Outsourcing, The Key To Globalization Essay

1406 words - 6 pages

The concept of outsourcing in the Unied States goes back to 80's. But it was in the 90's that really companies began to use it more and more and they found out that this is something that really works for them. Outsourcing is defined as "the practice of subcontracting manufacturing work to outside and especially foreign or nonunion companies." This concept became very widely used in practice today in the United States. Firms such as IBM, Sprint, AT&T, Dell Hewlett Packard, and Novell are some of the major companies which have really been successful using it for a while now. Despite companies success there are still many questions raised whether the US gains more than it looses or the other way around. This controversial issue might be considered a big problem for the US economy, and yet on the other hand it might also be considered a great idea. The issue has been brought up for a while now and it's still being debated. Outsourcing has brought many advantages for companies, but we should ask if it really brought advantages to America as a country. Is it more important that companies become more competitive in the international market, Americans loose jobs, and our economy suffers or should we keep Americans have jobs, and be less competitive. Also, there are serious issues that make outsourcing abnormal which include the manipulation of currencies by foreign governments, the control of workers rights and the absence of environmental regulations, where this is the ethics part. These questions might be easy to answer but how should these issues be administered so that everyone is happy. Is there such a way that every one would be happy? I personally doubt it, and I don't think that this issue will ever go away for the fact that the corporations are making money and United States is being competitive in the international market.

America is becoming very competitive in the international market by cutting its costs. This allows companies to offer better prices of their products. A company can hire someone in India, for example, for $10,000 a year where in the U.S. could cost $60,000 to $90,000 a year. This looks like a definite advantage. Yes, I definitely agree that this is a very significant con for the United States corporations. One of the interesting statistics from research company, McKinsey Global Institute, says that global outsourcing returns 45 to 55 percent in net savings to corporations, with added profits from the sale of American products (www.mckinsey.com). That looks like a huge saving which means that companies save half of the costs that they would have to pay otherwise. Also, another interesting point which we can realize by just shopping around is the prices of computers where they used to be and where are they now. For example, Dell, a company which outsources its production of computers to India is able to offer its computer for about $400. It's very cheap compared to few years ago, such computer which was...

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