Outsourcing of American Jobs to Other Countries Strengthens the US Economy - Research Proposal Example

Executive summary It is generally feared that outsourcing American jobs to other countries affects the US economy adversely. The existing literature gives divergent views and evidence suggests that outsourcing jobs only temporarily affects the job market. In the long run, the nation benefits as a whole. To confirm this view, research is proposed to be conducted through literature review as a lot of literature is available but it is fragmented. Chronological arrangement and interpretation of such literature would bring out the true picture and it is expected that the goals would match the objectives of the study. Outsourcing of American jobs to other countries strengthens the US economy Background Corporate restructuring, downsizing and layoffs have led to fundamental changes at the work place on a global basis. Senior executives and corporate leaders around the world agree that outsourcing is good for the world economy. These executives also realize that outsourcing can deliver more than just labor cost savings (Daga & Kaka, 2006). While in all markets executives think outsourcing is better for the world economy rather their own markets, the issue has become politically sensitive in America (P&P, 2004). The issue has become highly emotional because of two dramatically different effects – while some claim that it will result in layoffs and dislocation for many US workers, most economists believe that it will ultimately strengthen the US economy (Otterman, 2004). Strong arguments against outsourcing have arisen from statistics revealed through surveys and studies. According to a study by the Information Technology Association of America (ITAA), migration of tech jobs to low-paid foreigners has eliminated 104,000 American jobs, nearly 3% of the positions in the U.S. technology industry (MSN Money, 2004). Outsourcing causes damage to the people and the communities and there is an impulse to protect the American workers. Outsourcing has been referred as the ultimate betrayal of the American workers which is morally repugnant and profoundly un-American. A survey by Merrill Lynch indicates that the proportion of IT projects outsourced to India by Fortune 500 companies could increase from below 5 percent to over 15 percent in the next two years (Solita Systems, 2002 cited by Nair & Prasad). A research report from Deloitte showed two million of the 13 million jobs in financial services across Western economies will be transferred to India by 2008 (Moller, 2006). Arguments in support of the outsourcing are equally strong. Despite the recent economic downturn, according to a McKinsey Analysis, the U. S. economy created an average of 3.5 million new jobs in the private sector per year (Otterman). Outsourcing helps to stimulate the economy, argue some economists. The loss of jobs can be attributed to other factors like the bursting of the tech bubble and its effects on Wall Street, the consolidation of retailing under giants like Wal-Mart, and the after math of September 11 and other events. Hence there is no evidence that outsourcing has caused the recession and there is no evidence that it is making it worse. The Bush administration is convinced that shifting the white collar jobs to the developing countries might cause short term pain but is a part of the positive transformation that will enrich the US economy over time (Vieth & Chen, 2004). Outsourcing is not just a new way of doing international trade; it has also opened up new areas and products that can be traded, is another opinion. Between January and May 2004 there were 2634 reports in US newspapers focusing on fear of job loss due to outsourcing. The former labor Secretary under President Clinton too states that blocking jobs from moving overseas would amount to 1930s style protectionism and also make the companies less competitive (BusinessWeek, 2003). The impulse to protect American workers should not lead to policies that ignore economic principles which ultimately would end up harming even the developed nations. Rationale for research The existing literature gives diverse opinions about the outcome of outsourcing American jobs to other countries. Outsourcing has been in the news recently because of the numerous debates and the view points that it has attracted. Knowledge is fragmented and it is an interesting area of research. To fill the knowledge gap it is essential to conduct a research on the exact position in the American job market as a result of outsourcing jobs to other countries. With this in mind, the objective of research is as follows: 1. To determine the reason that prompted outsourcing in the first place. 2. To determine whether the number of companies that started outsourcing has increased or decreased between then and now. 3. To determine the type of jobs that are being outsourced. 4. To determine the number of jobs that have been outsourced in the last ten years. 5. To determine the overall impact on businesses and the economy. 6. To determine how outsourcing has impacted the purchasing power of the people in America. 