Outsourcing Jobs

In: Business and Management

Submitted By turtlesrgroovy
Words 866
Pages 4
In response to the article on “Outsourcing Jobs: The Myths and Realities” by Martin N. Baily and Dian Farrell, it surprised me to learn there could be positive effects to the American economy as a direct result of outsourcing jobs overseas.
Typically, I have read mostly about the unsatisfactory results that are given attention in the daily headlines. Jobs sent overseas means less jobs here at home; where does this leave the common American worker in the wake of this economic shift? After reading this article, I’m having a difficult time accepting there can be a positive effect to this transition. Since the emergence of outsourcing or offshoring, in the 1990’s, corporations have been implementing the allocation of resources in increasing numbers.
In the beginning of this article, it details how much U.S. companies are saving by shipping white-collar jobs overseas. “For every dollar of corporate spending that moves offshore, American businesses save 58 cents. Companies can reinvest the savings in new business opportunities, pay additional dividends to shareholders, or both. Moreover, because wages are lower in the relevant foreign labor markets, companies can hire more (as well as better-qualified) workers to do the same job, and spend more on supervision and training (Baily and Farell, 2010).”

This, in theory, sounds like a win-win situation, for both the U.S. and foreign economy where the jobs are being created in. U.S. Companies cut costs, and countries, like India, employ workers willing and able to work as call-center agent, medical technicians and software programmers. Examining this on the micro level though yields different results as more and more Americans are finding themselves out of work. It is estimated that nearly 40 million jobs are in danger of being offshored and most of those are in the engineering and science fields. The fact…...

Similar Documents


...The Trend of Outsourcing Jobs Did the major companies in America not think of global competition as they started to expand their operations and increase the salaries of the workers? Why is it such a hot topic now, why didn't this act of outsourcing start long ago? What effect does outsourcing have on the American economy, will we be able to stop this trend, and if so what will be the effect. In this paper I will be looking at and discussing why companies are outsourcing the jobs overseas. What benefits that companies are getting out of it, and the problems that face management, as outsourcing seems to be the trend of big business. INTRODUCTION Outsourcing is the delegation of tasks or jobs from internal production to an external entity (such as a subcontractor). Most recently, it has come to mean the elimination of native staff to staff overseas, where salaries are markedly lower. There has to be a reason that companies are going to outsourcing rather than hiring people within their own country. The bottom line, the single thing that drives every company in the world. What ever can increase the bottom line you can expect that companies will do everything possible to reach higher profits. Living in Michigan almost my whole life, and being feed from the hand of General Motors outsourcing hits close to home. I feel that the one thing that has increased outsourcing is the results of the union. Back in the time when the union started I believe what they were doing was......

Words: 3275 - Pages: 14


...Outsourcing is an important part of Globalization. The choice to outsource U.S. jobs should be taken into great consideration as there are many segments into which it effects greatly. Also, outsourcing is a great option for a company who needs a certain project completed who do not have the man power or the money to hire a new employee, companies can outsource based on projects in the U.S.A. or abroad. Often outsourcing is a way to save money, but there can be unexpected costs as well. While it can be both a benefit to a customer it can also be a reason to avoid doing business with a company due to it. The decision to outsource is certainly not one that any organization should enter into lightly. There are many reasons to consider outsourcing to foreign countries. A few of the most significant advantages of outsourcing include the most well-known reason to consider outsourcing is to access cheaper labor. Workers in developing countries are paid far less than workers in developed countries due to the lower cost of living. Often these workers are not unionized as well, which further helps with cost cutting. At the same time outsourcing U.S. jobs to a foreign country can create a detrimental blow to the reputation of a company. In 2002 when T-Mobile was established the television spokesperson was Catherine Zeta Jones, a very classy and beautiful actress. Customer service call centers were based in the United States and there was never an issue that could not......

Words: 1277 - Pages: 6


...Is Outsourcing Beneficial or Not? Tanya Billings BUS 644 Operations Management Dr. Gail Hoskyns-Long May 28, 2013   Abstract Outsourcing refers to utilizing outside suppliers to obtain goods as opposed to using internal suppliers. Companies that use outsourcing may benefit from low costing and increased profits. Outsourcing may be beneficial to the company by lowering costs. However, there are negatives associated with outsourcing such as the depletion of American jobs. Within the following text, some pros and cons of outsourcing will be discussed such as job loss, financial implementations, potential recognition, and profitability.   Is Outsourcing Beneficial or Not? Introduction Companies are constantly striving to secure the success of their business. There are many different strategies that companies use to ensure longevity such as planning for the future with capital investing or cutting costs with outsourcing. According to Keeling (1999), outsourcing is described as obtaining goods or services from an outside supplier in place of an internal source. Outsourcing is gaining popularity as it proves to be extremely cost efficient and takes away all of the problems with internal suppliers (Oza & Hill, 2007). However, there can be negative impacts from outsourcing as well such as the depletion of American jobs and disruption of the supply chain. This paper will examine the advantages and disadvantages of outsourcing to low labor-cost......

