Shore Patriotic

Account limit of 2114 requests per hour exceeded.

Outsourcing: Its Effects on the U.s Economy and Leadership

Outsourcing or off sourcing is a new trend among companies that operate and facilitate operations out of the United States. These companies use outsourcing as a way to cut costs and use cheaper labor by subcontracting to foreign companies or setting up offices in foreign countries. This takes away much needed jobs from the American economy. The decision to outsource is often made in the interest of lowering firm costs, redirecting or conserving energy directed at the competencies of a particular business, or to make more efficient use of labor, capital, technology and resources.  . Business segments typically outsourced include information technology, human resources, facilities and real estate management, and accounting. Many companies also outsource customer support and call center functions like telemarketing, customer services, market research, manufacturing and engineering.

 

Outsourcing is not the only way that companies cut costs though. The other way that these companies shift jobs away is by becoming offshore companies. Offshore Outsourcing is when a company takes its business to another country and sets up operations outside its main office. The companies choose to move certain aspects of their business to developing countries where wages and labor are cheaper.  Many of these Outsourced and offshore jobs go to young people in those developing countries who look for placement in their country’s job sector. For Example, Dell Computers is based, owned and operated in the U.S but will choose to outsource jobs and create offshore jobs in its customer service and call center departments. This allows Dell to get more “bank for their buck” by eliminating the wage restrictions of the U.S and hiring cheaper labor.  This move cuts costs to the company while still addressing the needs of the consumer.

 

As the outsourcing and offshore job practices are becoming more common among these large corporations and conglomerates that reside in the United States, the United States economy is suffering and beginning to feel the effect behind the corporations’ cost cutting maneuvers. Instead of those same jobs being offered to the American public, they are quickly shifted to a developing country in need of a new job market. Places such as India and England are now benefiting from these corporations’ decisions to move elsewhere in search of cheaper labor. 

On the other hand, it is a common rule of business to attempt to keep costs at a minimum and all the while to raise capital. It allows for the company to grow at a more rapid rate.   When companies keep labor costs down, they are able to use the additional resources in the operating budget.

Offshore jobs and outsourcing can also be detrimental to the economy that gets involved with such practices because the outsourcing can be in flux unless kept to a strict contract or agreement. Moreover, a company can decide to move to another developing country at any time and set up business and resources for even cheaper labor and training.

 

Off-shoring is not popular among the private sector because it takes jobs away from the American People.  While Americans fight to maintain and keep jobs, it is also up to the Government to make sure that these companies don’t take their business elsewhere in search of cheaper labor and lighter labor regulations. Many business people might dispute this but I believe that the government must regulate these companies in order for our economy to thrive. If the government doesn’t determine fair labor practices than companies would be able to set any standard they want for their employees.  It all revolves back into the economy which allows for more jobs to be created instead of being placed elsewhere.  It is the job of the Government to make sure the economy is steady for the livelihood of the country. If there is no governing board or regulations to oversee company’s business practices then there would be no success in the economy. Every company would possibly be monopolies and set standards way above and or below means. The companies that base operations out of off-shore locations do not worry about labor regulation or practices. This allows the companies to overlook the integrity and policies of the company in favor of profits. For Example, the Great Depression that plagued the United States during the latter part of the 1920’s and early 1930’s was brought along by the reckless judgment of companies and investors.  Companies were allowing money to be poured into stocks of companies and precious metals. Then, when companies pulled their interest in those stocks and precious metals the stock market crashed causing consumers and companies to lose vast amounts of money.   The government had to step in and make sure that this never happened to the American economy. The government setup regulatory institutions such as the Securities Exchange Commission (SEC act of 1934) to make sure the public interest were protected.

 

Is the outsourcing of jobs the cause to blame for our slow economy? You cannot say for sure but it has something to do with it. When there are fewer jobs for the American people, there is less money being spent on goods, services, and items that fuel the American economy.  These multinational corporations also impact the offshore locations where they set up operations. Companies such as Dell and Microsoft use off shoring and outsourcing to cut the costs but they pump money back into those countries allowing the countries’ people to spend the money they earn on the products and services the companies provide. Outsourcing and off-shoring can be a way of companies and corporations’ to expand their capital and revenue.  If done correctly, outsourcing can be a benefit.  However, Outsourcing especially to other countries can hurt the American economy and the American people.

This year is a pivotal year to the livelihood of a World Power and Economic Power, which is the United States. There has been a lull over the economy for the last eight years with the Nation’s overwhelming aptitude for taking on debts as result of funding downtrodden wars. The year 2008 marks a race for a new face in the oval office. With this being an election year, there are two candidates vying for the position: Barack Obama (democrat) and John McCain (republican). These two opponents are ready to tackle the nation’s economic problems head on, albeit in different ways. Obama feels that we should rebuild the nation from the ground up, meaning from infrastructure (highways, roads, airports etc.) to the oval office. Obama has already put his plans in motion by introducing the Patriot Employer Act of 2007 to provide a tax credit to companies that maintain or increase the number of full-time workers in America relative to those outside the US; maintain their corporate headquarters in America; pay decent wages; prepare workers for retirement; provide health insurance; and support employees who serve in the military. (Barack Obama)

Obama’s competitor John McCain has a similar plan in place. According to JohnMcCain.com, “John McCain Will Reduce The Federal Corporate Tax Rate To 25 Percent From 35 Percent. John McCain believes the taxes we impose on American companies should be no higher than the average rate our major trading partners impose on theirs. We currently have the second-highest combined corporate-tax rate in the industrialized world, and it is driving many businesses and the jobs they create overseas.” (JohnMcCain)

This is what little each candidate has to offer regarding the outsourcing of jobs and a plan to prevent the American economy and worker to succumbing jobs to outsourcing. I’m sure there will be more said and more developments as we get closer to Election Day. Hopefully, either candidate can turn the outsourcing trend around while creating more jobs for the American people.

 

 

About the Author