What is outsourcing? is it good or bad to the economy ?

Question

Pleas give fresh examples : )

All the best

Answer 1

Outsourcing began as a way for companies to cut costs but in the long run what they have done is taken jobs away from people here in this country.

One major example is the fact that the Orange County Register in CA has outsourced its copy editing to India for a trial run. That is insane! That says one of two things; either we are so worried about the bottom line that we are allowing someone who has learned our language as a second language to check out spelling, grammar and style or we suck so bad at it that other countries are better at it than we are.

Answer 2

It cuts production costs for industry and creates a competitive advantage. On the negative it decreases local jobs.

Answer 3

Dell outsources their customer service/manufacturing to India and other nations. This lowers the price of their computer as they lower their costs of maintaining customers and manufacturing. In this case its good because they can compete w/ other nations and other companies in pricing. All the Profits go to a US company that is publicly traded and we all can invest in. Plus the jobs they outsource are primarily lower income jobs while keeping their design and executive jobs (high pay) in the US. W/ low unemployment rates in US this is no big deal and beneficial to economy.

Now Halliburton moved headquarters to Dubai because of over taxation and demands from Dem controlled congress. Now they do not get hardly any taxes other than what they make in US and from US contracts. They also now do not get income taxes from employees that are US citizens unless they get paid over 115,000. They also now outsource higher paying jobs as a result to their location.

This is bad for the economy.

For areas like Detroit and Pittsburgh the Unions drove companies to other countries who did not demand such unusually high wages/protection/benefits. This destroyed local economy in these areas. Bad as demand for jobs went down and w/ that follows lower pay which causes less spending power which causes local businesses to fail.

Answer 4

Outsourcing is taking jobs from one department and moveing it to a more productive or less costly department.  With any trade allocation of scarce resources, the goal is efficiency.  It's based on the principle of comparative advantage:

Suppose Jim can type 20 pages in an hour or create 2 x box's

Suppose Chris can type 12 page in an hour or create 1 x box.

What does Jim give up to for an X box? 10 pages

What does Chris give up for an X box? 12 pages

So Jim should create X boxes and Chris should type.

In 8 hours, they produces 16xbox's and 72 pages.

This is more than either could make on their own without trading.

Answer 5

Outsourcing is good for everyone involved.  It takes away low paying, low skilled jobs and moves them to countries where it is cheaper.  Initially jobs are lost, but in the long run higher paying jobs come into the area, and if not the people move to somewhere where work is available, and 9 times out of 10 the work is less strenuous and workers get more money.  There are tons of examples of outsourcing, just look at call centers being moved to India, or most production moving to China.

Answer 6

Good for companies because it costs them less. Bad for local workforces and workforces in general because it drives down their wages.

Answer 7

First of all, let's talk about what outsourcing is. Outsourcing is where a company moves a function from being done in house, to be being done by some other entity (not nesessarily in another country).

For instance, a company might have had an internal legal department, but decided instead to use independent legal firms to handle thier legal work and get rid of thier in-house counsel. Or a firm might have used to make card board boxes in house to package it;s products, but found it could buy the boxes from China cheaper, and shut down it's in-house box making operation in favour of sourcing them from China.

Whether this is good or bad for the economy depends on whether the decision to outsource was made based on good economics. Assuming that the company made the decisions intelligently, the result should be that the outsourcing company can produce it's goods or services at a lower cost and with higher productivity, which means lower cost for purchases of the good and more resources for the production of other goods and services- economic growth!