White Paper- Outsourcing Round Two

For my second proposal on outsourcing labor, I want to take a deeper look at the pros and cons I plan on discussing in my paper. Outsourcing is primarily undertaken to allow companies to generate more revenue and gain a cost-competitive edge over rivals. Lower costs are probably the prime benefit that motivates companies to outsource. How can you compare with getting work done at a fraction of the cost while also getting better quality and efficiency? Thanks to the differences in pay and standard of living in countries like China and Indonesia, the costs of labor are next to nothing. Companies can save on average 60% from choosing to outsource.  Easier management, better productivity, and better quality are just a few things that can result. Sounds pretty good so far right? Companies can also utilize the time zone difference to stay ahead of the game. While the CEO’s are sleeping, over in Asia where the time is different, there are hundreds of workers vigorously working on products as the company headquarters are shut down for the night. Talk about a diligent work ethic!

If you would like to know which companies prefer to export America, visit this website. The real goal here would be to find a company who doesn’t prefer to send American jobs overseas or employ cheap labor.

U.S companies open stores, build factories, and hire overseas workers because that’s where the sales are. General Electric Chief Executive Jeffery Immelt told the Wall Street Journal that 30 percent of GE’s business was overseas in 2000.Today it’s up to 46 percent and it’s still considered to grow. Caterpillar’s overseas labor also grew by 39 percent in a span of five years. While the unemployment rate is increasing in the United States, countries like Brazil, China, and Indonesia are reaping all of the benefits from jobs that unemployed Americans would kill for. While strategic advantages may result in companies who choose to outsource, the economical disadvantages are just as numerous.

There are few Americans who are happy with the thought of large businesses opening new businesses or moving an existing business of American land. While this may be the right move for the business, there are millions of Americans losing their jobs and are willing to do whatever it takes to actually keep a job.  Outsourcing is an activity that has long run consequences for both the business and economical perspective. In terms of business, miscommunication has been the culprit of many huge mistakes due to language barriers. This is especially true in customer support centers where employees are engaged with companies on a regular basis. Do you remember getting phone calls from all of those telecom workers from another country where you could barely understand what they are trying to say? That’s lost revenue for every person who decides to hang up on them. When you outsource jobs, there is no way for a company to actually monitor the productivity of employees. So far in my research, what do you think about outsourcing? Do you think it’s a positive or negative?


One thought on “White Paper- Outsourcing Round Two

  1. I still don’t see you identifying very specific sources. The CNN list is fine. But it is a society source as we treat journalism as societal.

    Something directly form Immelt, for example, would be a business source. He is complex. For example, check out how he is ON The President’s Job’s Council. Many progressives or labor allies pointed out the difficulty of accepting his views as what is good for American labor and job growth.

    Still, GE having business abroad is DIFFERENT from outsourcing. If GE is making and selling equipment overseas, that is not necessarily outsourcing. If Caterpillar closes one factry here, opens a new one in Mexico, and then sells all of that output in the US, that is closer to the pure version of what you mean by outsourcing.

    You will find TONS on this including serious studies of the economics. I think you core insight is accurate- it can be good for US firms even as it is bad for US workers. But the full picture is more complicated. Some job losses in manufacturing are due to technology upgrades. Some outsourcing may be as much about weakening the power of labor unions.

    If you set it up as a “choice” to sacrifice profitability to manufacture here, few companies can make that choice. The strategy for firms and for US policy needs to find ways so that job growth in the US is strategic, not charitable.

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