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Outsourcing

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Outsourcing is affecting the U.S. economy greatly. Outsourcing is taking away jobs from the American people causing a rise in the unemployment rates. Not only is outsourcing taking away jobs, but it is making it harder to find new jobs. Outsourcing is where an American company will send certain jobs or duties to be done in another country. Outsourcing is also the transfer of the management, and also the day by day execution of an entire business function to an external service provider. It is a company’s practice of paying an employee in a small developing country to perform a function or produce a product that could be made by the paying company. Business jobs that are typically outsourced include information technology, human resources, facilities and real estate management, accounting, Customer support and call center functions, like telemarketing, customer services, market research, manufacturing and engineering. Outsourcing has become one of the fastest growing trends in the business world. There are many reasons that a company would elect to use outsourcing. Among them is the fact that it provides an almost immediate opportunity for savings as well as a noted improvement in quality. The main reason why American companies are doing this is to save money. It’s cheaper to have someone form a developing country do the job because a dollar goes a lot further than in the states.

One management problem that is causing outsourcing is that companies are looking for ways to cut cost tremendously in labor and manufacturing. Developing countries such as India are now taking a lot of American jobs. American companies are under pressure to reduce costs, and foreigners can do a lot of high-tech jobs more cheaply than they can be done here." That's why a lot of Americans are losing their jobs to the foreigners like the people of India and China. People in India are paid 1/10 of what employees in America get paid for doing the same job because the cost of living is a lot lower in India and other developing countries. So many managers in America are taking advantage of this and are saying “why pay an American twice as much for the same job when it can be done in India”. India economy is now starting to boom because of American jobs being outsourced to them. Telemarketing and I.T. jobs are among the highest paying jobs in India which are the two main jobs outsourced from America. Outsourcing has changed the life of the Indians. People are now getting more jobs than any other time and are feeling much freedom. Now in India, women are working at night and are dealing their own life.
In these small developing countries, where the majority of the working population speaks English fluently or are taught proper English, companies have access to the same caliber of highly skilled, motivated and educated workers that they have in the United States, but at a fraction of the labor cost of that in the United States. For the United States, India seemed like a perfect resource for these needs since most nationals spoke English and need little training on speech. A company can hire an engineer in India, for example, for $10,000 a year where an equally qualified engineer in the U.S. could cost $60,000-$90,000 a year.
Many companies are hiring teachers and professors to go to these countries to just teach the workers how to speak proper English so they can do any I.T. job just as well as an American. This is why most of these I.T. jobs that are outsourced, such as computer programming, call center and data entry jobs are the ones that Americans do not want to begin with, because they consider them trivial low paying jobs. Usually these low paying jobs have a considerable turnover rate in the United States. Because of the turnover rate, companies spend more time and money to fill these positions because they constantly have to hire and train new employees. In places such as India these jobs are considered good decent paying jobs, which people want to do. In the development of products, engineers from the United States work hand and hand with their Indian counterparts, and because of the time difference between the United States and India projects can be worked on around the clock and therefore take less time to develop.
Israel, Canada, India, and Japan are the four largest outsourcing countries. America is most intimidated by India because their economy is staring to boom and they are taking most of American jobs
Outsourcing is not just related to the services sector. A lot of manufacturing of products is also outsourced to countries like China and Taiwan. Consumer products including clothes and computer hardware are manufactured in these countries due to cheap labor. These products in turn lead to cheaper prices in the consuming nations.
Not only does America outsource I.T. and telemarketing jobs but we can also get items and parts manufactured in other countries such as clothing and car parts. Outsourcing is gaining in popularity – from manufacturing to white-collared job functions. In the clothing industry a lot of U.S. retailers such as Wal-Mart or Kmart have their clothing manufacture in small foreign countries where it’s really cheap to get the clothes made. Then they sell it in America for a really low price to gain customers. For example there are some clothes that cost $45 a shirt and the same you can get the same shirt for $15 at another store because that shirt was made in a foreign country. The reason why it’s so much cheaper, because workers in those foreign countries are getting paid half of what employees in America would get paid. Now a lot more white-collard jobs are being lost to outsource besides the I.T. industry. Basically anything that doesn’t require face to face interaction can be outsourced to another country.
