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How Does Outsourcing Affect The Economy

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Jobs outsourcing is defined when U.S. companies, of any size, hire lower-paid employees in emerging markets in lieu of Americans. The advantage of jobs outsourcing is it helps U.S. companies become more competitive in the global marketplace by keeping costs low. The disadvantage is that it causes unemployment in the U.S. and it eliminates the potential tax revenue from thousands of unemployed Americans. Restricting job outsourcing may provide more job opportunities to many Americans, but this could also make U.S. companies less competitive. This is the major factor why many U.S. companies are going overseas and are opting towards outsourcing.
The debate on just how outsourcing affects the US economy can be justified from both sides. Those who are in favor of outsourcing believe it has a positive effect on the U.S. economy because it reduces costs for companies. This in turn creates more opportunities for greater free enterprise in the US which leads to more Americans holding higher level jobs. Those who oppose outsourcing suggest that hiring foreign workers has a negative effect on the US economy by eliminating many jobs, particularly by semi-skilled or skilled laborers. Both sides have some valid points regarding this issue while many Americans have voiced their opinion and others have navigated through neutral ground. …show more content…

It’s also the case that there are plenty of skilled labor jobs being outsourced to foreign countries. According to Techsunite.org, the top 10 companies that have outsourced the most jobs, along with the numbers outsourced

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429 Words | 2 Pages

In Barbara Ehrenreich’s article, “Your Local News”, her ideas about outsourcing help the reader understand Fareed Zakaria’s thesis that we are living through a power shift called “The Rise of The Rest” by explaining that America is not declining but is helping everyone else rise above. These authors come together to further understanding of the shift of power that has occurred due to outsourcing, putting America in the backseat of progression, but not out of the race. Ehrenreich introduces his ideas by explaining that “in the eighties, US companies began outsourcing the manufacturing of everything from garments to steel…”, but by the nineties, “back office and call center jobs migrated to India” (609). This helps the readers understand Zakaria when he he tells his readers that “for the first time ever, we are witnessing genuinely global growth.”

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Open market is what keeps the world economy afloat. It favors some countries more than others in particular the US. Without it during the Terrible Surplus the US wouldn’t have survived such crisis. Speaking in regards to current time the slogan “Let’s bring the jobs back to America” is just an unrealistic assumption. As time progresses the minimum wage is increasing nationwide, so no matter what sort of incentive you give manufactures to stop outsourcing jobs, they will still face a high minimum age compare to what a person makes in Asia.

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Focus on Core Areas: Another advantage for outsourcing your business it would free your energies and enable you to focus on building your business more, it allows you to invest in research and development and move on to providing higher value added services. What this means it’s that outsourcing allows you to improve your business and allows you to take bigger steps. Levelling and Keeping the Game Rolling: For small businesses that do not have enough money to support in-house services, unlike larger companies, outsourcing can be a saving grace and can help them act “big” by providing them access to technology similar big businesses and other perks on expertise larger organisations or businesses carry. For example your business is small and across your business there’s a bigger business by outsourcing your business you can get accessed to similar technology as them which will make them see your company is

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1243 Words | 5 Pages

According to the report, the sharp increase in numbers indicates the growing importance of emerging markets, particularly in Asia, traditional American companies such as Caterpillar, Microsoft, Wall -mart and General Electric. These figures are considered to be undermining the recovery process in the US labor market, which still suffers from high and low salaries. Indeed, the data show that in 2009, which is considered in a recession and falling profits, multinational corporations have cut 1.2 million jobs (5.3% of the workforce) in the USA compared to 100 thousand (1.5% of the work) abroad. The companies themselves range from refusing to respond to the data (such as Oracle) or making excuses for the situation.

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553 Words | 3 Pages

Outsourcing is a practice used by different companies to reduce costs by transferring portions of work to outside suppliers rather than completing it internally. A numerous amount of people are against outsourcing because it leads to more unemployment in America, but then turns around and allows outside country’s citizen to easily proclaim the same exact job they were doing. Larger companies or businesses tend to use outsourcing because it’s a cheaper way to get the job done outside of the United States then it is to have it done in the homeland, people working in America are usually payed more for the same task as workers in foreign countries, like Brazil, India, and China.

