outsourcing con essay edited

8/3/2019 Outsourcing Con Essay EDITED

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Jaydeep Singh

Ms. Ball

World Literature

9 October 2009

Outsourcing is Detrimental to the U.S. Economy

Hello, this is Rajesh Srinivas- I mean Roger Smith, how doing today? Your

problem what is? Thick accents, bad English, and incompetent troubleshooting skills are

the major frustrations of a customer support call taking place with an operator half a

world away. When a company utilizes independent contractors or another company,

usually in another country, to perform services on its behalf, the organization is engaging

in outsourcing. The purpose of outsourcing, also known as offshoring or offshore

outsourcing, is to cut costs and thereby gain an important competitive advantage,

especially in the global economy of today. Outsourcing is detrimental to the United States

economy because it reduces jobs available to American workers, decreases the US clout

in the world market, and the disastrous effects of its misconceived efficiency on

companies and our economy.

Offshore outsourcing has been a significant cause in job loss, which in turn

detrimentally impacts various areas of the U.S. economy. Job loss creates a decrease in

the income tax base available to the government in a two-pronged manner. First, the

unemployed pay significantly lower taxes and second because jobs lost to outsourcing are

only regained at a fraction of the original pay. (Cooper) With a decrease in the amount of

taxes received, the government is forced to make budget cuts in other sectors within its

control, such as education and health care. A recent report states that the government has


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doled out $450 million more to the TAA (Trade Adjustment Association) to be

distributed among states for career training, employment, and case management services

for workers who lose their jobs due to outsourcing and foreign trade. (Dubie) This report

demonstrates how the government increasingly is being forced to spend more and

more money because of the unemployment attributed to outsourcing, especially

when unemployment is at an all-time high of 10.2%. There are also 3.3 million jobs

that could be moved to China, Russia or India, with an estimated loss of $136 billion by

2015. (Drezner) and currently more than 14.1 million American jobs are at risk of being

outsourced. (Drezner) Although it would be moral for the U.S. to stimulate the economies

of other countries, there is no rationale to take such action, seeing that it undermines the

United States economy and takes away American jobs and salaries.

Through offshore outsourcing, we are fueling the fire to our own doom, by sending

China on its way to being the worlds largest economy.

It appears highly likely that China at some point will overtake the United States asthe world s largest economy. Global Insight s projections, project that China willachieve 7.1% average real growth over the next 20 years. In comparison, the U.S.economy is projected by Global Insight to grow at an average annual real rate ofabout 3.0%, less than half China s rate. Global Insight s projections indicatethat China could overtake the United States as the worlds largest economy by2013. By the year 2025, Chinas economy is projected to be 59% larger than theU.S. economy, according to Global Insight. (Elwell)

When was the last time you read on a shirt label, Made in the U.S.A? As expressed in

Elwells example above, the U.S. is harming itself by exporting a myriad of services

overseas to India or China, such as the fabrication of products, information technology

and customer support. By doing so, we are boosting Chinas economy, and sending the

U.S. to the second position. Couple this with an increased trade deficit, Chinas newly


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gained power, and it will liquidate its vast holdings of U.S. Treasury bonds, thus

diminishing the value of the American dollar. Offshore outsourcing then leaves the U.S.

in a state to be pitied, and paves the way for the rest of the world to take over our place in

the market, and our leading positions in newly found industries.

Outsourcing is largely seen as a practice that seems too good to be true; this stems

from the fact that it really is too good to be true. The nave unsuspecting company

decides to outsource its jobs, expecting that the costs will be lowered, and that it would

be able to quickly expand its company. To the companys dismay, a financial report one

month later forces them to realize that outsourcing entails not just greater productivity,

but also hidden costs, problems in communication, inefficient completion of tasks, and

third class quality of product. The end result: companies either end in disaster and

bankruptcy or companies suing each other over the inefficiency of the promised

outsourcing contracts. Take for example the Sprint-IBM deal, in which IBM promised to

save Sprint $550 million dollars. This plan backfired and ended up costing Sprint roughly

$6.4 million dollars. (Cooney) Tales like this are not uncommon and provide a clear

perspective of the truly disastrous consequences which outsourcing can create.

Outsourcing clearly harms the U.S. economy, because of the inherent impacts of

job losses reducing government funds, a reduction of its power as a leading economy and

the increasing number of disasters, which occur due to the misconceived portrayal of

outsourcing. The solution to this problem is not to completely seal our borders and

completely ending outsourcing, but rather mandating certain sanctions that create a

balance between outsourcing and insourcing, in order to reinvigorate the economy.


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Works Cited

Cooney, Michael. Sprint sues IBM over failed outsourcing dealEd. John Dix.

NetworkWorld, May 2006. Web. 8 Dec. 2009.

.

Cooper, Mary H. "Exporting Jobs." CQ Researcher14.7 (2004): 149-172. CQ

Researcher. Web. 9 Dec. 2009. .

Drezner, Daniel W. 1-800-INDIA Essay: Offshore Outsourcing: Perceptions and

Misperceptions PBS, 13 Sept. 2005. Web. 8 Dec. 2009.

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Dubie, Denise.Feds dole out $450 million for U.S. jobs lost to outsourcingEd. Eric

Knorr. The IDG Network, 12 June 2009. Web. 8 Dec. 2009.

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Elwell, Craig K., Marc Labonte, and Wayne M. Morrison. "CRS Report for Congress: Is

China a Threat to the U.S. Economy Congressional Research Service, 23 Jan.

2007.Jstor. Web. 9 Dec. 2009. .

outsourcing con essay edited

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