THE EFFECTS OF OUTSOURCING ON THE US ECONOMY

The Effects of Outsourcing on the US Economy

The Effects of Outsourcing on the US Economy

Introduction

The U.S. economy is booming, and unemployment is at a 30-year low. Based on statistics released by the U.S. Department of Labour, unemployment was 3.9 percent in September 2000. This matched the 30-year low realized in April 2000, and while low unemployment is by itself very positive, these low numbers also mean there is a shortage of good people to staff firms and companies so that the company can exist cohesively in the eBusiness world. (Mark 2004)

The term "New Economy" comes to mind when considering that technology advances and a war for talent can be detrimental to a business. Many companies do not know what technology to implement because they are unable to attract or pay for the right talent in such an ever-changing environment.

To meet needs, many large companies purchase start-ups that succeed or hire talented people from those that fold. It's definitely a buyer's market--to the highest bidder. There have been countless stories attesting to this fact-good people (even CEOs and presidents) leaving the safe-haven of an established company for the risk and excitement associated with the dot-com. Consequently, businesses that don't seem exciting or alluring aren't attracting the same level of talent. A business must keep up in order to survive and, in many cases, must seek out consultants to implement eBusiness strategies. While this is a viable scenario, it can be a challenge to balance the roles and economics of internal resources with consultants to achieve a win-win execution. The answer, of course, is outsourcing.

The value that outsourcing delivers is best-in-class people, processes and technology under a pricing arrangement that benefits from economies of scale. Companies gain a competitive advantage in something they may have done inadequately, and will allow management to focus on core operations. A sharper focus leads to expansion and growth at a much healthier pace. (Mark 2007)

A major attraction to outsourcing is the ability to control cost. Additionally, the outsourcing business is high-volume and low-margin--resulting in lower rates than traditional consulting. And that isn't even the upside-resources are now available that allow management to perform at its greatest potential. (William 2008)

Data Collection

The research is based on secondary data collection. The data is extracted from various journals, articles and books. Secondary research describes information gathered through literature, publications, broadcast media, and other non-human sources. This type of research does not involve human subjects.

The research approach used is qualitative. Qualitative research is much more subjective than quantitative research and uses very different methods of collecting information which could be both primary and secondary. As already mentioned this study chooses the secondary method. The nature of this type of research is exploratory and open-ended.

This type of research is often less costly than surveys and is extremely effective in acquiring information. It is often the method of choice in instances where quantitative measurement is not ...