Outsourcing refers to a process of contracting some particular functions of a business firm to another external company. Tasks which are supposed to be performed by the company are therefore assigned to an external company that is contracted to execute them. Offshore outsourcing refers to the process of seeking the services of another external company based in another country. The purpose of offshore outsourcing is to streamline a company’s assets so that it meets its objectives and targeted goals. Offshore outsourcing is therefore very crucial in the contemporary business world. Offshore outsourcing is important because this practice is known to benefit the United States economy and other states indulging in it because it enables such countries to acquire skills from other countries which may not be available in their home countries. The process of offshore outsourcing should therefore be encouraged in the United States and other countries because it is very beneficial to the economies of such countries.
Offshore outsourcing is a convenient way of carrying out tasks because unlike using people in the same country to perform tasks, offshore outsourcing ensures that the work is completed within the shortest period possible and within the set deadline unlike using people in the same country who may work at their own pace because they enjoy the monopoly and support of people in higher offices. Offshore outsourcing is therefore vital for the U.S economy because it ensures the efficiency and continuity of a business through minimizing the risk of a country’s own internal workers who may not live up to the set deadlines and limits of working. Offshore outsourcing is beneficial for the U.S and other countries’ economies because it enables such countries to develop new business tools which are based on information technology and therefore created a positive impact on the offshore outsourcing relationship which are applied in various business models. Outsourcing enables a country to get immediate access to different functions which are being outsourced through the specialized professionals who are available in different countries and therefore abolishing the need for training of their personnel to carry out such functions. Outsourcing therefore enables companies in the countries outsourcing various services to retain their competitive advantage since they will mainly deal with non-core functions.
Countries will normally opt for outsourcing so as gain instant access to the services of some specialized personnel which will rather be very expensive to train and this eventually leads to product differentiation in the U.S economy and for other countries practicing such. Outsourcing enables such countries to place their concentration on vital activities rather than involving themselves in each and every business activity. Profitability of U.S and other countries’ companies is increased as a result of strengthened business models. Companies which have for instance in outsourcing of mainly manufacturing functions include Apple Inc which doesn’t manufacture any of its products and Gap Inc. which does not manufacture its jeans and clothing. Outsourcing therefore enables the access of non-core functions by countries practicing it. For instance, Dell and Microsoft Corporation have over the years established their customer support operations that are qualified in India and even outsourced their customer care technical teams through lower rates as compared to the ones in the United States of America. Another good instance of outsourcing is whereby America express outsourced its Information Technology functions for a period of seven years to the International Business Machines (IBM).
Outsourcing is beneficial to the economy of the United States and that of other countries practicing it because it aids on the intensification of pressure on the rivals and also reduces business costs through vertical integration. Outsourcing therefore is very beneficial for the United States economy because it enables it to outsource professional jobs from lower wage countries and thereby reducing costs. Allowing educated foreigners to work on American soil through the H-1B Visa programs enables the country to increase its economic capability and therefore making the companies to achieve higher profits that they could have gained in case they could have employed local personnel.
On the other hand, offshore outsourcing is not beneficial to the economy of the United States of America and the economy of other countries because it poses a big threat to the skilled workers who loose jobs because they have been taken over by individuals in other countries. The movement of high skilled American jobs to other countries without consulting the workers is unfair. Outsourcing therefore leads to loss of employment for U.S citizens and for other countries practicing such because the jobs which have been all along been known to be firmly planted in America are taken over by other foreigners which may lead to higher crime rates and social strife among the citizens of a particular country.
The retention of talented foreign students graduating from the United States universities as they wait for their green cards, much as it may be useful, is disadvantageous to the host countries and in particular the United States because it is a device used to transfer American jobs offshore. Companies which have been known to outsource like for instance the Bermuda based Accenture and Wipro Technologies based in India have been known to be major applicants for Visas and are therefore notorious for the transferring of American jobs offshore. For instance, recruits brought in America from India by Companies to learn about American business will thereafter go home well equipped and capable of interacting with their United States customers and this therefore puts American businesses at risk because of external competitors.
Offshore outsourcing is not beneficial to the economy of the United States and other countries economies because it leads to knowledge extraction or knowledge transfer. For instance some companies in the United States will normally request their workers to train their colleagues who are on H-1B and after such workers have acquired the relevant skills, they replace their US colleagues at a much lower pay. This therefore leads to depression of the American workers pay. For instance, the pay for computing professionals on H-1B program was $50,000 in the year 2005 and therefore this implies than half get less than this amount of money. For an Information Technology American worker possessing a Bachelor’s degree, the entry level salary is normally more than $50,000. Despite the fact that the law of demand and supply states that a shortage of a commodity or product will lead to an increase in price, the wages in the field of information technology have remained constant.
Offshore outsourcing is a sign of being unpatriotic to one’s country because it denies some able and capable citizens of a country an opportunity to fend for themselves by gaining employment because such chances have been taken over by foreigners. Outsourcing has therefore been a prelude of a few rich United States executives who have a lot of foreign workers under their command. Majority of these executives therefore see no need of training their own domestic workforce and therefore they see no need of raising the workers’ pay to American standards. By so doing, American natives are denied employment opportunities because they have been taken over by foreigners who are willing to take a lower pay package which is not consistent with American standards.
Outsourcing is not beneficial to the U.S economy and other countries practicing it because failure by such countries to ascertain the interest of the manufacturer’s contract in the countries they are sourcing will lead to negative effects or impacts on such countries. For instance, when Dell Corporation outsourced its business operations in India and established major call centres in Bangalore and Chennai in the year 2008, a lot of complaints arose regarding inefficient customer service and the outsourcing firm was not ready to shoulder any responsibility on this issue because it had little interest in the affair.
Outsourcing is generally beneficial to the U.S economy and to the economies of other countries practicing it because it enables such countries to minimize their inventory liabilities. Outsourcing is beneficial for such countries because it helps in enhancing convenience through provision of room for monitoring a country’s item quality before and after exportation and thus helping a country’s product to be at par with the products from other countries through the relevant quality. Outsourcing is essential and beneficial because it aids in maintaining a company’s product brand name since products from such countries are subjected towards close scrutiny during the process of manufacturing to ensure that they meet the demands of clients. The challenges brought about as a result of the ever changing economy can better be dealt with by countries which practice offshore outsourcing because it ensures that there is effective management of product changes in such countries. The changes brought about on such products will inflict pressure on the countries economy which can eventually affect its economic performance and therefore to keep in pace with such dynamic economic and technological changes, countries must outsource for some of the core functions.
The outsourcing practice should therefore be upheld by all countries not only because it is beneficial to their economies but also because it enables countries to gain access of various skills and technology from all over the world which can eventually lead to high quality products because of competitiveness. The movement of labour should be free and all the restrictions on outsourcing abolished to enable countries seek for essential services from qualified and talented individuals all over the world who may be languishing in abject poverty because of restrictions placed on outsourcing. Essential and attractive pay packages should also be designed to ensure that they are at par in all countries all over the world to curb against the problem of knowledge transfer. This will ensure that individuals can choose between working in their home countries or in other outside countries without envy from the local people who may feel bitter that their jobs are being taken up by foreigners at their expense.