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Outsourcing definitely has its cons, although it provides jobs for people, it also takes them away. Companies outsource their products because it is cheaper, faster and easier for them to be made in other countries and shipped across the world to consumers. For example, a brand of clothing is made in Canada, providing jobs to people here. The problem is that these clothes must be sold for high prices because of the wages and regulation laws in Canada.

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128 Words | 1 Pages

Global competition has affected the American labor movement significantly. Businesses has decided to move their manufacturer in search for less labor with hopes to outsourcing, this resulted in numerous Americans with zero jobs. In order for businesses to survive, less expensive labor and produces has called for competition. The bargaining power of labor union leaders has also been challenged by the expansion of competition. Industrial market employers have been significantly affected by global competition.

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The growth of outsourcing has spurred a contentious debate whether outsourcing is the sole reason the manufacturing sector is losing jobs, and if, in the end, it is better for the average consumer. In the article Toward a Progressive View on Outsourcing, written by Sarah Anderson, John Cavanagh, Jeff Madrick, and Doug Henwood in 2004, their stance is that outsourcing of manufacturing jobs is not the only problem, but also the outsourcing of service sector jobs, and that outsourcing will have a largely negative effect on the everyday life of the average American. Every author has substantial qualifications, including “Sarah Anderson [being] a global economy project director and John Cavanagh [being] the director of the Institute for Policy Studies” (Anderson 23). Meanwhile, In Defense of Outsourcing – written in 2005 – Timothy Taylor takes a conflicting view. He believes that outsourcing benefits the Unites States’ consumer, and any negative effects are offset by other factors.

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861 Words | 4 Pages

Many societies today take advantage of immigrant workers and outsourcing to increase their

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“The main negative effect of outsourcing is it increases U.S unemployment. The 14 million outsourced jobs are almost double the 7.5 million unemployed Americans”(1A). For example, China has received thousands of U.S jobs because of the cheap labor costs and for the fact that they will not buy american goods unless they are manufactured

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1266 Words | 6 Pages

Globalization and Labor Sweatshop Globalization is indeed a significant effect on the system's employment. This is because globalization has increased the integration of the world, especially in the economic field that directly participate impact on the flow of capital and labor. Capital and labor flows have strong linkages with each other. Then with the easy flow of capital engaged in international economic activity then automatically flows of labor would be more flexible. Then the consequences are increased competitiveness in the employment opportunities.

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969 Words | 4 Pages

Outsourcing directly contributed to job loss domestically, with 2.9 million people were put off work during 2001 to 2009. (Lerman & Schmidt, 1999) Employers relocate their industries overseas to enjoy lower cost of cheap labors and avoiding paying payroll taxes or social security. With less financial flow in the industrial stream, national tax base has been impaired. National income declines, so the government is lack of revenue to consolidate social welfare and public services, which has resulted in dramatic drop in people’s average living standard and quality of life. Taking America’s comparative advantage of high-end technology and human resources into consideration, one may easily find that the nation will leave its low-end and limited skilled productions and human resources to oversea market to boost productivity and maximize profitability at the same time.

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977 Words | 4 Pages

According to a The New York Times there were around 5.3 million Americans working for a foreign company in 2009, which is a significant cipher for the U.S. labor force. Toyota, Honda, Mercedes-Benz, Nestlé, Nesquik and even Anheuser-Busch, are only some of the many foreign enterprises that are generating

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Hiring the locals is cheaper short-term solution, but their initial savings is undermined by poor results on the long-term goals. 2. The Country has a Limited Local Talent Pool. Another reason to invest in expats would be a limited local talent pool in country.

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Outsourcing allows hiring of more qualified individuals to relieve the workload of employees with too many responsibilities. B. The benefits of Outsourcing also extend beyond large companies and to American consumers as well. 1. Another very important benefit that comes from outsourcing is greater access to innovation.

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