Words: 996 - Pages: 4

Outsourcing Jobs May Lead to a Weakened Economy

...Outsourcing jobs may lead to a weakened economy Anne Onyambu ENG 1000 Ms. Lorrinda Khan November 11, 2011 A popular theory states that something is not worth doing if it earns you less than your hourly wage, imputed or otherwise. For example, if you make $120 an hour and you can hire someone experienced to mow your lawn for $20 an hour then, you should go ahead and pay for the service instead of doing it yourself. This will leave you free to use your time where you can earn $100 an hour hence create more value for yourself and many others. Of course, you can mow your own lawn, but you will be losing a value of $100, if there is an opportunity to earn $120 an hour and can get someone experienced, who earns $20 an hour to do your lawn. This is the essence of outsourcing, to save costs and hence create increasing value for stakeholders in organizations. The prevailing trend of outsourcing to foreign countries has become an issue of major concern of all representations of the common people all over the world. Specifically, in America, outsourcing of American jobs has become a big topic. Many jobs are being outsourced to other countries, like China, India, resulting in job scarcity and leaving the American population unemployed. Outsourcing refers to the practice of contracting with third companies or vendors outside the organizations, usually in another country, to deliver products and services to local customers at a cheaper price. The practice of outsourcing is a...

Words: 1051 - Pages: 5

Outsourcing Jobs to Foreign Countries

...Outsourcing jobs to Foreign Countries Cedric Jones Axia College IT 105 Skills for Learning in an Information Age Rebecca Baiges February 18, 2007 2 Outsourcing American Jobs to Foreign Countries hurts the American Workplace due to the shortage of jobs. Have you every felt like in today’s job market having just a high school diploma wasn’t sufficient enough when it came to competing in today’s job market? Now, high school graduates have to really think hard and way every option before making that life changing and final decision before graduating. Do I pursue a college degree or do I take a chance and enter the work force. That kid that really had it rough in high school and all he or she was trying to do is graduate and receive their diploma and take a break from school, now is faced with another challenge. Do they have enough skills to compete in today’s job market. It’s really sad to say, that in today’s job market you see more people with college degrees applying for jobs at Target, Sears, Wal-Mart, Kmart, and even J.C. Penny. It’s really sad to say that you see more people with college degrees flipping burgers and dipping fries at McDonald and Burger King. You would think with all that money that was spent to acquire a degree, you could have it your own way. You would think with a college degree you could set your own course, but those days have come and gone. 3 Have you ever picked up the newspaper and......

Words: 1618 - Pages: 7


...Assignment 1 Outsourcing Richard Riggins ITT-Tech Outsourcing At the most basic level, outsourcing is form of trade. It produces economic gains by maximizing what the economist David Ricardo termed “comparative advantage.” The idea is simple: By outsourcing low-skilled jobs abroad for instance customer service, data entry, or labor-intensive manufacturing companies can obtain products and services at a lower cost than if they had tried to create or perform them. That allows companies to increase efficiency and productivity, creating an overall benefit to the economy. Meanwhile, the lower costs of less expensively produced services and goods are passed on to consumers. In short, all parties benefit. The biggest economic benefit may be efficiency. Outsourcing allows companies to perform functions that that they either can’t do or can’t do in a cost-effective way. Few firms waste precious time and resources doing their own taxes when they can outsource the task to professional accountants. That’s good for the company, which doesn’t have to waste resources on the service, for the accounting firm that gets the business, and for the firms’ clients, who won’t have to pay the added cost of the service. Domestically, this idea is not controversial. Companies outsource within the country all the time. Politics enters into only when outsourcing is directed overseas. It’s not obviously clear why that should be. By allocating resources more efficiently,......

Words: 517 - Pages: 3

Outsourcing Jobs - Does It Help or Hurt America?

...19, 2013 Outsourcing jobs – Does it help or hurt America? Outsourcing is any operation, job, task or process that could be performed by employees within an organization, but is instead contracted to a third party for a significant period of time. In addition, the functions that are performed by the third party can be performed within the organization or any other location. The U.S companies’ hires lower income workers in the emerging market instead of hiring Americans. The advantages of outsourcing are mainly benefiting the U.S companies to be more competitive in the global marketplace by keeping costs low. When U.S companies become less competitive this could usually drive those companies overseas, usually different types of jobs are outsourced for different reasons. My opinion outsourcing falls on the business owners and corporation who basically wants to minimize cost and maximize profits without regards to workers within their country. Some jobs that are outsourced are: Information Technology (IT) Many companies in the United Stated are now outsourcing this position or sometimes workers from other countries are offered visas to work for IT companies in the United States. Human Resources are sometimes outsourced since this would reduce cost to the companies by pooling thousand of businesses. This would lower the cost of retirements, workers compensation insurances, medical benefit plans. The major outsourcing of all......

