NOTE: Free essay sample provided on this page should be used for references or sample purposes only. The sample essay is available to anyone, so any direct quoting without mentioning the source will be considered plagiarism by schools, colleges and universities that use plagiarism detection software. To get a completely brand-new, plagiarism-free essay, please use our essay writing service.
One click instant price quote
The Benefits of Outsourcing One common view of outsourcing is that it will have a negative impact on the economy of the nation from which jobs are outsourced. Many believe that, in fact, outsourcing benefits only the companies that employ this policy while depriving workers of jobs. Each time the economy of a nation, such as the United States, has a downturn, the common cry is that the reverses are caused by sending jobs overseas. The truth is that there are advantages to outsourcing jobs. Companies that are able to outsource many of the functions that were once in-house have the ability to become more competitive in the marketplace, which ultimately will benefit the economy. According Elmuti and Kathawala, in recent times, the trends in outsourcing have changed, and that companies are no longer seeking cheap labor markets, but instead they are looking for productivity, flexibility, speed, and innovation (113).
Timothy Taylor explains that when companies outsource, they are not only benefiting themselves, but the economy as a whole. Taylor goes on to argue that outsourcing allows companies to contain their costs, and when that happens, there is more competition between companies, and the price of goods goes down, thus improving the economy of the country doing the outsourcing (371). In outsourcing business to India, the wages of the Indian workers is thirty-three cents on the dollar, meaning that sixty-seven cents comes back to the American firm and is put back into the American economy (Taylor 371). Taylor states that for every corporate dollar that is spent on offshore outsourcing, $ 1. 12 comes back to the American economy (372). One concern about offshore outsourcing is that it will cost jobs in the country doing the outsourcing. Taylor claims that this is a misconception that is not supported by the facts.
He states that total imports have not surged in recent years and that the unemployment rate in the United States in 2004 was at a respectable rate of 5. 5 percent (373). In other words, current research does not substantiate the notion that a large number of American jobs are flowing overseas. As Taylor points out, there are natural limits to outsourcing because not all jobs can be outsourced, and there is still a substantial labor market for jobs that must be performed close to home (374). He also states that automation has taken over as many jobs as outsourcing has, and that in the end, some jobs would be lost anyway (375). Another major benefit of outsourcing is the organizational efficiency it brings to businesses.
As the marketplace becomes more global, companies are going to have to be more competitive, and outsourcing is one way in which companies can effectively compete. According to Elmuti and Kathawala, outsourcing has become a management strategy that allows a company to perform it services in a specialized and efficient manner (113). For example, the profits of Chrysler are four times as high as GM as a result of effective outsourcing (Elmuti and Kathawala 114). Recent economic losses by GM seem to support the argument that effective management of outsourcing can be a good business strategy. Taylor points out that outsourcing has changed the anatomy of the successful firm (376). According to Taylor, while many of the large corporations are using outsourcing, medium-sized firms are prospering by finding their own niche and providing services no longer provided by the large corporations, and it is in this sector that employment is growing (376).
While offshore outsourcing may temporarily cause some unemployment, some like Taylor, believe that outsourcing is part of the economic evolution in which the linkages of production stretch around the world. (376). He also believes that outsourcing provides many economic opportunities, and that in the end, the economy will benefit from this practice (376). Another advantage of outsourcing is that it allows many service sectors of the economy like health and education to spend less on background services, thus contributing to the overall economy (Taylor 376). As the marketplace becomes more global, outsourcing has become a valuable tool for making corporations more competitive, and that benefits the entire world economy. Works Cited Elmuti, Dean and Yunus Kathawala. The Effects of Global Outsourcing on Participants Attitudes and organizational Effectiveness.
International Journal of Manpower 21. 2 (2000): 112 - 128. 4 Feb 2006 < web >. Taylor, Timothy. In Defense of Outsourcing. Cato Journal 25. 2 (Spring 2005): 367 - 377. 4 Feb 2006 < web >.
Free research essays on topics related to: american economy, outsourcing, feb 2006, taylor, large corporations
Research essay sample on Large Corporations American Economy
