Cheap Labor and Outsourcing - Research Paper Example

y workers with robots.” (Musil, 2012) But for the cheap labor available in the thickly populated countries like China, India and Indonesia there is no other justification for shifting or creating new facilities in these countries by the American companies. In fact, the companies do make several compromises in other areas to exploit the cheap labor. Do we have plans to shift the production facilities back to America, if labor could be replaced with robots? The indiscriminate outsourcing drive is neither in the interest of the host countries nor in the interest of the USA in the long run.

This paper seeks to analyze the causes for outsourcing either within the country or to foreign countries, its impact on the business and economy of the USA and the host countries. It is not the question of what is good to American economy. The issue has several dimensions. Is corporate social responsibility of the multinational companies engaged in outsourcing spree limited to only the USA? Are they not responsible for human rights issues involved in the operations of the suppliers? Disturbance of the existing equilibrium in the employment market either locally or internationally creates serious imbalances in the economic system in the long run and result into a situation of ‘catching the tail of a tiger’, meaning neither you can afford to leave the tail nor holding it for long!

“Outsourcing is generally recognized as a strategy for producing cost saving, however, by simply following a traditional cost-focused approach, companies may be missing opportunities to gain further competitive advantage” (Deloitte, 2008). The following points need to be carefully considered in respect of cheap labor in view of its impact in general on the economy. 3. The market is saturated locally and establishment of production facilities in a third country could meet the local demand in such country and this unit could act as a hub for export of such products to other countries. In