Major businesses find themselves struggling these past two years since the economy took a fall. Businesses have been faced with laying-off veteran employees, downsizing the company and trying every marketing tactic known just to stay alive. As a last resort, many companies have found themselves swimming away from the recession—by outsourcing their company.
Outsourcing is defined as the practice of having certain job functions done outside a company instead of having an in-house department or employee handle them; functions can be outsourced to either a company or an individual. Also, outsourcing is usually the term used when a company takes a part of its business and gives that part to another company—usually a third party company.
It is considered a smart business tactic when a major company decides to ship their business overseas to many foreign countries such countries as India or China.
Some of the reasons companies opt of outsourcing are: cost saving, quality services, access to specialized skills, liability is higher than an in-house resource, other countries have higher skills and knowledge, and capacity management (cost of labor versus cost of salaries).
For example, in 2005, Dell computers reported that by outsourcing their company to India, they had a growth in revenue by 44% and clocked sales of $5.7 billion in the 2004-05 fiscal years. Dell CEO and Chairman Michael Dell stated in a press release that he feels that outsourcing will stimulate foreign economies while not mentioning the implications to the domestic labor force. Dell now has three call centers in India.
In addition, many major companies such as Bank of America, Black and Decker, Earthlink, Gateway, IBM, Kellogg, Levi Strauss, Nike and Xerox are some other the hundreds of major companies that chose to export their company overseas whether it was to send American worker’s to another country or simply employ cheaper overseas labor.
Since the American economy took a fall in the last couple years, can America really afford to help other countries with their financial woes? I mean, after a company ships their business overseas, hundreds maybe thousands of employee find themselves unemployed.
In January 2009, CNN reported that America has lost 2.6 million jobs in 2008. Since then, economists reported an average loss of 250,000 jobs lost per month in 2009.
In 2004, the Council of Foreign Relation’s economists argue that outsourcing is just another form of free trade, which increases wealth in the economy. They say that employing workers at lower cost allows U.S. companies to be more efficient and productive, permitting them to create the same amount of goods with fewer resources. In turn, this lowers the price of the goods in the United States, strengthening U.S. companies and freeing workers for other tasks.
Now in the end of 2009, has American benefited from outsourcing? The country loses approximately 200,000 jobs per year due to companies moving their companies to a foreign country, contributing to the rising unemployment rate which now is at 10 percent according to the United State Department of Labor.
Some companies refuse to outsource their company to another country and would rather pass on their assets to another company, but will that company end up shipping their business to another country?
In February 2008, Yahoo revealed their plans to merge with Microsoft and hand-over their search engine business to Microsoft in exchange for Microsoft’s display ad business. Since the merger, Yahoo-Microsoft claimed that they increased their market share up to 28 percent, yet complain that Google still hold 65 percent. Microsoft has been analyzing Yahoo’s business strategies of how to make a higher-profit for the companies.
In April 2009, Microsoft announced that Yahoo could save over a billion dollars per year by outsourcing their infrastructure company to India, and would bring additional revenue of $800 million more per year.
With the trend of outsourcing America to other countries, not only is the country losing the trade war, but losing nearly a thousands of jobs to this date. Outsourcing has been considered a profit-maker this last decade, but who is it really hurting? Will companies actually make “millions or billions” more, or encourage the recession that America has been cursed with? By outsourcing, jobs are harder to find and unemployment rates will still rise like the millions of dollars that companies are taking away from our economy.
I believe it is time the Obama Administration needs to find another alternative for these companies. Now is the time to help America out instead of abandoning it. It is time to regulate the rapid trend of outsourcing, because if we don’t, what is to become of this country. The U.S. Department of Labor predicts that by 2015 more than 3.3 million jobs would be lost since 1998. American businesses is not only helping other countries stimulate their economy, but also increasing unemployment rates and not providing any additional jobs in the market.
Outsourcing is defined as the practice of having certain job functions done outside a company instead of having an in-house department or employee handle them; functions can be outsourced to either a company or an individual. Also, outsourcing is usually the term used when a company takes a part of its business and gives that part to another company—usually a third party company.
It is considered a smart business tactic when a major company decides to ship their business overseas to many foreign countries such countries as India or China.
Some of the reasons companies opt of outsourcing are: cost saving, quality services, access to specialized skills, liability is higher than an in-house resource, other countries have higher skills and knowledge, and capacity management (cost of labor versus cost of salaries).
For example, in 2005, Dell computers reported that by outsourcing their company to India, they had a growth in revenue by 44% and clocked sales of $5.7 billion in the 2004-05 fiscal years. Dell CEO and Chairman Michael Dell stated in a press release that he feels that outsourcing will stimulate foreign economies while not mentioning the implications to the domestic labor force. Dell now has three call centers in India.
In addition, many major companies such as Bank of America, Black and Decker, Earthlink, Gateway, IBM, Kellogg, Levi Strauss, Nike and Xerox are some other the hundreds of major companies that chose to export their company overseas whether it was to send American worker’s to another country or simply employ cheaper overseas labor.
Since the American economy took a fall in the last couple years, can America really afford to help other countries with their financial woes? I mean, after a company ships their business overseas, hundreds maybe thousands of employee find themselves unemployed.
In January 2009, CNN reported that America has lost 2.6 million jobs in 2008. Since then, economists reported an average loss of 250,000 jobs lost per month in 2009.
In 2004, the Council of Foreign Relation’s economists argue that outsourcing is just another form of free trade, which increases wealth in the economy. They say that employing workers at lower cost allows U.S. companies to be more efficient and productive, permitting them to create the same amount of goods with fewer resources. In turn, this lowers the price of the goods in the United States, strengthening U.S. companies and freeing workers for other tasks.
Now in the end of 2009, has American benefited from outsourcing? The country loses approximately 200,000 jobs per year due to companies moving their companies to a foreign country, contributing to the rising unemployment rate which now is at 10 percent according to the United State Department of Labor.
Some companies refuse to outsource their company to another country and would rather pass on their assets to another company, but will that company end up shipping their business to another country?
In February 2008, Yahoo revealed their plans to merge with Microsoft and hand-over their search engine business to Microsoft in exchange for Microsoft’s display ad business. Since the merger, Yahoo-Microsoft claimed that they increased their market share up to 28 percent, yet complain that Google still hold 65 percent. Microsoft has been analyzing Yahoo’s business strategies of how to make a higher-profit for the companies.
In April 2009, Microsoft announced that Yahoo could save over a billion dollars per year by outsourcing their infrastructure company to India, and would bring additional revenue of $800 million more per year.
With the trend of outsourcing America to other countries, not only is the country losing the trade war, but losing nearly a thousands of jobs to this date. Outsourcing has been considered a profit-maker this last decade, but who is it really hurting? Will companies actually make “millions or billions” more, or encourage the recession that America has been cursed with? By outsourcing, jobs are harder to find and unemployment rates will still rise like the millions of dollars that companies are taking away from our economy.
I believe it is time the Obama Administration needs to find another alternative for these companies. Now is the time to help America out instead of abandoning it. It is time to regulate the rapid trend of outsourcing, because if we don’t, what is to become of this country. The U.S. Department of Labor predicts that by 2015 more than 3.3 million jobs would be lost since 1998. American businesses is not only helping other countries stimulate their economy, but also increasing unemployment rates and not providing any additional jobs in the market.
Exporting America to save a dollar?
Outsourcing contributes to a fallen economy
Published: Friday, December 11, 2009
Updated: Friday, December 11, 2009
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Business find themselves drifting to another country
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