Outsourcing is beginning to be widely adopted by big firms in the United States. The biggest reasoning behind offshore outsourcing is due to the much lower costs associated with hiring professionals in other countries, mainly in pay levels. For instance, an Indian worker might take a position for around a tenth of the salary compared to an American worker. A better question begs the answer, just how vulnerable are American jobs? Data extracted from the Bureau of Labor Statistics website in 2001, showed that almost 128 million American jobs were at risk of offshore outsourcing ranging from jobs in business, medical, law, computers, and finance (Page 47). For example, EDS, an IT firm, who announced they were offshore expanding to multiple countries and downsizing in the United States & Western Europe by 20,000 equally (Page 51). Siemens is another firm that was also offshore expanding to China, India, and Eastern Europe, and also downsizing in the United States & Western Europe by 15,000 equally (Page 51). It is broadly believed that companies mainly offshore outsource low-wage jobs from the United States economy that no Americans want. It is also believed that outsourcing these jobs would ultimately lead certain low-wage occupations to disappear altogether and create a new mix of jobs that would require more education and higher skills for Americans to take. However, this is a fallacy and companies do not seem to show interest in investing into the skills development of their United States workforce. Not only are they not interested in creating higher education jobs in the United States, the companies are even offshore outsourcing high-wage jobs to other countries for minimal wages. IBM was the flagship that sparked the push of outsourcing amongst United States firms to relocate as many as a couple million high-end IT jobs to Asia, mainly to India. IBM considers itself the world’s largest technology employer and computer services provider. IBM has outsourced many of its IT jobs offshore. Between 2003-2010, IBM had fired so many American IT professionals and hired an excessive amount of engineers and computer programmers in India, that it now has a larger workforce in India than in the United States. The ongoing trend of outsourcing is also inflicting wage pressures on American high-wage jobs. It is also claimed that American workers do not have the sufficient skills due to the poor education system. For example, Kristine Serrano was in IT specialist working IBM working on their Oracle software. Serrano was given notice that she was being laid off due to “Global Resourcing” with a sixty day notice and was given instructions to train her replacement before she left or she would not receive severance pay. Four months later, she later found out that her job had been permanently outsourced to India. As said earlier, advocates of outsourcing have stated that one of the reasons for outsourcing jobs is because the knowledge and skills of American workers is inadequate. So why was Serrano laid off? She was a highly experience IT professional who had worked for IBM for sixteen years. The only logical reason for replacing her job overseas was because IBM was able to offshore outsource her job to a different country for a much lower pay level. This is advertently causing high-wage American jobs to decline. Why hire an American worker for $80,000 when you can get an Indian worker for a tenth of the salary. One other argument that outsourcing advocates seem to ignore is the fact that they are destroying the buying power of consumers in the United States, which is their most lucrative market, by destroying jobs and downward pressure on American wages. Regardless of what advocates have been preaching about how outsourcing is beneficial to the economy, this just does not seem to ring true. The studies prove to be dishonest and do not correctly capture the entirety of the consequences that outsourcing may cause. Evidence seems to point that outsourcing is predominately bad for the economy and the benefits seem to be vastly overstated to veil the true consequences. We have to ask ourselves, what will the long term consequences truly be like in the future?
You May Also Find These Documents Helpful
-
Outsourcing has become popular with major companies since the 90s. In 2011, “Wall Street reported major companies cut their workforce by 2.9 million people in one decade and hired 2.4 million people oversees.” (Jilani, 2012). The reason major companies outsource jobs because it is cost saving and allows companies to pay lower wages in countries outside of the United States. Forcing limitation on companies outsourcing, will create more jobs in the United States. In addition, more jobs mean more people are working. Taxes paid from these people, will go back to the government, and help the budget.…
- 1078 Words
- 5 Pages
Good Essays -
Wilson, Dennis R (2004, March 22). Outsourcing Production and Jobs: Cost and benefits.. Retrieved May 10, 2011, from http://www.allbusiness.com…
- 1658 Words
- 7 Pages
Better Essays -
Outsourcing could potentially hinder a stable American economy’s workforce. Despite that prices for goods and products…
- 412 Words
- 2 Pages
Satisfactory Essays -
Outsourcing has seemed to acquire a rise in popularity and usage in our modern times. Outsourcing involves entering into a contract in which an in-house company process, or processes, is ultimately handed over and dealt with from a third party’s perspective. I would have to say that there are three primary, helpful factors to outsourcing, especially when it comes to the world of business. To start off, the cost of operations can be trimmed down through outsourcing. This, in turn, would assist a corporation or business in accumulating more lucrativeness. Secondly, every organization out there has the intention of delivering top-of-the-line services and goods. Outsourcing can contribute to more efficient deliveries. Specifically concerning information technology or something that would be considered to be a bit more technical, outsourcing can bolster efficiency within that particular field of a technical nature. Thus, productivity would be improved through outsourcing. Thirdly and lastly, within a set interval of time, an establishment has the ability through outsourcing to complete projects promptly. This is due to the fact that while a third party is handling a certain progression of a certain company, that individual company can now use its human capital and employees – that may originally were going to have to deal with a peculiar development stage of a certain project which has now been outsourced – in other, more beneficial ways. More labor can be put into other areas.…
- 3041 Words
- 13 Pages
Powerful Essays -
While outsourcing may be beneficial to some of the companies partaking in it, the general consensus is that it ultimately proves to be harmful to the American workforce. The act of outsourcing and shifting many company call centers and technical support teams, or “low skill service jobs,” to foreign countries reduces jobs for those that could truly benefit from them within our own country. The unemployment rate has dramatically increased, and continues to rise, compared to what it has been in years past; yet there are numerous companies which still insist on handing over these “low skill service jobs” to people in other countries such as India. The most obvious and logical reason for outsourcing is reducing costs; people are working for a smaller fraction of the pay compared to that of their American counterparts. Outsourcing is used by many companies both in and out of the United States; it has proven to be beneficial to the companies that choose to partake in it, while other companies do just fine without outsourcing.…
