subject: Should We Outsource? [print this page] Should We Outsource? Should We Outsource?
While we know that outsourcing services overseas is nothing new today, but has created a lot of controversy there are studies shown how it can help the United States. Millions of people have lost jobs over the past years due to the fact of lower wage rates overseas and companies not able to pay high rates. The question is still unanswered whether we should outsource or not.
Outsourcing work to foreign countries is nothing new; this is part of the economy's change as the employment shifts from agriculture to manufacturing to services. What is raising some concern is how moderately high-skilled, white collar jobs, and services are getting outsourced. (Little) Some reasons companies are starting to outsource are that the amount of payroll is decreasing by a significant amount, and the standard of living in the foreign countries are cheaper. The average annual salaries in China, India, Japan, and Mexico make it easy to understand why companies find it appealing to make the move.(Wood) In 2007 Chinas annual salary was $1,290, in India $14,500, in Japan $17,000-$50,000 depending on what region you are going to, and in Mexico $9,000 to $16,000 depending on what region you work in.(Wood) As an owner or manager of a company you are always looking for ways to cut your cost if you can.
The movement towards outsourcing started when the word was out about how much companies have cut cost and how much they are gaining on profit other companies thought this would be a good idea and started to follow causing the unemployment rate to drop here in the United States. In 1994 when President Bill Clinton passed the North American Free Trade Agreement, hoping to open trade routes to all countries a lot of plants decided to start moving across borders into Canada and Mexico. Outsourcing to foreign countries is one of the major contributors of the national unemployment rate. According to Goldman Sachs, between 300,000 to 500,000 jobs have been lost up to 2007. The company estimates that this will lead to a loss of six million jobs over the next ten years. (Woods) To put this into more logical terms this would be like eliminating every job in Arizona. (Woods) The companies that outsource are in a variety of related fields, some for example are business applications, communication services, data operations, help desks, IT infrastructure, IT security, PC management, specialized manufacturing, and websites. Some of the names of these companies that are outsourcing are Cicso Systems, Dupont, General Electric, IndyMac Bancorp, Marriott Hotels, Penske, Proctor & Gamble, Unilever, and Wyeth.
As a company you have to ask yourself if losing contact with clients is one of your most important aspects of business. When a company outsources there is no relationships with the customer and this untimely leads up to customer dissatisfaction. Another major downside of outsourcing is the delay of communication for a project. When customers have to call for customer service and are speaking to a person with a tick foreign accent it can be hard for them to understand what the employee is trying to tell them.
United States workers suddenly face a new threat, even with highly educated tech and service professionals have to compete against legions of hungry grads in India, China, Japan, and in the Philippines willing to work twice as hard for one-fifth of the pay. (Engardio) American workers go through a lot of schooling and hard training to be the best they can be and work hard, and then businesses take away jobs from people that are highly trained and give them to foreign workers who are not as skilled but are willing to work for less makes American workers wonder about the future of jobs in the United States.
Before a company decides to outsource I think that there are a lot of key points that they need to consider before making a move. They need to make a list of the most important things and keep the customer in mind. If the customer has a large part on how the company runs I don't think the company should outsource. Outsourcing has too many risks associated with it if the customer is the main reason the company stays alive. By keeping jobs here in the United States it will help workers feel a greater sense of accomplishment and not letting them feel like just because they deserve to get paid more for their education companies are not going to hire them.
