numerous companies which still insist on handing over these “low skill service jobs” to people in other countries such as India. The most obvious and logical reason for outsourcing is reducing costs; people are working for

Specifically, companies are transferring these services overseas as in the case of call and help center services or companies are ordering manufacturing supplies from overseas at a much cheaper price than they could obtain them inside the U.S. Outsourcing is a term that is often used interchangeably with off shoring (Bhagwati, Panagariya, & Srinivasan, 2004).

The dawn of the outsourcing era. Many large U.S. corporations cultivates outsourcing faster than we can imagine. The trend that began in the late 1970 and picked up speed in the 1900s with the opening trade with China, India, and Eastern Europe (“Outsourcing: What’s the true Impact”). In its broadest sense, outsourcing is simply contracting out functions that had been done in-house—a longtime U.S. practice (“Globalization: Threat or Opportunity”). Subsequently, outsourcing is an essential part of globalization; and it is the combination of markets through the cooperation of internalization, federal, and state governments with corporate companies to produce products on a reduce production cost, and offer services on lower labor cost. When a U.S. manufacture product, and buys material from an intermediate supplier from out of the country rather than producing them in-house, that is what is called outsourcing. Also, when U.S. corporation hires outside contractor out-of-the-country to do U.S. call center services for less labor cost that is outsourcing. When a company deals out its operational task, such as payroll, accounting, and software operations that is outsourcing. Obviously, all of these examples seem to benefit and in favor of the corporations. To get the clear understanding of outsourcing for major corporation perspective, I have interviewed IKEA’s U.S. Deputy Retail Country Manager Rob Olson about outsourcing—Swedish

Globalization is the integration of markets through the cooperation of internalization, federal, and state governments with corporate companies to provide low-cost products. Subsequently, outsourcing is an essential part of this globalization. However, what exactly is outsourcing? In its broadest sense, outsourcing is simply contracting out functions that had been done in-house—a longtime U.S. practice (“Globalization: Threat or Opportunity”). When a U.S. manufacture product, and buys material from an intermediate supplier from out of the country rather than producing them in-house, that is what is called outsourcing. Also, when U.S. corporation hires outside contractor out-of-the-country to do U.S. call center services for less labor cost that is outsourcing. When a company deals out its operational task, such as payroll, accounting, and software operations that is outsourcing. To get the clear understanding of outsourcing, I have interviewed IKEA’s U.S. Deputy Retail Country Manager Rob Olson about outsourcing—Swedish goods. Olson stated that IKEA’s outsourcing utilizes the unique talents of different countries and their labor markets to increase trade, which helps better allocate resources in their own countries while getting goods cheaper from others.

Outsourcing is a method used by many corporations in which their products are manufactured in foreign countries often for cheaper labor.This method method of productions has it’s pros and cons.

The purpose of this paper is to analyze and come up with a reasonable conclusion on the effects of outsourcing in America. From overworking, to a decline in the manufacturing sector, a high wealth gap, and finally the contribution of corporate lobbying are prime examples of the by-product that were created by outsourcing. Although free trade is the root of the problem, outsourcing is the most prevalent issue that it has created. Since free trade is now a standard and cannot be eliminated we will look into how outsourcing, since it can still be controlled, has affected America.

In today’s society, outsourcing has become a very critical and controversial issue to companies and other countries. Outsourcing is known as offshoring as an organization’s use of an outside organization for a broad set of services. As technology continues to grow and advance more, outsourcing becomes more popular. Many American white collar jobs are being taken over by foreign countries around the world. Almost every occupation or career in the United States has some effect of the outsourcing. As a result, many Americans become unemployed and financially challenged; being that outsourcing can increase the United States unemployment rate. Employees who live in the US rather keep jobs in the country to create more opportunities. On the other hand, few stakeholders

You may have been asked if your job is next with the recent outbreak of shipping American jobs overseas. Lately, all of the corporate talk is about outsourcing and how it’s helping American companies grow, but what is not talked about is how it’s going to effect the American economy in the next few years and what should be done to stop it. Outsourcing is a modern plague that is killing the American dream. Its long-term effect is catastrophically damaging to the American economy and Americans need to step up their educational expectations, skill sets and motivation if they are to keep that long-fought for dream alive.

Throughout time, many things evolve based on current trends. The business world is no exception to evolution. In the world of business, the bottom line is key and wealthy figure heads are paid large sums to bring up profit margins and cut production costs. During the twentieth century, production costs have been cut by the means of outsourcing. Although outsourcing is financially beneficial to large businesses, it has detrimentally impacted the American economy through raises in the unemployment rate, lost countless tax dollars and compromised the integrity of products received.

Because of outsourcing jobs to overseas many American workers lost their jobs or compelled to work for much less compensation. This trend leads to the shrinkage of middle class income bracket and the reduction of the family’s standard of living. Besides, due to the elusive future employment status and the financial problems, many people have to live hand to mouth, and many more have to cut their expenditures in order to survive this dreadful and unpleasant situation. More importantly, the reduction in spending money and the deterioration of consumer confidence can hurt the economy severely and exacerbate the situation.

Outsourcing is a severely underestimated threat to the United States’ economy, which may eventually lead to our next financial crisis. Damages from outsourcing span throughout all levels of the US economy, although the effects of outsourcing are especially devastating to those of the lower class. The threats presented by outsourcing are acknowledged by both of the major presidential candidates: Hillary Clinton and Donald Trump. In order to prevent the next financial crisis, we must take immediate action.

The concept of outsourcing originate from the American terminology “outside resourcing”, meaning to get resources from the outside.1