Another problem is globalization. Globalization is one of the main reasons that lead a company to outsource. When talking about globalization, other countries can perform certain tasks cheaper than if they were performed in the US. Many large businesses outsource and continue to outsource suggests that, in many cases, outsourcing is successful in that it increases product quality and decreases the cost of the product
There’s also positive side to outsourcing which is international competition. U.S. companies should compete with the high tech countries such as Japan to solve the problems that outsourcing has caused. Using overseas workers to save money or boost production generally results in cheaper services, which leads to more competition, innovation and growth. International competition increases the American economy. Now American companies are better than the past. For example in the automobile industry, because of globalization and outsourcing now American automobile companies are producing more fuel sufficient, safer, cheaper cars. This is a result of competition with Japanese companies and America trying to keep up. This has caused America to produce cheaper safer cars.
The cheaper labor overseas allows U.S. companies to cut costs while getting their products to market more quickly. That makes them more competitive, and, in theory at least, will allow them to hire more U.S. workers to market and sell the products and to design new ones. Companies will always look for ways to build goods cheaper and faster. If American companies won't outsource to foreign countries, the other countries will, and that will cause United States to lose its edge
Companies taking a part of their business overseas, a company can lower their bottom line and enter markets they were not able to reach before. America competing with other countries to manufacture and technology building has caused American companies to keep up. Most companies have to outsource jobs in order to remain competitive and offer more affordable products and services, their share holders are demanding higher profits and their customers are demanding higher quality for less price. Competition drives down prices for businesses and consumers and increases their choices. By outsourcing to lower cost operations, businesses are able to reduce their overhead, compress time-to-completion with around-the-clock operations, and focus on core, strategic investments and hiring. Many manufacturers, for example, are running leaner, more competitive operations as the result of outsourced IT services, focusing their resources on the research, design and processes for improving their products. Thus proponents argue that outsourcing some service work enables employers to preserve the rest of the jobs here in the U.S. Some job loss in manufacturing and call centers are losses that are out of the control of the companies because they have more to do with technological innovation than outsourcing. These innovations are necessary in order for the US to remain competitive and cutting edge.
Outsourcing some jobs will allow companies in the U.S. to create more jobs the in high-end service sector allowing more employees to earn higher salaries. So while there are some workers who this outsourcing will affect negatively, there are some workers that will benefit from this so I think it all balances out in the long run.
Now the government is trying to get involved to stop outsourcing from happening because it’s hurting Americas economy. They have added tax incentitivs to only have American companies use American employees. The government stated that companies should be banned for outsourcing but how will they all be detected? Also how will they prove that? Companies can easily hide it and claim they are only using American workers because there isn’t a way to monitor every company to see if there outsourcing.
Companies should look beyond the short term gains and see that there are lots of costs from a company level 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.

Outsourcing continues to play a major part of today’s competitive global marketplace. It is available to many organizations on a national and international level. Furthermore, outsourcing provides many corporations with the ability to harvest the benefits of lower labor costs in developing countries. Major benefit of outsourcing today and for the future is the ability of the organization to develop competitive strategies that will leverage their financial positions in the competitive global marketplace. In addition, other benefits of outsourcing involve: increased product quality, lowering firm and consumer cost, advantage to the developing countries as for example China, Philippines, and/ or India.
Although the United States creates more jobs in foreign countries at this point in time, the jobs that are created here in the United States are on average higher paying than the jobs that are outsourced. Outsourcing is expanding its reach in terms if industry and geography. Companies that invest in outsourcing are growing in large numbers. Outsourcing brings multiple benefits to the firms. It enhances speed and efficiency. Outsourcing experience also enables the companies to gain expertise in new geographic areas into which they wish to expand. If the current trend will continue, outsourcing industry will have a great future. But the management challenges will grow more urgent as rising global salaries dissipate the easy cost gains from offshore outsourcing. The winning companies of the future will be those most adept at leveraging global talent to transform themselves and their industries, creating better jobs for everyone.

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