Pros And Cons Of Outsourcing In The United States

In the United States, outsourcing has become to be considered a bad word. There have been many officials who have vowed to stop it and businesses that feel the need to downplay their involvement with it. The idea of shipping any jobs overseas, especially when unemployment is high, is very objectionable to many Americans. Outsourcing has many pros and cons, but is it as big of a problem as people make it out to be?

“Outsourcing is when a company contracts with an outside provider for services or other business processes, rather than employing staff to do these services in-house” (about.com). Companies use it as a way of filling roles within their company that would normally be too inefficient or expensive to create themselves. Common outsourced services are: human resource, sales and marketing, customer call center, IT, and finance and accounting.

Many companies choose to outsource because it is often cheaper in terms of salaries and benefits. The average minimum wage in China is $1.18 compared to America’s $7.25. With a reduction of labor costs and cheaper materials, companies are able to turn those savings onto the consumer. With the ability to lower the cost of the goods and services the company is able to stay within the competitive market. With the cost of salaries greatly reduced organizations are also able to keep more cash on hand, freeing their resources for other purposes, such as “capital improvements”. Lower prices lead directly to higher standards of living and more jobs in a growing economy” (Kane, Schaefer, & Fraser, 2004, p.