The Offshoring Debate in a Small Organization

Because many businesses in the US have more often began outsourcing different business products instead of doing them in-house, it is important to understand why outsourcing may be the best option. Although many tie outsourcing to foreign markets, outsourcing can include both foreign and domestic markets. By entering into a contractual agreement, outsourcing allows organizations to pay for services they need. This gives the option for a business to get professionals to perform services for them that the business may not have the staff for. Outsourcing provides a cost saving-strategy that is usually more affordable. Ultimately,

For United States businesses, there are several advantages and disadvantages of outsourcing US manufacturing activities to other countries. Some of these advantages include lower labor costs, fewer regulations,

As the world has gotten “smaller” in terms of trade, outsourcing has become a hot topic in much political and economic debate in the United States.

The U.S. economy has seen many hardships within the last decade. The economy has suffered from a recession that is still threatening to cripple some Americans and unemployment has been at an all time high. People have lost homes and jobs and many businesses have gone bankrupt simply trying to survive. However, in the midst of this economic crisis some companies have managed to survive. Many companies, approximately 36% of them, have found a way to avoid economic collapse by cutting costs (Job Outsourcing Statistics, 2014). One of the most popular cost reducing strategies of our time is called outsourcing.

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.

* Outsourcing the labor in different stages (manufacturing, operational, etc.) allows for the company to save costs which can increase the profit margin and improve the financial situation.

Outsourcing is a practice used by different companies to reduce costs by transferring portions of work to outside suppliers rather than completing it internally. (Investopedia) Outsourcing jobs has become increasingly popular in the economic realm of the world since the mid-20th century and has since then become a more controversial topic. The United States economy has been under the microscope for the last 4 years due to the economic recession. In today’s global business competitive environment, companies must find innovative ways that adapt to new strategies to sustain revenue generation, while also remaining competitive. This paper gives the effects that I have found to be most pertinent to the ongoing debate over outsourcing jobs, and how it can affect the U.S economy.

As described in the article, “Outsourcing - Pros And Cons” by Kristin Carpenter; “Outsourcing is basically the practice of one company to contract another company to provide the services that could have been performed by their own staff…. One of the main reasons why companies are into outsourcing is diminished company resources, both in financial terms and in manpower costs” (Carpenter). Because the most powerful American corporations in the U.S are no longer producing their merchandise in the U.S but in developing nations, in order to reduce the cost of labor and increase productivity, the United States no longer has companies that produce jobs in America. And due to the gradual growth of the use of outsourcing, American employment opportunity has decline greatly, leaving many people unemployed and harming our economic strength in the world.

For big corporations outsourcing gain the overall advantage because they are able to increase their economic output while drastically decreasing their overhead expenses. The saving the companies incur is then passed on to the consumer who can afford to buy multiple products at a lower price. They are able to acquire access a wider range of the world's resource and intelligence. Because big corporations are able to offer competitive wages to foreign workers they are able to hire the best talent within country. This also frees up jobs in America, by allocating tedious jobs overseas big corporations can better utilize talents in their home countries. By doing this they can focus on more important corporate related tasks. The benefits of outsourcing in low wage countries is that it raises their standard of living. Foreign workers are often payed twice as much than what could be offered by jobs within their country. Foreign worker also gain valuable skill sets from international companies. These skill sets increases their marketability within the workforce. The skill sets they develop are transferable and gives them a competitive

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

In 1989, outsourcing was formally identified as a business strategy that would increase a company’s markets and profits. The idea of outsourcing involves subcontracting manufacturing jobs such as IT and engineering design to foreign companies. Even though the term outsourcing has been recently introduced, the concept has been around for quite some time now. Outsourcing had promised to create more jobs and a better life for Americans. In reality, outsourcing, despite insourcing, has hurt far more American job holders and job seekers than they have helped. Instead of creating more jobs for Americans, it has created more jobs for non-Americans and left many unemployed. Only a few people have benefited from outsourcing: company executives, shareholders, and consulting firms.

Outsourcing overseas is a major disadvantage to the American economy. Contrary to popular belief, companies argue that low- cost labor will in turn save them money and raise competitiveness, which will result in less costly products. When taken into consideration outsourcing eliminates domestic jobs. When a firm outsources, the jobs outsourced are, by definition, removed from the country. These jobs are then sent overseas, where labor is paid far less than in the United States:

Several industries in America have moved low-skill, low-wage jobs overseas. Often, the motivation behind the relocation of these jobs is corporate financial gain. Companies can decrease production costs by utilizing low-cost labor in foreign countries. Manufacturing is one industry that has moved low-skill, low-wage jobs overseas. In 1980, the United States manufacturing employment was 21.3 million. Yet, in 2010, the United States manufacturing employment shrunk to 14.1 million (Douglas, 2017).

The essential goal of any business ever has been to make the most money that they could. This element is the very basis of what we know today as commerce, but the way modern businesses have done this is completely different and far riskier than what businesses did in the past. One controversial way they are doing this is through “outsourcing” in which companies move overseas for a variety of reasons and it has already become a commonplace practice in modern business because of its benefits, but it is the unforeseen consequences – that undermine these benefits – which are just as ground-breaking.

Outsourcing, or the movement of internal jobs to an international location, is one of the defining processes of business growth and economic management in the twenty-first century. However, its many benefits, such as cheaper labor costs and greater production rates, also cause a wide range of problems worldwide. As outsourcing becomes an increasingly popular economic option among developed nations, to what extent should outsourcing continue to be adopted in the United States?