The Impact of Outsourcing on American Workers - Essay Example

Where Have All The Workers Gone? The Impact of Outsourcing on American Workers. Dionne D. Cona Axia College Tom Javarinis COM 220 Research Writing Where Have All The Workers Gone? The Impact of Outsourcing on American Workers. When the rent is too high, it’s time to move. When employee pay rates in other areas are lower, it’s time to relocate. American companies have been using these tactics for decades. Wall Street financial firms moved their operations across the Hudson River to places like Secaucus, N.J. and then further to Dallas and Phoenix in search of the most cost efficient locations to do business. The problem is that the moving hasn’t stop at our borders. These tactics continue today in the form of outsourced work shipped overseas. Even though outsourcing promotes efficiency and cost reduction so companies can maintain their competitiveness, sending American jobs overseas hurts America because our economy depends on jobs at all levels in order to continue functioning. The economy is suffering from this practice and it will continue to do so because Americans are forced to compete for jobs at pay levels well below the standard of living. The secondary problem with outsourcing is that companies can visit abuse on their employees and the workers have no way of protecting themselves. Even some companies have found that outsourcing isn’t as profitable as they had once thought it would be. When American businesses outsource, it seems that everyone loses. As Americans began to raise concerns about job losses, major companies gave their reassurances that this was only happening to the “low-end” jobs. This would weed out the lower end, highly repetitive and unskilled labor, leaving better jobs for Americans to fill. These early rounds of "globalization" cost millions of U.S. jobs, but various experts assured Americans that this should not be a major concern because these were blue collar "rust belt" jobs. Old technology, they claimed. Manufacturing is passé. The U.S. would enter the new global economy with the new technology. Information, services, cutting-edge research and development—these would be the clean, high-paying jobs that would keep America on top. (Jasper, 2006) This promise has been revealed to be an empty one as Americans watch more jobs leave the United States as outsourcers move up the ladder to target higher skilled jobs such as engineering, medicine and legal research. Between 2003 and 2008 financial service companies have moved approximately 500,000 American jobs overseas. Seen in the chart below are the companies with the highest numbers of outsourced workers overseas. These 10 companies alone are responsible for outsourcing nearly 200,000 jobs. These certainly aren’t the only companies outsourcing, but they are responsible for adding to the problem of American job losses due to outsourcing. Corporation Outsourced Jobs IBM 63,700 EDS 22,400 Dell 17,450 Cognizant 15,000 Siemens AG 15,000 General Electric 14,250 Convergys 14,000 Accenture 13,000 Computer Sciences Corp 10,800 Intel 10,426 (Fulks, n.d.) Is there no job safe from the threat of outsourcing? The Fisher Center for Real Estate and Urban Economics at UC Berkley’s Hass School of Business calculates that roughly 11% of all U.S. occupations are vulnerable to outsourcing. That is correct; any job could be next. Already, many high paying jobs, such as the creation of computer chips and components, have been outsourced to countries, such as China, and Japan. Computer drawn sketched, easily done in the states, are often outsourced to Hungary. Even bookkeeping and financial analysis is being outsourced. These are not blue collar jobs. Many well-paying jobs are being outsourced to other countries for less, which means more Americans are losing out (Hemphill, 2004). The majority of children’s toys are manufactured overseas, especially in Taiwan, China, and Japan. Most of our electronics come from other countries as well, with Japan leading the pack. Many motor vehicles are made in other countries, and then imported to the United States. While one may not think of this practice as necessarily outsourcing, consider that Americans are just as capable of making automobiles in the United States. Ford has been doing it for years. If car companies didn’t outsource or deal with overseas dealers, they could save the customs and import costs and taxes that Americans pay. This certainly adds to the financial crunch that outsourcing puts us all in. Both blue collar and white collar jobs are clearly at risk, and it gets worse. Analyst John C. McCarthy predicts at least 3.3 million white collar jobs and $136 billion in wages will shift from the U.S. to developing nations by the year 2015. (Jasper) Sudip Banerjee, President of Enterprise Solutions at Wipro, one of India’s largest overseas outsourcing providers, says “The jobs will go to those who can do them best, in the most cost efficient manner, geography is irrelevant.” (Baker, 2006) Clearly overseas outsourcing providers have all levels of American jobs firmly locked in their sights. The table below shows the current situation and the expected rise of outsourcing in America. Number of U.S. Jobs Moving Offshore Job Category 2000 2005 2010 2015 Management 0 37,477 117,835 288,281 Business 10,787 61,252 161,722 348,028 Computer 27,171 108,991 276,954 