Outsourcing Jobs to Foreign Countries
Outsourcing jobs to foreign countries helps American businesses compete in the global economy. As the world economy becomes less restrictive, U.S. businesses modify their business strategies to meet these new world challenges. These businesses must outsource to meet these challenges. The U.S. economy is in competition with the world economy. The globalized world economy has incorporated outsourcing or offshoring, a way of obtaining goods and services from an outside source, as a tool to become more competitive. Outsourcing has a direct bearing on a businesses productivity and profitability.
Outsourcing is an additional chapter in the ongoing industrial revolution. This third industrial revolution, like its predecessors, will force many people to make difficult and painful decisions (Sennholz, 2006). Outsourcing is not new. According to Sneddon (2004), “it is part of the economy’s evolution as employment shifts from agriculture to manufacturing to services and knowledge-based activities and as products mature through their life cycles.” “Where are the blacksmiths and the candle makers?” asks Singer (2004). He continues, “Cars and light bulbs have nearly completely eliminated these jobs. But everyone in society is better off today than when blacksmiths and candle makers were indispensable.” Businesses that are multinational stay competitive by diversifying their capital and labor shares by increasing their foreign investment in both categories (Harrison and McMillan, 2006). U.S. businesses, attempting to satisfy the consumer need to produce the best product to sell at the lowest price. Consumer expectation has driven many U.S. companies to outsource a portion of their operations overseas. Businesses must design, build, market and deliver a product or service to as wide a consumer base as possible quickly and economically while returning a reasonable profit.
Outsourcing affects blue and white-collar professions. Some blue-collar manufacturing jobs going overseas include textile jobs manufacturing blue jeans to athletic wear.
Another blue-collar job being outsourced are the assembly line workers manufacturing equipment and machinery. U.S. automotive, equipment and computer manufacturers are moving their assembly lines and subcontracted vendors overseas. According to Alan Harrison (2004), “Vehicle brand owners are outsourcing more and more ‘non core’ processes to supply chain partners so that they become market responsive themselves and become less exposed to demand fluctuations by reducing their investment in fixed assets.”
One type of white collar job at risk of being outsourced is high technology jobs. The greatest amount of outsourcing in the technology sector is in the information technology (IT) occupation. “In 2006 more than half of all companies are expected to have used IT outsourcing” (King, 2006). India has been the country of choice for most IT outsourcing after Canada, Israel and Singapore became too expensive (Alexandrou, 2006). Computer software programming, from basic to complex, is being outsourced. Companies are outsourcing their research and development programs to foreign countries. Once the basic research has been completed they are returned to the U.S. for final development. In the U.S. automobile industry, states Dossani and Kenney (2006, p35), “research and development and engineering outsourcing may reach 44 to 45 percent by the year 2008.”
The back room operations of many companies are another white collar occupation moving overseas. These jobs range from the support occupations of customer service call centers to a technical help desk. Other back room operations relating to accounting, such as billing and receivables are now moving overseas. Tax preparations are now being sent overseas for initial evaluations before being finalized in the U.S. Companies regard these as “functions that are of low strategic value or can be treated as commodities can be readily outsourced,” according to Kakumaun (2006).
- Quote paper
- James Tallant (Author), 2007, Outsourcing Jobs to Foreign Countries , Munich, GRIN Verlag, https://www.grin.com/document/167466