Outsourcing Jobs in USA



Outsourcing jobs in the USA

Introduction

The practice of "outsourcing" has acquired a negative connotation in American business. Although technically refers to hiring outside the company to perform a particular task, it has come to be associated with the replacement of foreign workers for domestic work. Critics say outsourcing this narrowing of wage differentials reduces aggregate income and employment in the U.S. Its field of view is too narrow, but seeks only the particular type of work that faces foreign competition. In practice, this may be the low labor skills, although this is not always true. Other workers are more productive for the greater efficiency provided by foreign workers (Buchholz, 2004).

There are many reasons that companies outsource different jobs, but the financial motive is the most prominent of all companies can save big amount of money by outsourcing. Outsourcing has been considered to be the cause of death of many good-paying jobs. The prime motive of most corporate companies is to take advantage of the huge wage gap that prevails between the industrialized and developing nations. Consequently, even the highly educated U.S. workers and professionals are facing a crucial threat as they have to compete against a large number of workers from India, China, and the Philippines, who are willing to work twice as hard for one-fifth of the pay (Hira, 2008).

Evolution of off shoring

Outsourcing originated in the 1980s, when the Fordist system of mass production entered a worldwide crisis. Allen Scott and Michael Storper, working on industrial change in California, described the emergence of tightly interconnected networks of small firms in place of the previously integrated large businesses. Without using outsourcing, researchers have been able to describe a regional pattern of firms that adopt outsourcing to spread risk and contain costs. These early works introduced a spatial component in the analysis of outsourcing. The concentration providers for outsourcing services in certain regions allow an easier and more efficient coordination of the production processes (Olive, 2004).

Types of Jobs being offshore

Long-term outsourcing: This is characterized by the partnership between the provider and the organization of outsourcing. For example, a strategic network or alliance. The parties need to have an interactive communication where risks and outcomes are shared.

Arms-length subcontracting: Arms-length subcontracting is characterized by a loose relationship between the outsourcing organization and the outsourcing provider, similar to the traditional market relationship.

These two outsourcing forms differ in their economic implications of ...