Negative Aspects of Outsourcing

Outsourcing Jobs
Outsourcing is a lucrative option for many industrial and manufacturing companies, but the repercussions affect more than just profit margins. Many companies expand their reach to lesser developed countries in hopes of cutting down costs on overhead and employee wages. These companies do not take into account that, while doing so, they have a negative impact on unemployment ratings, the foundation of one-income households, contribute to the decimation of manufacturing based towns and cities, and open themselves up to security breaches and shaky business ethics.
The loss of American jobs to outsourcing is directly related to unemployment ratings in the United States. According to Cynthia Kroll, “the national job base shows that close to 15 million people, or 11.7% of the employed labor force are in white collar occupations at-risk to off shoring” (Kroll). Although not every one of those jobs will be outsourced the numbers are substantial enough to hinder the unemployment rating. Following the recession of 2008, this causes a significant impact on a country that is desperate for work. Post-college graduates are having an increasingly difficult time finding jobs in a market that is being limited by large corporations. These factors, included with the national averaged debt of college graduates as B. Goose points out in, The Chronicles of Higher Education “with an average of $29,400 per borrower. From 2008 to 2012, debt at graduation (federal and private loans combined) increased an average of six percent each year” (Goose) only compound the economic stress on many Americans. Many people fail to realize the connection between outsourcing and college graduates. As tech companies grow to proportions unseen before, they begin to outsource IT jobs that would have traditionally been to support college graduates in their fields of study. An article in Issues and Controversies emphasizes this notion:
An oft-cited study by Forrester Research, an independent technology research company, estimates that 3.3 million white-collar jobs could move overseas by 2015, about 2.5% of total U.S. employment. The biggest losses would occur in the computer and software fields, according to the report. However, the phenomenon of offshore outsourcing is not confined to high-tech jobs. Positions in fields as disparate as customer service, accountancy, and health-care diagnostics are increasingly being taken up by workers overseas. (1-2)
This striking testimony shows how further outsourcing can lead to an overwhelming hit to the job market for white-collar workers, impacting more than just one field of study. The individuals who struggle the most with the pursuit of a cheaper workforce are the families of those that lose their income, especially one income households. The disruption of job security leads to stress on the benefactors to provide for their families and in rare cases leading to young teens working to sustain a living. The toll that this takes on the structure of families can be devastating to mental health, as pointed out in an article on PBS.org by Paul Solman; “A 2011 study by the Centers for Disease Control and Prevention reported that the suicide rate from 1928 to 2007 rose and fell with the economy, describing a direct correlation to unemployment rates” (Solman). While big companies turn greater profits it’s at the expense of their fellow Americans’ livelihoods. The mental stresses that are thrust upon the workers who are displaced sometimes suffer so much they may even go to the extreme of suicide.
When a company closes a significant plant due to outsourcing it can affect the entire town. As Lou Dobbs notes in his book Exporting America, “In Syracuse, New York, Carrier, the maker of air-conditioning and heating units, is closing two of its most productive and profitable factories and laying off 1,200 workers. Most of these jobs are headed to Singapore and Malaysia” (Dobbs). Many of those workers are too young to retire and cannot live of the meager incentive package offered by Carrier. This will result in the rise of a lower class in Syracuse and contribute to the decimation of this city. There have been numerous towns and cities affected by extreme cases of outsourcing leading to shanty towns popping up all over America. Outsourcing does not only affect those whose jobs are at risk but also the security of companies. When an organization outsources HR, payroll, and recruitment services, it invites the risk of exposing confidential company information to a third-party. These security risks can lead to shady business practices such as outsourcing hospital maintenance of patient records. The information is not much use to offshore workers, but the information can be a severe publicity risk in the hands of local companies. Outsourcing private information is detrimental to the public as a whole. Businesses shed a dim light on their companies as they lay off workers, leading to bad publicity. One of the most serious problems with outsourcing is boycotts, embargoes, and naturalization. Large corporations that have had ongoing enterprises in foreign countries are all off the sudden banned from doing business because of political strife. This can most notably be seen in recent economic sanctions between U.S. and Russia. If a political sanction was to be enacted, American companies with IT centers, the most popular form of outsourcing in Russia, would be at the mercy of not only domestic laws but policies in foreign lands as well. In conclusion, American based companies that outsource jobs to foreign lands can have a negative impact on so many aspects of life. It is profit margins and greed that fuel outsourcing, leaving a devastating path of destruction in its wake. The findings and supporting documents in this essay exhibit a clear disruption in American life and economic stability in a wavering job market, as well as being a detriment to businesses that practice these methods.