Words: 513 - Pages: 3

Outsourcing Jobs

...appears to be satisfactory to protect workers from being overworked and compensated properly. According to Chase, Aquilano, and Jacob (2001) (Chase, Aquilano, & Jacobs, 2001), outsourcing is an intentional act of transferring some or all of a company's activities to an outside provider. Outsourcing may result in loss of control of responsibility for decision making . There are numerous reasons for a company to outsource activities that they currently manage. A few of the reasons for outsourcing are to enhance effectiveness by focusing on what you do best, increase product and service value, obtain expertise, skills, and technologies that are not otherwise available, gain market access, and reduce labor cost for the company (Milkovich, Newman, & Gerhart, 2013). However, along with advantages to outsourcing, there are disadvantages when a company decides to outsource its activities. Often layoffs occur, employees may be rehired, but at a lower wage, psychological impact to laid off or rehired workers, and change to economy in short and long term (French, 2006). This review of outsourcing jobs and its effects will focus on job outsourcing and will consider the affects of a company deciding to outsource jobs, and the workers and economies of both countries involved in an outsourcing decision to include monetary and psychological impacts. Reasons and Effects - Company's Perspective As per Milkovich, et al. (2013), a company must account for several types......

Words: 810 - Pages: 4


...Outsourcing – A Global Challenge MBA-700 International Economics Abstract The choice to outsource is a major strategic decision not made lightly by companies in today’s global marketplace. Though it brings probable results of cost reduction, loss of control in your product or the quality of service rendered makes this a decision that should not be taken lightly. Though a concept decades old, outsourcing is a topic that brings out fervor in individuals fighting for or against it. It’s a debate centered on moral, economical, and political aspects, with feelings that intensify during economic downturns because of the This paper will discuss theories of outsourcing, while comparing and contrasting the disadvantages and advantages (SWOT Analysis – see Appendix 1) of a concept that is growing in global business. The paper will conclude, most importantly, with discussions on three outsourcing alternatives and their potential to re-invent the status quo. Introduction The advent of globalization has proven that outsourcing is not a hypothetical situation; it is a major strategic business decision growing in popularity that our American workforce must now face in the decline of our U.S. economy. Some believe that outsourcing has become a serious issue not only for our workforce, but also in our major corporations, and the political arena. Issues such as the security of our nation have become debate topics, with critics arguing that outsourcing has weakened national......

Words: 4072 - Pages: 17


...No. 2005-12-A Office of Economics Working Paper U.S. International Trade Commission Growth in Services Outsourcing to India: Propellant or Drain on the U.S. Economy? William Greene* U.S. International Trade Commission January 2006 *The author is with the Office of Economics of the U.S. International Trade Commission. Office of Economics working papers are the result of the ongoing professional research of USITC staff and are solely meant to represent the opinions and professional research of individual authors. These papers are not meant to represent in any way the views of the U.S. International Trade Commission or any of its individual Commissioners. Working papers are circulated to promote the active exchange of ideas between USITC Staff and recognized experts outside the USITC, and to promote professional development of Office staff by encouraging outside professional critique of staff research. Address correspondence to: Office of Economics U.S. International Trade Commission Washington, DC 20436 USA No. 2006-01-A OFFICE OF ECONOMICS WORKING PAPER U.S. INTERNATIONAL TRADE COMMISSION Growth in Services Outsourcing to India: Propellant or Drain on the U.S. Economy? William Greene U.S. International Trade Commission January 2006 The authors is with the Office of Economics of the U.S. International Trade Commission. Office of Economics working papers are the result of the ongoing professional research of USITC Staff and are solely meant to......

Words: 33759 - Pages: 136

Outsourcing Jobs

...Outsourcing Jobs I think it is interesting to know the positive and negative arguments about outsourcing. On one hand, there is the current uproar about illegal immigrants swarming in to the U.S. to do the jobs that Americans don’t want to do. And on the other hand, there is the continuing outcry about jobs going overseas. This would be the outsourcing of jobs that Americans would be willing to accept if the corporations were not so adamant about improving their bottom line for their stockholders. So, what is outsourcing and offshore outsourcing? By definition, “outsourcing (or contracting out) is often defined as the delegation of non-core operations or jobs from internal production within a business to an external entity (such as a subcontractor) that specialized in that operation. Outsourcing is a business decision that is often made to lower costs or focus on competencies” (Miller, 2010). A good example of outsourcing is janitorial services. Instead of a company training several people for the position, they can outsource these tasks to another organization that specializes in recruitment services. This way they can save the time from hiring and training, and the work output should be of the highest quality. Offshore outsourcing is referred to as, “work done for a company by people in another country that is typically done at a much cheaper cost” (Miller, 2010). These services are outsourced elsewhere to countries other than where the goods and services are......

