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Outsourcing Jobs to Foreign Countries

Essay by   •  May 22, 2011  •  Essay  •  1,529 Words (7 Pages)  •  1,555 Views

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In today's world, many companies are outsourcing their non-core activities as well as many of their technical positions (Monster Papers). In this paper I will explain the term outsourcing and why companies are preferring to outsource. I will also explain some of the advantages and disadvantages to outsourcing. As a society we know what outsourcing is but many don't understand the benefits or the repercussions of outsourcing. My position on the matter is that outsourcing can be an advantage from a company standpoint labor is cheaper, and more cost effective foreign workers are more eager to please than their American counterparts.

According to the dictionary, there are several definitions of outsourcing, the word outsourcing means to purchase (goods) or sub-contract (service) for an outside company (Dictionary.com unabridged v.1.0.1). It can also be described as assigning work, to an outside provider or manufacturer in order to cut costs.

In today's turbulent times there are many different reasons why companies chose to outsource. One major reason is it's cost effective. Reasons also include our changing environment. To elaborate, companies that are able to accept change and be flexible will prosper, while companies that are not acceptable to change and flexibility will eventually fail. Outsourcing is here to stay. Globalization is an aspect which has an impact on increasing outsourcing. Today many companies are turning their attention to foreign markets. The number of global companies is accelerating. These companies do not have in house expertise to negotiate or operate the supply chain process in international markets. So, they need to outsource their supply chain to logistic companies which have international expertise in the distribution function. Another reason for outsourcing is the increasing complexity of distribution networks. Storing and moving goods have become more complex as technology is advancing so fast. A manufacturing organization normally does not want to waste its management resources to this function. Therefore, they prefer to outsource this function to logistics companies which possess all the necessary skill and technology in this service (Monster Papers).

Another form of outsourcing is the ever large growing population of work from home customer service representatives. Better know in the industry as cyber agents who are employed in the United States and overseas. These individuals are a force to be reckoned with and this industry is growing at an alarming rate. CBS This Morning and also the Today Show have featured some of the legitimate companies that let you experience the freedom and flexibility from working at home. My experience with working from home is that it is a wonderful opportunity and it is definitely taking the place of a call center. Think about it; there is no company overhead, everything is done from your home, you use your own phone line, your own computer, and everything you use belongs to you. When you have a meeting it is set up as a conference call so there is no need to go into the office. You save on gas, lunch, clothes, anything that you would spend as far as money on a day to day basis you don't spend because you are at home. The only disadvantage to working from home is that you are usually a contractor and you don't have medical benefits or insurance you usually have to supply your own. But on the upside there are many companies that offer affordable insurance for the self employed.

Outsourcing our Information Technology or better know as IT is fast becoming a major enterprise. More opportunities to cut cost and increase revenue is a major contributor as to why so many IT jobs are being moved overseas. When it comes to IT jobs companies tend to think globally and act locally.

Another impact of downsizing IT jobs in the U.S. is the perception of inflation. Inflation and business are economic entities that are intertwined. One cannot exist without the other's influence which is very important when evaluating how government tries to minimize inflation along with the size of variations that exist in the business cycle.

It can also be argued that while companies are increasing revenue and decreasing costs the U.S. unemployment rate is steadily rising. Since 2001 the unemployment rate has been on the rise. More than half a million U.S. citizens lost their jobs between Jan. 2001 and Dec. 2002. By the end of 2004, 1 out of every 20 information technology jobs have been relocated overseas (Steve Lohr). The relentless flow of jobs out of the U.S. is harming our ability to develop and expand the high tech sector. Companies are sending more and more high tech jobs overseas which are why so many workers are failing to develop their skills. By 2015, 3.3 million U.S. jobs and $136 billion wages will transfer to countries like India, Russia, China and Philippines (Olga Kharif). These actions are adversely affecting the economy.

With more white collar workers either unemployed or in lower-paying jobs the economy suffers because they spend less money. Not only do higher paying white collar jobs to other countries increase unemployment, it also drains the U.S. of much needed revenue by moving income that would be taxed to other countries. Outsourcing's impact on United States wages will have negative consequences for United States workers. Job losses that are being suffered now are

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