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Effect of outsourcing jobs
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Effect of outsourcing jobs
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Outsourcing IT Jobs: Pros and Cons
In 1973, a monumental shift was prevailing where U.S. companies were sending low skilled jobs within the manufacturing industry to offshore countries to reduce labor cost while maximizing profits. The effect of the jobless manufacturing work force was a shift of those laborers to focus on and perfect the service industry of what it is today (Koch 1). During the high tech recessions of the late 1990s and a nominal expansion of the present time, the Information Technology industry, an industry which through continuous innovations enabled the companies and corporations of America to become more efficient and productive, is also facing the outsourcing similarity with manufacturing. While outsourcing manufacturing jobs offshore requires movement of raw materials and building new factories, Information Technology jobs could be outsourced much quicker than manufacturing jobs, as the majority of its roles and responsibilities are mobile. Overseas outsourcing of IT jobs has quickly become a controversial national issue. Outsourcing involves far more complicated advantages and disadvantages than the debaters on either side are willing to admit (Weidenbaum).
Outsourcing can help a company operate in an increasingly competitive global marketplace. Outsourcing can enable a business to provide 24/7 coverage, especially for consumers who need around-the-clock support (Weidenbaum). In the next several paragraphs, I will discuss from a microeconomic level the actions that my employer implemented to take advantage of globalizing the work force to reduce costs, the issues my organization is facing with offshore efforts on the other hand, and then the cost associated with this trend towards macroeconomic wi...
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...el to the U.S. macroeconomic perspective. Therefore, in the best interest of the American economy, political influences should intervene by either providing corporate tax breaks to offset the labor cost or slow the off shoring efforts by making U.S. companies aware of all the complications that go along with outsourcing Information Technology jobs overseas.
Works Cited
Goodwin, Bill. “Outsourcing users taken by surprised”. Computer Weekly. (2006): 4.
Koch, Christopher. “Back Lash.” CIO Magazine. (2003): 1 – 3.
http://www.cio.com/archive/090103/backlash.html
Koch, Chris. “What CIOs Can Do.” CIO Magazine. (2003): 1.
Terry, Rory L. “Answers on Outsourcing.” CNN Money Magazine. (2004): 1 – 3.
Weidenbaum, Murray. “Outsourcing: Pros and Cons”. Executives Speeches (2004): 31 - 35
http://www.cio.com/archive/090103/backlash_sidebar_2.html
A perfect government would restrict offshoring in a socially optimal way. However, the fact that the government’s clear-cut motive is to act in the best interest of its citizens is a questionable assumption. It is reasonable to think that their offshoring policy decisions could be slightly swayed by a motivation to remain in power. They may, for example, change their policies to be more restrictive of offshoring to alleviate pressure from workers who publicly announce their discontentment with the fact that their job was lost due to offshoring. To base policy decision solely on the basis of complaints and without properly founded economic reasoning is inherently flawed, and deviates from what is socially optimal.
Offshoring American jobs have positive and negative consequences to the American community. Some of those consequences of offshoring American jobs include Amer...
Outsourcing simply means acquiring services from an external organization instead of using internal resources (Butler, 2000). By using outsourced resources, organizations can gain a competitive advantage by utilizing contingent staff to accomplish strategic goals without incurring the fixed overhead. By focusing on the leading edge and highly specialized skill sets, outsourcing providers can often offer higher quality services, or at a lower price than the client organization. Typical reasons for outsourcing go beyond simple contingent staffing. Outsourcing providers are able to maintain economies of scale with regard to specialization (...
Mankiw and Swagel (2006) argue outsourcing is not as large a phenomenon as the media describes. Their research indicates outsourcing accounts for very little of job loss in the United States, nor has it made a distinct contribution to the slow rebound of the labor market. They go on to propose that increased overseas employment has actually contributed to higher employment in parent United States companies. They reported that while 30,000 jobs were lost per month in 2004, two million job changes per month were happening as well. They reference the Bureau of Labor Statistics when they report that in 2015 there are expected to be 3.4 million jobs outsourced, but 160 million jobs gained here in the United States. They also claim that there is a rise in net US income by 12-14 cents per dollar of outso...
