Will American Factories Ever Resurface - Term Paper Example

? Full [March 13, Will American factories ever resurface? American factors have laid off hundreds of thousands of workers due partly to the recession and mostly because these companies find it cheaper to outsources their manufacturing to other Asian countries, where the same work is done at a much cheaper cost. There is a lot of heated discussion and debate over the issue of outsourcing. Proponents insist that it is the best thing for the US economy, opponents contend that it is not so, and this is causing massive employment. Advocates are of the view that outsourcing will save money for corporations, will enable new possibilities and would lead to Americans to get their hands on executive jobs. They feel that outsourcing exercise brings significant advantages to the American economy by making imports cheaper and exports more costly for other counties. Opponents of Outsourcing: Those who are not in favor outsourcing contend that hiring people from other countries has a negative effect on the US economy and deprives hundreds of thousands of workers in the US especially skilled and semi-skilled workers. Poor Americans who are willing to do jobs that do not need many skills, are finding it very cumbersome to get jobs, and poverty isn’t really helping help the US economy, instead its reducing consumer spending considerably and also the amount of tax collections. They say that the lost jobs will never be recovered and this is a permanent loss to the American and the economy. This does seem valid and everyone knows that outsourcing does cause people to be jobless in America, especially such jobs that have very few or no qualifications, education or technical skills, because job loss is not only confined to people limited skills, but also jobs of skilled nature are now outsourced to other countries where manpower is cheaper. The reason that outsourcing hurts the US economy is quite controversial. For those who support outsourcing for political reasons, outsourcing will on the whole have a constructive effect on the American economy, since it is cheaper and saves a lot of money for corporations, opens up advantageous chances for greater free enterprise in the US, and would have the maximum number of Americans working at higher level executive jobs. Opponents are adamant that the hiring of overseas workers at jobs that can do done by semi-skilled or skilled laborers. The way that companies that outsource save taxes, outsourcing will diminish taxes paid by corporation and therefore also decrease spending by the governments, both federal and state. Both sides on this issue have some valid arguments. Outsourcing has become the major cause of joblessness in America and it greatly affects people with only limited skills. On the other hand the fact that tons of skilled labor jobs are being offered to foreign countries can also not be ruled out. Benefits of Outsourcing: People who favor outsourcing say that reducing the operating expenses of corporations leads to creation of new and better jobs. There are many government departments and agencies that outsource their work load, enabling them to save tons of dollars, which benefits the US economy and reduces federal spending. This is for those who state that paying workers less wagers would mean the companies would be able to produce more products with considerably less expenditure and this saving could be passed on to customers. Lower prices would enable more consumers spending, and would enable companies to generate more jobs for employees working in America as they usually pay those workers less who work outside the States. Outsourcing is a very controversial issue, but it is an issue all the same. Virtually no one agrees that outsourcing can be completely stopped (Wise Geek 2012). Many US citizens feel that companies are dodging taxes and cheating the US government of revenues and suggest companies should be taxed more for outsourcing, and given added incentives if they decide to keep their worker base in America. Others feel the temporary loss of jobs will result in greater revenues by cheaper imports and expensive exports and will ultimately are worth the temporary loss of jobs. The Nature of Outsourcing: “Outsourcing” began in the 1980s when US companies extended their foreign operations from Asia to Central America South America and other parts of the world. .During the 80s European manufacturers also started outsourcing. Outsourcing and increased international trade was now becoming a global phenomenon. Outsourcing started after World War II because before that international trade wasn’t as developed as it is now, due to increases in technology in the years after the war, which reduced the costs of transportation and communication. Like other economic principles, outsourcing can be seen from different approaches. One of the finest ways to view outsourcing from a global perspective is its positive relationship that increases international trade. On a world wide scale, outsourcing does not lead to decreasing jobs, rather a shift of jobs between countries. When looking at the actual statistics unemployment hasn’t really gone up in America as outsourcing has gone up. Outsourcing often follows “in sourcing”. According to monetary breakdown a greater number of products are outsourced to America then the goods outsourced by America itself. Although the US is does outsource some jobs to other countries, the greatest benefactor of outsourcing is the U.S. itself Origins of Outsourcing: Although the subject has become has made it to headlines only quite recently, outsourcing has been going on for quite some time. Many service