Tuesday, January 17, 2012


Outsourcing has had a substantially detrimental affect on America's economy while serving to nurture and aid developing countrys' economies like India and China. Outsourcing is when an American company hires thousands to millions of workers in said countries for cheaper than what the average worker would earn here--much cheaper. An article from businessweek.com says that hired employees in outsourced nations might earn 1/5 th of the wage an American would. What does that mean for the company? Profit, of course. Cheap labor can slash production costs and save a company millions of dollars. However, while the company benefits from this movement, America's economy suffers. All the jobs given to developing nations is the kind of unspecialized labor that the 8.5% of Americans would kill to have. On the flip side, bringing all these jobs back to America--the call centers, the factories, the production lines--would cost a fortune for these companies and for the consumer. Consumers benefit from outsourcing in that they enjoy the deflated prices of the products they spend money on. By the time the company brings all the outsourced jobs back to America, hires Americans, builds new factories and provides them all with healthcare and minimal benefits, the American consumer would have already stopped pouring his/her money into that company.


Smith said...

Excellent analysis. You bring up great points and each one illustrates the paradox of value of outsourcing. What are your ideas for a solution to this paradox?

GageLane said...

The term "out sourcing" adds a negative adjective to what is sound economic practice. When manufactures price final goods for the market they must be competitive. American companies can be competitive using resources found all over the world. Labor or other resources need to be secured from all locations. When a competitive product is sold in America by an American company using labor or other resources gained from "out sourced" locations, Americans still win. The US economy has employed some Americans which is far better than not employing any Americans. If a company did not out-source, it would not be competitive and would go out of business.

GageLane said...
This comment has been removed by the author.