Outsourcing

Outsourcing

Mitul Patel

Econ 101 – Outsourcing

March 21st 2012

Outsourcing

Outsourcing has become a very popular alternative for many companies, because it is very beneficial. Outsourcing is helping in many different ways (Smith, n.d.). Most companies outsource to save money. However, in the U.S it is costing workers to lose their full-time jobs and replaces them by outsourcing it to a less developed country, to those countries where wages are lower and labor laws are very strict like it is in America (Wadhwa, 2009). There are both positive and negative effects of outsourcing.

Firstly, Outsourcing reduces cost for the companies. Lower wages and operating cost in the under developed countries help companies reduce their costs (Smith, n.d.). The lower cost of manufacturing in other countries helps companies to increase their profit margins. Companies who do not have staff or well-trained employees use outsourcing because it can save money. By outsourcing, companies do not have to train the staff and in addition they get skilled and qualified staff (Smith, n.d.). There are other factors that are advantageous for companies who outsource.

Another advantage of outsourcing jobs in other countries is larger workforce. This is beneficial for smaller companies who outsource because they don’t have to worry about hiring additional workers when necessary and do not have to worry about maintaining larger staff (Smith, n.d.). If the outsourcing vendors are well-managed then they can enhance development of employees. Outsourcing vendors can bring ideas for the companies (Meyer, n.d.).

Outsourcing U.S. jobs is hurting the American economy and helping other countries. By outsourcing jobs America is hiring people from other countries to do the work and here hundreds to thousands of workers are losing their jobs (Saleem, 2008). Those workers become unemployed and by paying foreign workers, companies are helping create new jobs in other countries, instead of...