As American’s, we are taught at a young age how great it is to be a citizen of the United States. Though Americans today are perceived much differently by people around the world, as they see American as being a money driven country, as they use one word “Capitalism”. What is being said here is, American companies are more interested in turning a profit, by offshoring their businesses to avoid taxes, rather than providing jobs and replenishing the American economy. Companies such as Apple have avoided these taxes by taking out loans to buy back stocks, these loans become tax deductible, and allow them to minimize their tax expenditure. The previously described is known as Globalization. The articles “Sweat, Fire and Ethics” by Bob Jeffcott
“5 Facts About Overseas Outsourcing.” Center for American Progress, Center for American Progress, 9 July 2012,
For advocates of global business, the hope is that outsourcing will help lift the United State’s economic growth and development by lowering the input cost of services (i.e. labor and materials) and by opening new markets abroad. Mainstream economists believe that outsourcing will have ...
Both sides can agree that outsourcing can be desirable for a business do to the potential profit. It allows goods to be made cheaper, management to run smoother, and money to be made faster (Salanţă 270). Both sides can also agree, however, that U.S. jobs are lost as a result of outsourcing (Ahmed 192), as well as environmental damage being cause due to corporations taking advantage of loose environmental regulations (Marquis 39). Upon digging deeper into this debate, one can find that both sides present very convincing arguments.
Since the concept of outsourcing was introduced it has been a subject of debate between politicians and citizens of the United States. Remarkably, it was the United States who supported outsourcing and now it is the United States that feels its economic progress is being threatened by outsourcing. One may argue that the financial situations that existed two decades earlier are not the same as they are today, thus the change of time, business priorities of economies have also changed.
As the problem of job outsourcing becomes more of an issue in politics, elected officials like the President and Congress will no longer be able to ignore the dilemma. The war in Iraq has been at the forefront of the presidential race but the importance of outsourcing American jobs seems to have been slightly overshadowed. If the issue of outsourcing is not watched carefully and a definitive plan hammered out, a trickling down of negative effects may occur within the U.S. economy. However, there is a polarized opinion on the effects of this “phenomenon”.
...ect on the college graduates and younger children of today. Outsourcing has made nothing but trouble for the United States with the passing of free trade agreements. It will cause a lack of jobs that will run the economy into the ground, and ruin the lives of the citizens of the United States. All of that so a business can use its faulty practices to make a higher profit. Outsourcing has consequences that will haunt the average American and their families for the rest of their existence on this planet.
Do you ever wonder what our nations underlying focus is? The answer is simple and should be fairly easy to guess… Money! Outsourcing originated from someone coming up with the idea that we can make products for practically nothing in other countries and make very high profits. Although it seems like a great idea to businesses, it negatively affects our country. American consumers are buying these products that are made in other countries and the companies profits are continuing to rapidly increase. At the same time, people that are in the production field of work in America are losing their jobs because producers would rather pay foreign workers to get the job done for a much lower wage. When it comes down to it, one of the reasons our economy is suffering is because of outsourcing. Basically, it all comes down to money. The consumers don’t pay close enough attention to where the products are made. Therefore, consumers are spending extra money and are causing outsourcing to thrive. The lack of knowledge Americans have on the subject of consumers affecting outsourcing is leading our country to economic stress but if we begin to recognize the issue, the jobs we could potentially save may be our own.
Kibbe, C. (2004, 07 09). Outsourcing: the good, the bad and the inevitable. New Hampshire Business Review, pp. 1A-21A.
Outsourcing has been around for many years. In this paper I will discuss some of the history of outsourcing, the goods things about outsourcing, and the bad things about outsourcing.
We say that we are heading toward a more global economy because of the fact that competition in today’s markets is global. This means that corporations in the United States can compete in foreign markets and vice versa, therefore U.S. corporations and foreign corporations become interdependent and thrive off each other. This can have a good impact on the United States because it allows U.S. corporations to seek materials and labor outside of the U.S. in countries such as China, India, and Mexico, where workers are paid a lot less money than U.S. workers, thus allowing them to sell their products for significantly cheaper than if they were produced in the U.S.; however, the tradeoff is that many American workers in the industrial sector lose jobs due to this shift of labor to overseas. In the long run this will be beneficial for the U.S. and although some percentage of workers are losing work, new jobs in the services sector, in fields such as computer technology, telecommunications, and language skills are opening up and experiencing growth because of this change.