Words: 2350 - Pages: 10

Outsourcing Jobs to Low Wage Countries

...Outsourcing Jobs to Low Wage Countries Research and Key Issues Business outsourcing, a practice that was previously shrouded in controversy has become commonplace, not only among technology firms but also the IT departments of established companies in various industries. The bulk of overseas outsourcing, a practice that involves companies in economically developed nations shipping jobs to businesses in developing countries, has expanded after the practice became fashionable during the period of economic boom in the mid 1990’s. During this time, the outlook of the practice remained relatively unchanged, though this seems to be changing. For instance, firms that deal with outsourcing are starting to consolidate, resulting in larger providers who offer a wider range of services. Niche providers are also coming forth. Additionally, developing nations such as China and India are in direct competition with one another (Sornarajah 277). India has been the traditional outsourcing –services leader. Initially, outsourcing was the preserve of the larger companies, but now even the smaller and mid-size businesses are beginning to outsource jobs. Additionally, the previous practice was to outsource large projects, for instance call-center operations and basic application development. Today, as outsourcing is becoming more commonplace, companies are beginning to outsource smaller projects such as research and development (R&D) and scientific projects to external providers. Many......

Words: 2993 - Pages: 12

Offshore Outsourcing Jobs in the United States

...Offshoring, also known as offshore outsourcing, is the term that is used to describe the practice among companies located in the United States on contracting businesses beyond U.S borders to perform services that would otherwise have been provided by in-house employees in white-collar occupations. The term can be applied to U.S. firms that are offshoring the jobs of blue-collar workers on textile and auto assembly lines, for example, which has been taking place for decades. The extension of offshoring from U.S. manufacturers to facilitate providers has heightened public policy concerns about the extent of job loss and foregone employment opportunities among American workers. This concern was especially relevant to policymakers because of the national unemployment rate persistently exceeding 9% despite the end of the Great Recession in June 2009 . The outsourcing of service sector jobs from the United States was a response to the early 1980s recessions when employers narrowed their focus to the company’s core mission and contracted peripheral activities (e.g., janitorial duties) to other U.S. businesses. The 2001 recession caused employers to seek further efficiencies by tapping into the global supply of labor. U.S. businesses were able to outsource overseas the jobs of white-collar workers in some service providing industries as a result of widely disseminated technological advances that permit low cost, good quality, and high speed transmission of voice and data......

Words: 2569 - Pages: 11

Outsourcing American Jobs

...Outsourcing: America’s Job Killer Javier A. Arocho Axia College of University of Phoenix COM 120 Effective Persuasive Writing Carl L’Esperance August 6, 2006 Abstract In my paper “Outsourcing: America’s Job Killer” I will be covering the effect that outsourcing has on the American people. Job losses, higher unemployment rate, and lower economy are the results caused by outsourcing jobs to foreign countries Try to imagine American’s going to work early in the morning, same routine for over 10 years at the same job. They arrive at their desk to find a memo from their CEO announcing an important meeting taking place that day for all employees. During the meeting their CEO announces that in two weeks their company of five hundred or more employees will be closing for good because they are relocating the business to a foreign country. Now in two weeks they will be unemployed from the job that they gave 10 years of excellent service, and they have to start all over again. This is what happens to hard working American’s when companies decide to offshore their business to foreign countries. Outsourcing jobs to foreign countries create job losses in the United States. American jobs are becoming scarce every year. More companies are deciding to outsource, because it saves them more money. There are people in other countries that are more than willing to work......

Words: 1657 - Pages: 7


...Anh Tran PSU ID: 9 5424 7020 Extra Credit: Video Response `Let us all face it, the fact about outsourcing as a controversial topic. When talking about outsourcing, I begin to look from two different directions. First, we have to consider the group of people who are hurt because of outsourcing. According to investopedia.com, “outsourcing is a practice used by different companies to reduce costs by transferring portions of work to outside suppliers rather than completing it internally.” Simply put, outsourcing is the idea where the company replaces local jobs by another location cheaper in cost. As a result, the local employees are losing their jobs and are having hard to time to find another. To be specific, in the United States situation, the number of unemployed population as well as the victims of the outsourcing layoff is claiming that outsourcing is the main reason behind losing their jobs. Protestants’ anger is not only losing their jobs but also that their jobs are being transferred oversea to many less educated than they are. However, we also need to look at a bigger picture, the economy as a whole. In the past, the United States had always shown it competitive advantage, such as advance in technology, creativity, and the skilled labor. Unfortunately, as the technology continues improve, the technological competitive advantage becomes less credible. Now, technology and software, which once are developed, will quickly be adapted and copied. Unlike the US,......

Words: 358 - Pages: 2