472,632 Architecture 3,498 32,302 83,237 184,347 Life Sciences 0 3,677 14,478 36,770 Legal 1,793 14,220 34,673 74,642 Art, Design 818 5,576 13,846 29,639 Sales 4,619 29,064 97,321 226,564 Office 53,987 295,034 791,034 1,659,310 Total 102,674 587,592 1,591,101 3,320,213 (Fulks, n.d.) Outsourcing American jobs came with a promise of allowing American companies to be more competitive in the global marketplace. Since outsourcing is basically explained as the activity of contracting other proficient and specialized organizations to perform regular business activities or specific business processes of a certain organization (Halvey & Melby, 2007). In the short term, allowing companies to reduce their employment costs allowed them to continue to grow despite a slowing economy. With American unemployment numbers growing, less money is available to spend on goods and services and American companies are now beginning to feel the depth of the impact an unemployed American population has on their bottom line. Corporations focused solely on the bottom-line looking to improve their standings with investors. These corporations have lost sight of the responsibility they have to the American people. In response to the concerns raised by the public, their claims and statements have given the impression that these companies feel that American workers are incapable and overpaid. The truth of it is that Americans are the most innovative and productive of all societies in the world. It is hard to believe that the citizens of the world’s superpower nation, as the US is commonly referred to, are incapable of doing the jobs that they have done for years. These jobs are what made America what it is today. The citizens of this country, throughout history, have put their backs into blue collar jobs so that they could not only feed their families, but could provide them with a better nation in which to live. Even the health industry is jumping on the outsourcing bandwagon. About ninety nine percent of the medical equipment used in the United States isn’t manufactured here. Syringes, needles, IV catheters, MRI and X-ray machines are just to name a few. Many prosthetic limbs are not manufactured in the United States. There are so many items and machines that can be found in any hospital that didn’t come from America. No industry is really safe, and this never dawns on American citizens until they try to get a job. American citizens hold employers responsible for fair treatment of employees and demand that they be provided safe and secure places to work. An employee in an underdeveloped country doesn’t get that same level of protection from the US government. Factory safety standards are most often at a bare minimum in other countries. Further, injured workers may not be compensated at all for injuries sustained on the job. It is easier to replace an injured worker, than to rehabilitate that worker, and pay the resulting medical bills. In most developing nations, a worker cannot afford to sue for such treatment. Even if they could, they may not have the right. Some workers even suffer physical abuse from their superiors. If items are returned defective, for example, workers who manufactured those items may be beaten. The list of abuses goes on, and parent companies can turn a blind eye. Consider this: Dell is a major corporation in the United States, and subcontracts its call centers to a company in India. Abuses are exposed in the call center in India. Those abuses are cited, not as the fault of Dell, but as the fault of the subcontractor. Even though Dell is a United States based corporation, with a handbook written to US standards and with US laws in mind, the subcontractor is based in India, and is only responsible for following Indian law. Dell is free of blame for the abuse, because they didn’t ignore unfair treatment of US workers on US soil. They can claim no knowledge of the issues, and the subcontractor takes the blame. Everyone effectively goes home happy. In most cases, the subcontractor might get a reprimand, a slap on the wrist, from its parent corporation, and they will continue doing business (Gordon, 2003). Hypothetical situations such as this are all too often a reality. People suffer terrible abuses, and no one is the wiser. These human atrocities, coupled with lower standards of living, lack of infrastructure and employee rights, and the resulting wages much lower than American workers can survive on. "Outsourcing" is a much tidier way of describing how rich guys are shipping millions of American jobs to places where they are free to destroy the environment and disregard human rights—little-known places where they can pay human beings, some of whom hardly are old enough to go to school (assuming there is a school for them to go to), pennies a day to make things that will be shipped back to America and sold to the same people who once made the same things before the same rich guys "outsourced" their jobs. The cycle is unending and vicious. The rich guy stays rich, the poor worker stays poor, and the American citizen stays jobless. Experts stated that by globalizing the economy, American companies would have new foreign markets for their goods and services. Yet exports to countries where American companies outsource jobs have not increased their imports from America at substantially greater rates that other countries. When manufacturing