Offshoring of Jobs and Global Development - Essay Example

Transfer of Jobs With the increasing levels of globalization which results from liberalization of markets, efficient flow of information, and integration of economies, the level of competition in the local market has increased tremendously. This results from the entry of multinational companies in the local market which have a huge financial base to segment the market, position their products and services strategically in the market, and attract the loyalty of the customers towards their products and services. Therefore, in order for the local businesses to remain competitive, they are offshoring some of their operations in countries such as China which have invested heavily in the modern technology and technical education, an aspect that has enabled the country’s population to provide high quality but cheap labor. On the contrary, in United States the cost of labor continues to rise (Gereffi 22). Therefore, many of the companies cannot afford to produce their products locally. Therefore, the government should not protect American jobs through imposing stiff penalties on companies that transfer jobs offshore by transferring or manufacturing in a different country. With the increasing levels of competition in the local market, company offshoring plays a significant role in enabling the company to maximize its returns through the use of cheap labor and raw materials. Currently, the costs of operations in United States are very high. With tough economic times that are facing the people, the demand for higher salaries continues to rise beyond the reach of many firms. On the other hand, the market continues to pressure the companies to offer high quality products at very low costs. In order to balance these aspects, companies are opting to offshore some of their services to countries with cheap labor. For instance, Apple Inc remains one of the US most successful companies. However, this has been made possible by offshoring its operations in China. This is because the cost of labor and other factors of production remain low. Although there are several complaints that the firm has been overpricing its products, the companies have been instrumental in putting the country in the global platform through businesses (Oshri, Julia, and Leslie 38). Forcing such country to start operating and producing its products locally will have a major impact on its competitive. Currently, Apple Inc is facing stiff competition from Sony, Huawei, and Samsung. Therefore, any attempt to confine the operations of the firm in the country will give an advantage to its competitors who are also offshoring their operations. Therefore, the government should not put any restrictions on the operations of the companies. Ofshoring enables the business to focus on important areas of the business. For instance, currently, customer relationship management has become a major aspect towards the success of the business. Many of the successful businesses in the market have ensured that they has increased their workforce who deal directly with the customers in order to understand different factors that affect their consumption behavior. US market has also become more complicated with the entry of various substitutes in the market. Therefore, market research has become an important component that enables the business to understand the trends in the markets that might require some changes in order for the business to retain their competitive advantage. Although the entry of social media has made it easy to conduct research and understand the tastes and preferences of the target market, more subordinates are required in order to observe the changes in the market. As a result, offshoring has enabled the businesses to focus more on satisfaction of the customers. Imposing stiff penalties will increase the workload of these companies, an aspect that will affect their service delivery. In addition, they will find it hard to deliver high quality products to the customers. This will give an advantage to external businesses to enter the local market and segment the market, thereby, weakening the local businesses. This will have dire consequences on the economy of the country. Companies that are transferring jobs to other countries are doing so in order to remain relevant in the market. The government has a mandate of not interfering with the freedom of the market. Imposing penalties will kill the spirit of competition in the country. Investors will start to withdraw their investments in the country because they will be unable to keep u with the competition levels. This will lead to loss of more jobs than even anticipated. Majority of the local businesses that have transferred jobs in other country bring back their earnings to their countries. Despite offshoring these operations, they still retains their headquarters locally. Therefore, the government is a major beneficiary in this transfer of jobs. This is through heavy taxation that is imposed on these businesses. Through the use of the money collected, the government is able to support other projects that play a significant role in employing thousands of local citizens. Furthermore, the government is able to support education through student loans and improving the infrastructure of the learning institution. This equips the students with the long-term skills which enables them to be creative. This enables them to open their own businesses and create employment. Therefore, putting penalties will create a major setback to the country through losing the tax remitted by these firms. This will stall many projects, an aspect that will lead to loss of jobs (Feenstra 46). Moreover, with inefficiencies due to increased workload in the economies, companies will not be able to make money. Some of these will be forced to mechanize their operations in order to reduce the operation costs. This will lead to unemployment. Therefore, the decision will have a devastating effect on the economy. The US residents have been able to enjoy low priced products because of company offshoring their operations to different parts of the world. With the toughening economic times, the government has been trying to ensure that the living stardards of the people improves immensely. However, this cannot be achieved if stiff penalties are set up in order for the businesses to be forced to operate in the country. With the cost of labor, electricity, and other factors of production being high, manufacturing products locally will be very expensive. The extra costs of production will be passed to the consumers. Therefore, the customers will pay more for products that could have cost them little money. Therefore, they