Outsourcing: Where Are Our Jobs Headed?

Outsourcing: Where are our jobs headed?

When the federal government declared that our economy was facing the largest economic downturn since the Great Depression, many managers of all companies regardless of the size began to layoff employees in order to reduce their overall cost to do business. For companies with large overhead, the most feasible way for managers to cut cost was to outsource much of the overhead expense to smaller companies or overseas. According to a Business Week article, “the first wave started two decades ago with the exodus of jobs making shoes, cheap electronics, and toys to developing countries”. Fortunately, over the last few years the economy has become a little more stable for companies, however, those same companies have also learned that outsourcing not only helped to keep their operations afloat during the recession, but also may produce a more profitable current and future bottom line. This concept of outsourcing has moved into the realm of good business decision making strategies among managers. The problem with this concept is that outsourcing has just as many disadvantages that could be more costly than the advantages that managers believe exist. The main objective in management’s consideration to outsourcing is to understand the cost structure and the long-term effects.

Outsourcing

The term outsourcing has no agreed upon definition thus it is inconsistently used. It is viewed as involving the contracting of business function to external business providers. Outsourcing is nothing new to the business environment; it is simply becoming a common practice among companies in their effort to slash as much overhead costs as possible. This was expressed in an article by Cook, who says “as a concept it’s not new. Companies have chased cheap labor around the globe for decades”… “this latest outcry is fueled by the fact that some service professionals, once insulated from outsourcing are watching their jobs head-overseas during a...