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Outsourcing: Benefits and Costs
Transcript of Outsourcing: Benefits and Costs
What is Outsourcing?
Is the means to obtain goods or services from an outside or foreign supplier, especially in a place of an internal source.
When Outsourcing Took Flight
The concept of outsourcing first began in 1980s;
however it was well known and popular during
the 1990s. Most corporations decided to
participate in this semi-new process since it
was more beneficial for the company.
American Businesses Outsource To:
Demand for some products are higher in other nations than in the homeland.
Companies are trying to increase productivity and efficiency.
Some governments have too many protective regulations.
Outsourcing is Important
Businesses highly consider outsourcing since they are more concerned with maximizing their profits and expanding their camaraderie amongst trading horizons by serving the hunger for foreign demand.
Fears Associated with Outsourcing:
IT customers may be frustrated to be attended by a person who barely knows how to speak English
Whereabouts of the companies' profits gained as a result of outsourcing are unknown.
Americans fear the possibility of losing their jobs to others in other nations.
People believe that productivity will reduce if put in another nation.
Negative Impact on US Economy
Positive Impact on US Economy
Truths About Outsourcing
Outsourcing vs. Offshoring
Impact on Workers of Outsourcing
Some workers of outsourcing businesses have to be in dangerous environments where working conditions are horrible including overheated factories and 15 hour shifts working 6 - 7 days a week.
Connection to Chapter 20
With outsourcing, America is strengthening its' economy because it is allowing itself to freely interact and exchange with other nations thus gearing America away from isolationism.
Trade Barriers are often placed to regulate how many imports come in the nation. Also, there are many arguments, especially the Cheap Foreign Labor Argument, which state that the exporting of jobs can bring worse living standard for the American population since products will not have a great quality and jobs will be taken out of America.
Manufacturing jobs make up 70% of the Unites States. Since most outsourced jobs are shipped out, more and more people are beginning to lose their manufactured/IT job. Identity theft is also a possibility that may result from outsourcing.
Outsourcing is not the number one cause of unemployment. Structural unemployment happens!
Business send in-house jobs overseas, sending out jobs out of the country.
A company contracts a specific process out to a third party, finding someone who specializes in whatever needs to be done
Myth 2: Only greedy corporations benefit from outsourcing.
Myth 1: Free trade, free labor, and free capital harm the US economy.
Myths and Facts
Fact: Restricted economic freedom slows down the economic status of a nation such as Cuba, Soviet Russia, and North Korea.
Fact: Companies decide to outsource because it is more efficient. Here in the States, people benefit also because the prices are cheaper.
Myth 3: Outsourcing is a one-way street.
Fact: While jobs are shipped overseas, jobs also come in through the ambition of immigrants.