subject: Globalization and Outsourcing [print this page] Globalization and Outsourcing Globalization and Outsourcing
Outsourcing as we know it is referred to subcontracting an aspect of your business to a third party. There are two opposite opinions when it comes to outsourcing and how it is affecting both our country and our world as a whole. On one side of the spectrum, businesses and consumers alike will agree that outsourcing and globalization allows more companies to achieve economies of scale. This in turn will allow them to produce a product for a much cheaper price, or deliver a service at a fraction of the cost, allowing consumers to save money as the end result. On the other end of the dilemma are angered American citizens. Many Americans have lost their jobs due to outsourcing jobs to cheaper competitors in foreign countries. The new technological era in which we live now, is allowing businesses to cut corners anywhere it is possible and ultimately make more profit. This back and forth battle is one that can be viewed as good or bad for our nation, but the truth is that globalization is not stopping anytime soon and it seems that the future will be filled with as many outsourced jobs as possible. One country that seems to be leading the way in performing outsourced jobs is India. The cost of living is one fifth of what it is in the United States. This allows the same amount of American money to perform nearly five times the amount of work from another country. While many people might concur that outsourcing is unfair to the ones doing the work, most of the ones doing the jobs are more than happy to work for the salary they are earning.
Outsourcing works by analyzing every aspect or area of a business that can be done by a third party in another country for a cheaper price. Not every job, service, or product has the capability to be outsourced, which means job security for those working in very specific career fields. However, any job that can be taught, product that can be made, or service that can be performed by foreigners at a cheaper price will occur as the amount of money saved is without a doubt substantial. Recently, service outsourcing has become the most popular. IT services or Information Technology services such as help line telephones are among the most commonly outsourced job positions. When a company saves money in a less important sector of their business such as handling phone calls, it allows them to have more cash on hand and in turn allow for innovation and expansion within the organization. Simply put, companies will outsource jobs to fill the roles that are too expensive or inefficient to create themselves.
The major benefit of companies outsourcing production is reaching economies of scale. When an economy of scale is achieved by a business, they are able to lower the price of their products which opens their market to more consumers. It also allows the business to reduce their time to market. Instead of hiring engineers and consultants to organize expensive production processes, they can pay a third party production plant in another country to handle the work for a fraction of the price. These businesses also benefit from tax benefits. Taxes work in the favor of the business owner because the work being outsourced is done by citizens in other countries that don't follow by our same tax laws. All in all, when tedious work is outsourced it creates leisure time within the higher levels of the work force which can be just as important as making some extra money on the bottom line.
The most intriguing part about outsourcing is that most people think it's only done at the low level positions. Every industry in America is seeing at least some influence of globalization within their department. Jobs such as cartoon animation, videogame production, debt collection, x-ray and CAT scan analysis, engineering, tax returns, advertising, security, and consulting are all being filled by foreigners ready to compete against Americans in the job market. Most of the production of aircrafts, computers, cars, and furniture are all done in other countries and imported into the United States. While most business owners are in favor of globalization and the outsourcing the job positions they offer, the majority of working class Americans highly oppose of it. They blame outsourcing for the high unemployment rate and job displacement within the United States. As of 2004, approximately 1 million jobs were declared as being "outsourced". With the way the world is becoming more interconnected every day, globalization and outsourcing show no signs of letting up any time soon.
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