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Negative Impact Of Outsourcing On Economy - Research Paper Example

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Outsourcing is all about one company being contracted to provide services by another company, which can otherwise be offered by employees of the company in-house. Companies offering outsourcing services would often do these tasks (Reingold, 2004). …
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Negative Impact Of Outsourcing On Economy
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Negative Impact Of Outsourcing On Economy

Download file to see previous pages... Companies contemplate on various ways in which they would reduce on the output of their money and intern saves on cost. Therefore, the main idea that comes across is outsourcing of some of their work. There is a notion that outsourcing has the ability of saving on cost of employment. The fact is that most of outsourcing companies work on a low budget their workers are not provided with benefits and most of their employees do not require overhead expenses (Olga, 2003). Moreover, cost can also be reduced if the company offering outsourcing services is from a different country. This is because of differences in economic stature, which will lead to high differences in currency value.
The other reason why some companies outsource their work to experts is that they want to involve themselves on other business issues. This is due to the urge of concentration by individuals in a company (Lazarus, 2004). The experts will ensure that work is done, and the contracting company will leave everything to them as they concentrate on other things. The management will also give out work, which will not require their attention and resources, as they will have an easy time managing a company from within. On the other hand, companies involved with outsourcing can maintain their professionalism by operating on a streamlined direction of acquiring excellent technology, which could not be available in locally (Olga, 2003). Outsourcing helps in globalization of a company, as it is a cost-effective way of building branches and franchises in other countries. The manner in which outsourcing affects cost is indicated in the graph below. is indicated in the graph below. It is clear that outsourcing is an event, which has gone beyond the whole ideology of employment and working from one position as a team (Ryan, 2004). Therefore, it would best if the paper examines some negative effects related to outsourcing in the education sector, society, companies, neighborhoods, and communities (Michelle, 2004). Moreover, the paper will also determine some hidden costs incurred by companies in terms of reducing cost of productivity and decreasing support from customers. Effects of outsourcing According, to some business scholars such as Olga Kharif (2004) argue that companies prefer outsourcing because of low cost associated with it and they will save wages they would give to employees working from within the company. However, with cost of IT increasing every day, companies will realize that they sometimes use more than what they expected to use (Olga, 2003). The industry is always competitive, and most companies prefer offshore outsourcing. However, frustration is drawn back to local employee who would be rendered jobless due to another person elsewhere being given same job. Outsourcing has also created insecurity in the job market as workers can lose their positions as other people can offer their expertise from elsewhere at a cheaper price (Ryan, 2004). The other predicament caused by outsourcing is and associated with joblessness is increased crime rate. People need to survive, and they would do anything to survive. Therefore, people who lose their jobs will turn to crime (Michelle, 2004). Crimes include cyber crimes where people hack into the ...Download file to see next pagesRead More
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