Chapter 7, Problem 1TAI1

Summary Introduction

To Determine:

Whether I agree with either of the manager’s point is to be explained.

Introduction:

You overhear the talk between your supervisor and the manager of another company. Your supervisor tells that he is fed up with companies outsourcing jobs to lower-wage nations. The other manager responds that if that decreases the company’s cost then it is good and fair since all the companies aim at making profits.

Suggestion:

Hence, I agree with the manager of another company that it is good to outsource work to other nations unless and until it does not create joblessness in the home country

Given information:

As per the data given the case is regarding outsourcing some of the jobs to low wage countries abroad.

Explanation of Solution

Outsourcing has become a major trend among companies who want to reduce cost and increase their profits. There are various advantages when company outsources jobs to other countries, they are:

• Reduce labor cost - Companies often outsource to countries where the labor is cheap therefore, they can reduce the labor cost.

• Improve economy of developing countries − when a developed country like US outsource jobs to developing nations then the country will have more jobs and thus they will gain economic growth.
• Focus on core strengths − when the companies outsource less value jobs to other nations then they can use their workforce to concentrate on the high skill tasks thereby improving their core strength and gaining more profitability.

While outsourcing has lot of benefits there are also negative impacts attached with it, they are:

• The home country may become jobless if the company decides to outsource more jobs in view of cutting costs.
• The quality of the product may decrease since the labor in low wage nations may not be competent enough to match the skills of the home country workers.

After analyzing the pros and cons of outsourcing I feel that outsourcing is a good option if the company maintain ethical standards like providing good working conditions in the low wage nation and also see that the jobs in the home country is also not reduced. Since a company can benefit from outsourcing in terms of cutting cost and the other developing countries will benefit economically then it is a good option.