Outsourcing Jobs To Foreign Countries

Outsourcing Jobs to Foreign Countries

What does it mean to be a true American? True American citizens have pride in their family, pride in their lifestyle, and most importantly, pride in their economy. It goes without saying that this pride causes Americans to feel the need to buy American-made products. Why give United States dollars to another country when American-made products are the best and will stand the test of time? After the September 11th terrorist attacks it is argumentatively illogical that America would help other countries grow when our own country is still in need of every penny it can possibly earn. At first glance it seems the best option for America is to give jobs to Americans. But how can we have a competitive American economy if we cannot even afford to make the products? The latest trend among American corporations is to send some of their production to other countries in order to save money. In the long run, outsourcing jobs to foreign countries is not only beneficial to large corporations, but to every single American citizen as well. It benefits the economy as a whole, affects the cost/price relationship of products, and allows companies to focus on core competencies such as marketing, advertising, financing and engineering.

Outsourcing, also known as Offshoring, is the newest trend that Corporate America is using to cut its costs and generate greater revenue. Since day one, the main motivational factor for every American business is to generate profits. According to Capstone Consulting Partners (2005) (CCP), corporations can expect to cut their operational costs in half when compared to keeping production within the United States. This savings is huge when considering that operational costs are often millions and millions of dollars for the countries largest corporations. This savings will ultimately increase revenue and allow companies to expand into uncharted territory and grow as an American Corporation. This growth in revenue will eventually lead to an increase in the amount of jobs available for Americans. In addition, CCP (2005) also stated that operational and training costs, together with cheaper and more efficient labor will account for a 70 to 80% savings over traditional production within the United States. When production is completed, products are then shipped back to the United States for American corporations to do a final quality control inspection. This process ensures that these outsourced products meet the high standards needed to earn the label of an American-made product.

Known world wide for their reliability, American products must still compete with Asian and Eastern Europe technology. A country such as India, China and Russia are widely known for their technologically skilled minds. These countries are capable of producing information technology (IT) services at a reduced cost and offer corporations wildly imaginative opportunities. With the mass production of IT services going on in these parts of the world, these countries are producing IT products at a fraction of the cost while Corporate America is paying white collar American workers as much as five times more to complete IT related projects (Heffes, 2004). With Offshoring costs being so low, United States corporations can afford to produce higher quantities of goods and market them to industries they were once unable to touch due to the higher cost of production within the United States. Corporations are now able to spend less time training employees on how to make the product, and spend more time focusing on core competencies. If companies do not have to continually update their training departments, or even pay trainers for that matter, they can spend more time on other facets of the business: such as marketing, advertising and finances. Outsourcing jobs has so many benefits for corporations that it almost seems foolish for large businesses to not choose this option. This is not where the debate lies.

How about the American population in general? Despite what the rumors and media publications might say, Offshoring to foreign countries has had a positive impact on our economy. When the costs of producing goods sold in the United States are lower, those goods return back to the original corporation and are sold for lesser amounts. Thus, the American economy reaps the rewards of higher profits. This in turn helps to lower our inflation rate. By having a lower inflation rate, the average American can afford to spend more of his or her hard-earned dollars on what they want to buy, not just what they need to buy to survive. Americans will see more money in their wallet and they will be able to spend more money as well. The more money spent, the richer our nation grows. Therefore, outsourcing helps our economy by increasing spending and ultimately having a positive affect on employment.

Another controversial topic when it comes to outsourcing to foreign countries is job loss and the unemployment rate. There is a large amount of the American population who will argue that outsourcing has a direct impact on the amount of jobs lost every year, and how it negatively affects our unemployment rate. However, as stated by Erica Groshen (2004), Vice President of the Federal Reserve Bank of New York, "The United States has a workforce of about 130 million people, and a few hundred thousand jobs per year being shifted overseas has little impact on the number of jobs in the United States in the long-term" (Trade: Outsourcing Jobs, Ð'¶ 11). Erica (2004) goes on to say, "The workers released from outsourced jobs will go on to create the next big thing" (Trade: Outsourcing Jobs, Ð'¶ 11). Workers that have been laid off from their current job are taking their ideas