7. To determine whether the US economy ahs strengthened or weakened as a result of outsourcing. Significance of research This research will be of great significance as it could put to rest certain apprehensions against outsourcing. Much of the fear is in the expected loss rather than the actual loss of jobs. Research would help to clarify this stand and give a new direction to the companies that have been contemplating outsourcing. It is also believed that outsourcing has motivated the local people to study technical subjects and overall enhanced the educational level in America. Supporting these facts with evidence would give a new dimension to the concept of outsourcing. Research Paradigm Although research has been considered important in every business activity, there is no consensus on how it should be carried out. Research is a method of enquiry or investigation; it is systematic and methodical and it increases knowledge (Amaratunga et al., 2002). Research relies on facts, experience and data, concepts and constructs, hypotheses and conjectures, and principles and laws. There are different paradigms for research which are classified under qualitative or quantitative research. According to Taylor et al., (1995) quantitative data is numerical in form. Questionnaires and interviews are the usual research methods used under this paradigm. Some researchers claim that unless human behavior can be expressed in numerical terms, it cannot be accurately measured (cited by Jones, 2004). Qualitative data covers a range of material collected from previous research, literature review, case studies and unstructured interviews. Some researchers argue that the qualitative approach is better as it provides greater depth. Research Strategies As far as this research is concerned, the qualitative method would be applied. A lot of literature is available, with diverse opinions. This would enable to understand the totality of the situation and multiple methods can be used to establish different views of the phenomena. With qualitative data it is possible to preserve chronological flow, see precisely which events lead to which consequences and derive fruitful explanations. In qualitative study any number of approaches may be used to generate theory. This research aims to get an in-depth understanding of the situation in America which includes the government policies, the problems of the industries that outsource, the net savings that such companies estimate or actually save out of outsourcing and the actual outcome over the years. Data collection and analysis method The methodology that would be applied is literature review. A literature review provides the meaningful context of the project within the universe of already existing research (Obenzinger, 2005). It sets the basis for discussion or analysis or contemplation of implication and the necessity for further research. Literature review distinguishes what has been done from what is to be done. Previous perspectives can be synthesized and a new one gained. Due to the vast amount of literature available, only the most significant texts will be selected, which itself implies a process of evaluation and prioritization. The literature review would include case studies of firms that have outsourced jobs. It would also give insight into the different outcomes that such firms might have experienced. A literature review would help in emphasizing on the findings of the previous results. The trends and themes in the previous literature would be pointed out including gaps if any in the literature. To analyze the data it is important to rely on the theoretical propositions of the study and then analyze the evidence based on these propositions. Pattern matching is another major mode of analysis. Here the empirical pattern can be compared with the predicted one. When the patterns coincide the internal validity is enhanced. The analysis should rely on all the relevant evidence. Expected outcome The objectives have been clearly laid out based on the information available. The research methodology has been discussed along with suggestions for data collection and interpretation methods. This research is expected to add to the existing body of knowledge. The existing literature gives divergent views and it is confusing as both views appear to be equally strong. It is expected that the results would match the goals of the study which would confirm that what was proposed was actually executed. Limitation of this research There is no unique research method and each method has its own strengths and weaknesses. Three major weaknesses in qualitative research persist which include the inability to manipulate independent variables, the risk of improper penetration, and the lack of power to randomize. During data analysis through pattern matching there remains a risk of interpretive discretion. Qualitative research is the method of asking simple questions and getting complex answers. This is where prior expertise and knowledge would help in interpreting data. References: Amaratunga, D., Baldry, D., Sarshar, M., & Newton, R., (2002), Quantitative and Qualitative Research in the built environment: application of mixed research approach, Work Study, Vol. 15 No. 1 2002, pp. 17-31 BusinessWeek Online (2003), Commentary: Outsourcing Jobs: Is It Bad? 04 Aug 2007 Daga, D., & Kaka, N. F., (2006), Taking offshoring beyond labor cost savings, The McKinsey Quarterly, 04 Aug 2007 Jones, C., (2004), Quantitative and Qualitative Research: Conflicting Paradigms or Perfect Partners? 04 Aug 2007 Moller, P., (2006), Offshore or offtrack? Business Strategy Review Autumn 2006, London Business School MSN Money (2004), Outsourcing actually creates U.S. jobs, study finds, 04 Aug 2007 Nair, K. G. K., & Prasad, P. N., (n.d.), Offshore Outsourcing: A SWOT analysis of a state in India, IS Sourcing, WWW.ISM-JOURNAL.C OM SUMMER 2004 Obenzinger, H., (2005), What can a literature review do for me? 04 Aug 2007 Otterman, S., (2004), TRADE: Outsourcing Jobs, Council on Foreign Relations, 04 Aug 2007 P&P (2004), The McKinsey Global Survey of Business Executives , March 2004, The McKinsey Quarterly, 04 Aug 2007 Vieth, W., & Chen, E., (2004), Bush economic report praises outsourcing jobs, 04 Aug 2007 Read More