Outsourcing: Boon or Curse?

How outsourcing affects the U.S. economy really has been a subject of great debate. A study was conducted by Enterprise Systems in 2006; the main cause of domestic companies to outsource is to control costs. With the economic slowdown, more companies are outsourcing their data processing centers abroad. In fact, offshore outsourcing, the total rose from $ 75 billion to $ 76 billion in 2009. People from the political right will agree that outsourcing has a positive effect on the U.S. economy, the positive effects of outsourcing jobs today lived by those who were brave and innovative enough to hire people from other countries for certain jobs. The outsourcing and off shoring has become the latest fad in corporate America. Companies use outsourcing to reduce costs and remain competitive in the market.

The other concern that U.S. citizens have is confidentiality. Besides, many credit card companies see the processing centers, and even financial institutions also pass the work abroad. There are many government agencies that even outsource some of their tasks, which in turn can save millions of dollars – which is actually a direct effect on federal spending and the U.S. economy. The outsourcing and off shoring has become the latest fad in corporate America. Companies use outsourcing to reduce costs and be competitive in the market. It is estimated that about 200,000 service jobs could be lost each year for the next 11 years. According to experts, more than a third of the growth of world trade is conducted through outsourcing to other countries. A variety of arguments can be made against outsourcing:

• Loss of jobs for Americans, especially customer service or technical
• The above problems generally lead to unhappy customers, employees and unions.
• Slow response time, which can only lead to frustration or anger from customers.

Yet there are some good reasons for outsourcing. The ITTA points out that there is highly qualified and educated lot cheaper in other developing countries like India. Of course, outsourcing is not new. The U.S. and state governments and U.S. companies have been outsourcing for decades national services such as managing databases, janitorial services and payroll. In recent years, U.S. companies and businesses of all types and sizes have benefited from sending their jobs overseas to reduce costs of their operations. While for some concept of outsourcing is equivalent to the opportunity and growth, and other than the dollar saved by outsourcing. Some people have concerns about the possible negative effects of outsourcing, particularly in the U.S. economy, especially Unemployment for the U.S. citizens. Outsourcing has been mired in controversy, but those who say negative things about it really do not understand its benefits.

Some companies have reported savings of up to 70% on labor costs by hiring from any outsourcing strategy. This makes this technique so very ideal for small businesses, that do not have much capital to work in the form of salaries to employees. These global trends are causing a constant need to adapt.

One Response to “Outsourcing: Boon or Curse?”

1. Steve says:

   October 13, 2011 at 7:29 pm

   The long established practice of outsourcing, particularly when it represents the decimation of US manufacturing industrial base has no real upsides.

   The wealth of a nation is measured by its production, not by the current GDP indicies; consumer spending is the privilaged outcome of production. This reality is skewed in America to the point of a propped-up economy that is now gasping with the US Dollar’s tenuous status as the world’s reserve trade currency.

   Multinational corporations parading as American have long since been taking short-term profits from the practice of outsourcing. This is akin to whacking off one’s appendages…a point in time comes when the inescapable effects become overwhelming. We are approaching that juncture. Backfilling the gap from lost productive capacity (jobs) & inability to fund our national debt involves the failed endgame of tariff wars, embargos, and where the FED continues printing even more money (Inflation/debasement of currency). The precipice is the fall into a currency crisis, inflationary depression, and ultimate 3rd world status.

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