Introduction
Outsourcing is the process of employers transferring some of their company’s functions to an external organization that performs them for a fee. In recent years, outsourcing has become increasingly popular in the United States, leading to job losses in various sectors of the economy. This issue needs to be examined as it has a severe impact on the economy and people’s lives.
Some American companies outsource their business functions to other countries. In contrast, others do the opposite and use outsourcing to attract foreign partners to perform specific tasks in the US. This can be due to several factors, such as the availability of labor resources, the reduction of costs for specific business functions, or access to technical expertise and knowledge needed to perform different tasks (Marano and Noussia 52). This can lead to increased profits for companies and lower prices for certain goods and services for consumers.
Benefits for Foreign Economies and US Corporations
Many companies in the United States are transferring their production and services to other countries, such as India, China, and others. Thus, these countries benefit significantly from US jobs being outsourced to them. For example, one of the primary benefits foreign countries gain from outsourcing is the creation of new job opportunities (Ilan Oshri et al. 116).
When American companies outsource jobs to other countries, they often do so because labor costs are lower in those countries. This means that foreign workers can be hired to perform tasks that American workers would have otherwise done at a lower cost. As a result, new jobs are created in foreign countries, and workers can earn a steady income.
China is one of the leading producers of electronics and other goods for American companies, such as Apple. India is one of the largest information technology (IT) providers, including software development and technical support. American companies often use these services to improve their processes and increase profits.
Domestic Consequences
For the US, this process certainly has some advantages, but it also has some drawbacks. One of the main drawbacks of American outsourcing is the destruction of jobs in the US. In many cases, workers who lose their jobs are forced to look for work in other sectors, which is not always possible (Bilal and Lhuillier 3). Some companies, when transferring their production abroad, also transfer the technologies that are related to it to another country. This leads to the US losing its technological capabilities and innovation.
Thus, outsourcing can lead to severe quality problems. When companies outsource tasks to other companies, the quality of the work performed may be lower than if these tasks were performed within the company. This can lead to customer dissatisfaction, damage to the company’s reputation, and loss of profit (Bilal and Lhuillier 3).
It is also essential to consider that outsourcing can hurt company culture and innovation. When companies outsource their tasks to other companies, they lose their expertise and knowledge, which can lead to a decrease in the culture and innovation within the company. In addition, outsourcing harms the US economy by reducing workers’ wages in many sectors. Workers in countries with lower wages do not get the same benefits as workers in the US. This leads to a decrease in family incomes and, consequently, to a decline in consumption and living standards.
Outsourcing jobs in the US has led to decreased productivity and professional development of workers (Carroll 327). Thus, workers have lost the opportunity to progress and develop the skills necessary for increasing productivity and improving working conditions. As a result, workers no longer feel motivated and cannot actively participate in the work.
Additionally, outsourcing results in a loss of contact with the employer and social support. It also leads to job losses in the US and forces people to look for work abroad. Outsourcing can also lead to unfair labor conditions, including poorly paid employment and poor safety conditions (Carroll 129).
One example of the negative impact of American outsourcing on jobs is the company General Electric, which transferred the production of its refrigerators abroad, thus destroying many jobs in the US. Another example is Nike, which transferred the production of its sneakers to China and other countries. As a result, many jobs in the US were destroyed, and many families lost their incomes.
Apple Inc. can serve as another example to illustrate the concept. This company manufactures mobile devices and computers. Although it is registered in the US, most of its production capacities are located abroad.
Apple outsources the production of its devices to China, where labor resources are cheaper. In addition, the company uses the services of contractors worldwide to produce various components of its devices. This allows Apple to reduce production costs, which increases the company’s profits. However, this also led to a decrease in the number of jobs in the US, and many American workers who used to work in production lost their jobs.
However, the adverse effects of outsourcing US jobs are not limited to the manufacturing industry. The service sector, including call centers, accounting, and IT services, has also been heavily impacted. The problem with outsourcing is that companies are more concerned about their bottom line than their workers (Marano and Noussia 70). They are willing to sacrifice American jobs for cheaper labor costs, which has led to the decline of the American middle class and a rise in income inequality.
Solutions for a Balanced and Fair Approach
To overcome the problem of outsourcing, it is necessary to decide to find alternative options that will benefit both workers and businesses. The first step should be creating training programs to help workers acquire new skills and improve their qualifications. Legislation should also be adopted to provide workers with decent working conditions and protect their rights. The government should also offer programs to support workers who have lost their jobs due to outsourcing (Ilan Oshri et al. 113).
Another solution is to create partnerships with other companies. Instead of outsourcing jobs to third-party companies overseas, companies can partner with other businesses in the US to share resources and expertise. This not only helps to create jobs in the US but also fosters innovation and creativity.
Conclusion
In conclusion, American outsourcing provides many benefits for foreign countries as it helps companies save money, and foreign workers gain additional income and professional experience. However, it has a negative impact on the economy and people’s lives in the US, such as a reduction in product quality or loss of jobs. Therefore, measures must be taken to regulate outsourcing, create new jobs in other sectors of the economy, provide training and retraining for workers, and support new entrepreneurs and small businesses. As a result, the negative impact of outsourcing can be reduced, and the United States economy can be strengthened.
Works Cited
Bilal, Adrien, and Hugo Lhuillier. Outsourcing, Inequality, and Aggregate Output. Web.
Carroll, Archie B. Business & Society: Ethics, Sustainability & Stakeholder Management. Cengage Learning, 2022.
Marano, Pierpaolo, and Kyriaki Noussia. The Governance of Insurance Undertakings: Corporate Law and Insurance Regulation. Springer International Publishing: Imprint: Springer, 2022.
Ilan Oshri, et al. The Handbook of Global Outsourcing and Offshoring. Springer Nature, 2022.