will have little money left to save and spend on other important activities (Oshri, Julia, and Leslie 84). This will increase the poverty levels in the country, an aspect that will put more pressure to the government to subsidize some products and services. The global economy has become interlinked. Each economy is dependent on the other. This explains the reason why the financial crisis that hit US had devastating consequences in other parts of the world. US companies are spread all over the world. The decision to put tariffs will hurt US more than any other country. In case all the other countries decide to retaliate, the US economy will be hard hit. Statistics indicate that foreign direct investment has been increased over the years. Majority of the countries that have transferred their operations to other parts of the world still go with them some of the top officials to control the operations of the subsidiaries. These people send their income in the country. If these companies are closed and forced to relocate to the country, all these managers, supervisors, etc. will be rendered jobless. The country will therefore, have a very hard time trying to accommodate these people. This will push the figures of unemployment even higher (Contractor 86). On the other hand, the local companies have been relying on global market to increase their sales. If each country follows the decision taken by the country, the businesses will lose their market share in the international market. This will make it very hard for the companies to support their operations locally. They will have to undertake a retrenchment strategy in order to reduce the number of employees. This will increase the number of people who are unemployed. American businesses have been able to perform effectively in the global platform because majority of the employees have learnt on how to deal with customers emanating from different parts of the world. Through offshoring, employees are able to gain experience in new markets. Furthermore, they are able to interact and learn new business ideas. Putting strict penalties will confine the locals in the US market. This will be an advantage to exteranal companies which will be looking towards investing in the country. Therefore, US will lose its competitiveness in the global business platform. Offshoring creates value for individual American Companies and frees US resources to operate for activities that add more value. Many of the US citizens have been looking at some jobs as for the low class people. Therefore, the companies have been struggling to get the necessary personnel to work on these areas. Offshoring gives companies an opportunity to fill these gaps. Therefore, forcing the companies to relocate back in the country will have devastating effects on the labor market in the US (Feenstra 26). The companies will lack subordinates with specific expertise to work on these areas. This will affect their performance. Many of the US residents remain unemployed despite the US companies employing thousands of foreigners in different countries. Many of the products being sold in US are produced outside the country. Therefore, the decision to put stiff penalties will force these companies to relocate and establish local bases. This will play a significant role in creating employment to thousands of young people who remains jobless. Over the years, the government has been putting up different measures in order to promote the growth of the businesses with the aim of reducing unemployment. However, once the companies dominate the US market, they transfer jobs to other countries. This has been having a devastating effect on the economy. This is through loss of taxes and jobs. Putting up stiff penalties will act as a cautionary measure to protect the US market which contributes immensely to the immense profits being made by the companies (Berry 67). This will in return enable the locals to enjoy the benefits of consuming the companies’ products by getting jobs in these firms. The government has invested heavily in the education of its citizens. Through student loans and improving the infrastructure of the schools the government has been spending a lot of money. Therefore, it has a role of protecting the interests of the local population. Putting stiff penalties will ensure that skilled people secure jobs in these companies. This will play a significant role in reducing the level of unemployment in the country. US have been losing a lot of money to China and India through offshoring. Initially, the country was enjoying the benefits accrued from manufacturing industry. However, with offshoring, products being sold in the country are mainly manufactured in other countries. Part of the money paid by the customers in order to get the products is taken back to other countries in order to pay salaries and sustain the companies. This is making the government to lose a lot of money to the competitors. This is money that could have been used to develop the necessary infrastructure to enable the people to create employment. As a result, the country growth has declined while countries such as China, Brazil, and India continue to record growth and development. Therefore, the government should impose strict penalties in order to ensure that money from the local customers remains in the country to fund development projects which in turn generates employment. In conclusion, government has a mandate of protecting the interests of the citizens. However, putting up stiff penalties on the companies that transfer jobs in other countries will kill the spirit of competition which has been enabling the customers to enjoy cheap products. Furthermore, the intervention will have devastating effects on the government itself. This is because the companies will have to retrench some of the employees because of the increased operation costs. Therefore, the government should allow the forces of demand and supply to dictate the operations of the businesses in the market. Works Cited Berry, John. Offshoring Opportunities: Strategies and Tactics for Global Competitiveness. Hoboken: Wiley, 2006. Print. Contractor, Farok J. Global Outsourcing and Offshoring: An Integrated Approach to Theory and Corporate Strategy. Cambridge: Cambridge UP, 2011. Print. Feenstra, Robert C. Offshoring in the Global Economy: Microeconomic Structure and Macroeconomic Implications. Cambridge: MIT Press, 2010. Print. Gereffi, Gary. The New Offshoring of Jobs and Global Development. Geneva: International Institute for Labour Studies, 2006. Print. Oshri, Ilan, Julia Kotlarsky, and Leslie Willcocks. The Handbook of Global Outsourcing and Offshoring. Basingstoke: New York, 2009. Print. Read More