International Outsourcing. The Essay Is About The Negatives And Positive Effects Of Outsourcing.

1903 words - 8 pages

IntroductionThere is has been much attention paid to international outsourcing and its effects on western economies in particular the United States. Outsourcing of 'American' jobs was a presidential election issue this past November. There are many contrasting opinions on the subject and this paper will try to clarify some of the hypes and show what the facts really are. Unions and other left wing politicians have been against the idea of American companies outsourcing. They have encouraged a protectionist approach to outsourcing and forcing companies to keep jobs in America. Corporate profits have led large corporations to outsource work to South Asia and they have been strong advocates of outsourcing and the efficiency it allows them. There is a great deal of literature on the topic of outsourcing and it is difficult to cover all the ideas surrounding it. This paper will discuss some of ideas and controversies surrounding outsourcing.What is Outsourcing?Outsourcing is simply contracting out some work that was done in house to an outside company. This enables companies to specialise on one part of a complicated task. The supporters of outsourcing say that this specialisation allows companies to be more efficient (The Economist, 11/13/2004). This process could be used a in a variety of different industries where technology has made manufacturing very complex. Electronics and automobiles are two products which have many parts that could be made in a variety of different countries and assembled wherever the company chooses to. This flexibility allows companies to deal with the growing complexity of current manufactured goods. Outsourcing is a major concern outside of manufacturing for Americans; they are concerned with the white collar jobs that are being outsourced to developing countries.There are two types of international outsourcing that has been occurring recently. There is the Business Process Outsourcing (BPO) and the Information Technology outsourcing (IT). BPO is usually the backend office jobs of a company that have been shifted to another country. General Electric (GE) did this in 1997 when they setup a subsidiary, GE Capital International Services to do accounting, insurance claims processing, supply chain and IT management in India(The Economist, 11/13/2004). IT outsourcing is a much smaller setup where the company is setup to deal with the task of managing information systems. The growing complexity and rising costs in the IT sector was a reason why the companies began to setup in the Asian market (The Economist, 11/13/2004). IBM is one of the many large corporations that has led the way in IT outsourcing by shifting jobs from America to companies in India.Outsourcing and EmploymentThere has been much press about outsourcing leading to unemployment problems in the west. Unions especially have called for a protectionist approach in dealing with outsourcing (The Economist, 11/13/2004). The American Federation of labour says employment...

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