jobs fell to the first wave of outsourcing and China became the world’s predominant manufacturer they did not readily provide an open foreign market for American products. America’s imports far outweigh its exports, and the idea of free and fair trade seems to be disappearing. It would appear that foreign countries are more than happy to take American jobs, but not American goods and services. Even some companies who have outsourced work are starting see problems with outsourcing. According to a survey done by Pricewaterhouse Coopers, less than half of the companies that outsource really feel that it is effective. In fact, one third of outsourced companies that were surveyed stated that outsourcing is not as effective as they originally thought it might be. Of the companies, only 9% feel they are breaking even, and 4% actually report that they are losing money (Anonymous, 2005). At first glance, these numbers might seem small, but consider how many companies that really is. Those numbers mean a lot when determining how poor the efficiency of outsourcing really is. Outsourcing was designed as a way to save companies money and bring in more profit, and yet, the numbers show the opposite. Companies who outsource seem to be getting hit harder financially, then companies who keep all of their labor in the United States. Once the heart and soul of America, the middle class society of the US has grievously suffered swelling job losses and a great decline in their living standard. (Behreandt, 2007) Yet another threat linked with the outsourcing is the loss and decline of the domestically generated talent as it may result in the hindering of the progress of a worker by denying him the experience he would have attained by managing the corresponding issue of the business himself rather than outsourcing it to a third external party. Many American workers don’t know how to perform the tasks of their job, because they have lost the opportunity to learn. Managers don’t know how to manage. Human resources departments are split down the middle, because half of the employees don’t even work in the United States. Even some business owners and CEO’s are lost when it comes to understanding basic business practices, because they don’t deal with the everyday issues that come with having all of their employees in the United States. By taking the work out of the United States, companies are actually dismantling their own cohesiveness and losing understanding of business practices. Even American farmers suffer due to outsourcing. The grocery store says it all. Tomatoes, strawberries, and other foods are clearly stamped “product of Mexico”. Mexico is not the only country that provides the US with its produce. However, the exact same foods are grown locally, following USDA standards and pesticide laws. Local farmers’ markets and fruit stands suffer when chain grocery stores choose to stock imported produce, just because they saved a few pennies on the overall purchase. As long as there are pockets of the world with accessible workers willing to labor for a fraction of a reasonable US salary, it is unlikely that US companies will wake up and decide that they need to favor employing American workers. The fate of the workers, both in the United States and abroad, means nothing to these companies. Their ability to profit, and save money at the same time, is the bottom line. Workers are just casualties for the cause. The only resolution to the problem of outsourcing is to send clear messages to companies that continue to resort to these tactics. These businesses need to be told that American citizens will not tolerate their jobs being pulled out from under them. Choose to purchase items made in America, sold in venues with face to face consumer interaction and supported by American workers. Americans should make a statement with their checkbooks that they value corporate policies that respect the communities that brought their companies to market in the first place. Cancel services that employ third party outsource providers from low wage countries. American banks should work with American companies. Buy local food from local growers. Supporting companies that outsource isn’t supporting America; rather it is supporting the decline of the American economy. References (Baker A 20060618 In Search of the Next Bangalore)Baker, A. (2006, June 18). In Search of the Next Bangalore. Retrieved March 25, 2009, from Time Magazine Web site: http://www.time.com/time/magazine/article/0,9171,1205351,00.htm (Fulks R Facts and Figures on Outsourcing)Fulks, R. (n.d.). Facts and Figures on Outsourcing. Retrieved April 18, 2009, from Love to Know Web site: http://jobs.lovetoknow.com/facts_and_figures_on_outsourcing William F. Jasper. "Americans Lose Their Jobs to Foreign Competitors." At Issue: Does Outsourcing Harm America? Ed. Katherine Read Dunbar. Detroit: Greenhaven Press, 2006. Opposing Viewpoints Resource Center. Gale. Apollo Library. 18 Apr. 2009 Neve Gordon, “Strategic Violation: the Outsourcing of Human Rights Abuses”, the Humanist; Sep/Oct 2003; 63, 5; Research Library Anonymous, “Reports Offer New Views on Job Outsourcing”, Quality Progress; Feb 2005; 38, 2; ABI/INFORM Global pg. 21 Thomas Hemphill, “Global Outsourcing: Effective Functional Strategy or Deficient Corporate Governance”, Corporate Governance; 2004; 4, 4; ABI/INFORM Global pg. 62 Read More