- 1938 Words
- 8 Pages
Good Essays -
Outsourced Jobs in America Outsourcing has continued to grow at an astounding rate over the last fifteen rates. The similarities between job outsourcing and The Grapes of Wrath extend much deeper than what may be seen at the surface. Similar to how migrants fled to California due to fake advertising of jobs in newspapers, many immigrants migrate to America in search of a better job, only to find that the jobs that they are seeking are being transferred to developing countries. Over the last seven years, over three million jobs in the country have been moved to developing countries which can provide a more skilled workforce for a lower wage than America.…
- 1049 Words
- 5 Pages
Good Essays -
In the United States volumes of research have been conducted with a range of 300,000 to a projected 1.4 million will be lost to outsourcing. However, the research cannot identify the exact amount of jobs lost to outsourcing or natural progression and technology advancements (Gorg & Hanley, 2004).…
- 2422 Words
- 10 Pages
Better Essays -
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".…
- 1056 Words
- 5 Pages
Powerful Essays -
As an American citizen, I initially believe that outsourcing is a terrible thing for America’s economy. When you hear about American jobs closing to be moved over overseas, it makes you worry about our already troubled economy. You become worried about all the employees who have been removed from their jobs. The government will provide a limited supply of unemployment pay, but they cannot guarantee all displaced employees’ their jobs back.…
- 305 Words
- 2 Pages
Good Essays -
What is outsourcing? Outsourcing is a practice used by many different companies to reduce costs by transferring portions of work to outside supplies rather than completing it internally. You may be asking yourself “why should I care”, “how does this have anything to do with me”. Well when you buy a new pre-paid cell phone, in order to activate it you must call the one eight hundred number on the back, should you be surprised to know that most of the respondent’s is of Indian ethnicity? In fact almost all of our technological based problems are solved by other ethnic based community’s. How does outsourcing affect the American people? Should we as a country support it?…
- 830 Words
- 4 Pages
Good Essays -
The U.S. federal and state governments are contributing to the problems created by outsourcing due to their lack of monitoring and data gathering on the number of jobs that are being exported. Without having the needed statistics on the number of jobs that are being exported, the full impact of job loss cannot be properly quantified. The U.S. Commerce and Labor Departments claim that the lack of monitoring system to record the number of outsourced jobs in America is due to a lack of resources. This thought process seems contradictory as the federal government spends over $130 billion each year on research and development, and a fraction of this spending would be enough to grasp the full scale of this outsourcing issue (52). This prevents any meaningful understanding for the U.S. people on the scale of jobs being outsourced, the business’s and occupations being affected by outsourcing, and the economy’s potential responses to the negative impacts of outsourcing. With the absence of this data, corporations are able to continue concealing…
- 1347 Words
- 4 Pages
Good Essays -
These days we hear a lot about offshoring. But offshoring has become a hot topic that it was even discussed in the recent presidential debate. There are so many questions come to us when we talk about outsourcing. Sending jobs to countries who don’t ask for much is easier than paying Americans who ask for what will get them through the day. Workers in countries such as china and India are hard workers. Many people do not realize that outsourced jobs leave many Americans unemployed. Another problem is that we have more than Americans relying on us. Outsourcing affects everyone. That’s why many young Americans are going to other fields that are the less likely to be offshored. Information Technology jobs overseas also run a security and privacy risk. Risks such as these cause a negative impact on outsourcing.…
- 1893 Words
- 8 Pages
Powerful Essays -
Outsourcing has been practice for decades, it happens when companies or business contract a third party, someone outside the business, to produce goods or provide services. Outsourcing can be local, within the same country or offshore, outside the country. Some of the job areas companies outsource are Accounting, Customer Services, Human Resources, Information and Technology and Payroll. Outsourcing supporters affirm that this activity provides substantial cost savings to businesses, through paying less to others do their job, at the same time they can lower prices of goods and services. Although outsourcing brings benefits to a company, this activity may limit the quality of products and the availability of…
- 693 Words
- 3 Pages
Good Essays -
Outsourcing jobs is a major epidemic facing the American people today, because it is leading to higher and higher unemployment. Many critics argue that outsourcing benefits the American majority because it makes the products purchased at home in America a lot cheaper than they would be. These cheaper prices are because the cost to produce the items is lower since the jobs were outsourced. “Cheaper prices for consumers goods is often the first thing cited when defending outsourcing” (Hargreaves). However, most people don’t see what the negative effects of outsourcing are. Katherine Paralta, part of U.S. News, acknowledges that many Americans lose their jobs from outsourcing, she later even went on to say that as many as “3.2 million Americans have lost their jobs since 2001” (Peralta). These people are then in need of jobs to support themselves and many cannot find these jobs. What Peralta is saying is that when companies outsource their productions to cheaper areas, they are laying off the American workers which causes these people to desperately need money…
- 1669 Words
- 7 Pages
Good Essays -
In many circumstances a product can be made here in the United States by a worker making fifteen dollars an hour plus benefits; or companies can find the same product somewhere else made where a worker is paid four dollars an hour, with no benefits. Which one would be more of a logical move? After all, it is the bottom line companies are chasing here. Why wouldn’t companies want to take jobs overseas? Which leads us to what outsourcing really does to the U.S. economy. Is it really hurting the economy? If so, why are so many companies considering offshore outsourcing to be beneficial? What should we as students do to prepare for the future if outsourcing continues to grow? Below will contain an analysis of the advantages, and…
- 3058 Words
- 88 Pages
Powerful Essays