Concept explainers
Interpretation:The reasons as to why offshoring operations are not bad for the jobs in the United States of America.
Concept Introduction:
Offshoring is a business practice that has received much criticism especially within USA. Many Americans think it is unfair and takes unnecessary advantage of artificially created low rates of foreign wages. Further, they believe that it encourages managed exchange rates and promotes labor conditions that are substandard. However, it has also been argued that it is not as bad as it is believed to be.
Explanation of Solution
An offshoring company is an organization that transfers its operational and/or non-operational activities that were at a time handled by locals to companies operating in foreign countries. Many try to emphasize on the bad side of it saying that it makes the
Statistics have proven that even amidst offshoring operations creating a certain level of unemployment, some states in the USA have reported higher income levels. Further, given that a product or service could be made at a lesser value in another country, it makes sense to take advantage of that opportunity. On the other hand, organizations carry a responsibility to earn highest possible returns to its investors and shareholders. Hence, if a particular product could be made cheaper, why go for a more expensive option? After all, the gains are being enjoyed by the shareholders back at home and not any other country.
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