companies outsourced work for overseas workers to gain a foothold in foreign markets. They provide their educational and technical expertise to customers where they are and conducts audits, provide consultancies wherever the customers are. Basically they do not ask that these customers come to the States for services. International markets are expanding rapidly as local ones have reach their optimal capacity. America generates approximately 60% of its revenue from IT based companies that in situated in other countries. It isn’t something unique. In various industries top firms report that their overseas sales are much more than their sales in the United States. . There are innumerable reasons for companies to outsource many different jobs, but the best and most well-known and important reason is that it saves money. A lot of corporations that get their jobs outsourced provide services cheaply since they don’t have to cater for benefits to their employees and therefore have the least amount of expenses to be paid out in the form of overheads (Weidenbaum 2004). Depending on the country, it often becomes beneficial to outsource various works to other countries. Outsourcing without any doubt is one of the best cost cutting tools. If one doesn’t want to lose his or her job job, the only thing to do is perform better and work for less. Reasons to Outsource: Experts are if the opinion that foreign outsourcing promotes the culture of globalization by improving the living standards of countries to which the work is outsourced and that subsequently gives a boost to the American economy by providing cheap products American customers. Eventually this leads to high paying jobs within America. American companies not only reap the advantages of decreased labor costs but also of offshore tax savings. Smaller companies involved in outsourcing are often considered to be far more competitive then bigger corporations. Repercussions of Outsourcing: Simply put, massive job reductions and losses happen when companies outsource service contracts to developing countries that perform the same work at much cheaper rates. Outsourcing is routine and normal method of business that is used by many of the largest US companies including HP, Microsoft, AT&T and IBM. This has resulted in Americans losing jobs as such companies outsource work to vendors in countries with cheap labor like India, Philippines and China (Sloane 2011). The jobs lost are of both sorts, skilled as well as unskilled. College professionals often find themselves competing with people who have the same college degrees and are ready to work much harder and longer for a very low percentage of the salary in Western countries. For the smaller towns and cities, overseas outsourcing can be especially devastating as they may not be able to find jobs inside their own cities and villages and for work must leave the area where they have lived their entire lives. Outsourcing can be very hazardous for American businesses. Massive redundancies by firms cause severe monetary losses as a result of bad planning and the depleted morale of the remaining workers. When companies outsource services, they often lose well trained and experienced staff to their competitors. Also the contractor who provides outsourcing services will come across extremely high rates of turnover, which would lead it to replace its staff very frequently with new staff that might not be that efficient. Often contractors do adhere to the commitments that they make to their clients which results in much poor quality of service. Revenues in Outsourcing: Outsourcing revenues are huge and result in a decrease in the cost service that may be as much as 50% to 60%. Nearly 50% of the more than $19 trillion which European firms spend on administration and revenue could easily be subcontracted with considerable savings being made on them (Hasan 2008).  Despite the hue and cry outsourcing is usually given to corporations in similar countries. The reality about the pace, magnitude and continuous acceleration of the business process, people are wondering about the total effects of outsourcing on the American economy (Davidson 2003). Outsourcing is very controversial and it affects almost all parts of a business. Outsourcing has however been admired as economical, well-organized and competent, prolific and dynamic and well planned and calculated. Conclusion: Opponents call outsourcing very as evil, practiced by people who are greedy money-grabbing monsters, it is quite destructive, merciless and has been invented for exploiting the poor, destroying communities and nations. Both the opponents and proponents do have points; but everyone agrees that outsourcing has led to the decline in the quantity of jobs in America, and now that the trend has started, it seems very difficult for American companies to gain their previous position in the industrial world, unless they can come up with some formula for producing goods and services at more competitive prices. Works Cited Davidson,. Harry R The outsourcing of America’s jobs. Final News.com (Updated Nov 24, 2003) Outsourcing. 'The Rise of Outsourcing & It's Connection to Post-Industrial America. From Steel Production to Hamburger Sales: the undeniable link between Outsourcing and Industrial Transition Overseas Outsourcing: American Business: The Future of Outsourcing - Impact on Jobs: Growth of India and China, emerging markets threat and opportunities: Globalchange.com Weidenbaum, Murray. Outsourcing is a good thing, mostly: (2004). < http://findarticles.com/p/articles/mi_m1272/is_2708_132/ai_n6019795/pg_2/> Wise Geek. What is Outsourcing: Clear answers for common questions(2012) Read More