Policy on Outsourcing - Research Paper Example

Policy Paper on Outsourcing

• Executive Summary

The research paper focuses on the position of policies regarding global outsourcing activities of the United States. The policy is framed regarding outsourcing activities of the companies of the nation. Outsourcing is a modern trend adopted by companies in their business operations. The policy has created impacts on both global and local outsourcing. Many issues were not covered in the policy such as tax competition between United States and other countries, undervalued exchange rates, condition of the local outsourcing companies etc. The research paper covers the issue statement, policy alternatives, and recommendations while addressing the issues that are not included in the policy. United States faces maturation stage of globalization that results to a high developed synergetic system. With the rise of competition in business, outsourcing has increased. The policy for outsourcing is creating problems for many global companies which adopt global outsourcing as their strategy of business.

• Introduction

With the increase of adoption of globalization by the multinational companies, outsourcing is the most important concept used by these companies for their business expansion. Globalization infuses technological innovation which is associated with electronic communication, computing and internet. The current policy of United States is not focused on the nature of competition of the global companies. Failure of recognizing the issue leads to distraction of the actual goals and objectives of the policy. The policy for outsourcing did not put emphasis on the appropriate rules of government of United States for controlling and checking the level of competition between United States and other countries as well as within the country (Howlett and Joshua, 2010). The conflicts that arise due to the present policy of United States are employment, manufacturing wages, union membership, profits of the multinational company. The thesis statement of the research paper is “addressing the policy of outsourcing of United States because some of the government rules are not supporting the competition within the industry”. The past policy focuses on the outsourcing limits of the global multinational companies. The global companies are sourcing their business not only to the local companies of United States but also to the other global companies. Companies are lacking in skilled workers and suppliers throughout United States (Tjader, Jennifer and Vargas, 2010). Suppliers and the outsourcing companies of United States charge huge money to the global companies for outsourcing. It is also a fact that the skilled labor market of United States is not so much developed. Companies are lacking competent and skilled candidates in their organizations. Hence, the policy needs to be analyzed so that it can consider the issues of taxation, exchange rates, internal labor market of the country. The major assumptions and the issues are to be considered so that the companies of United States and the people of the country get benefitted.

• Discussion

The issue statement of the policy is based on the loopholes of the current position of the policy of outsourcing. The policy needs to be revised to address the current uncovered issues of the policy. Stakeholders are the recipient of a policy. Stakeholders have a great impact on the success and failure of a policy. Improvements in the benefits of stakeholders are responsible for the success of public policy. Usually policy makers of United States have to consider the consent of the stakeholders regarding any changes in the policy. In the parliament, at first a bill is formed by the members of legislation. Then after many hearings and changes, the bill goes to the governor. After 45 days of signature of the governor on the bill, it becomes a policy. Stakeholders of the policy of outsourcing include Government of United States, general public, owners of different multinational companies, owners of different outsourcing companies, etc. The changes on the policy will be made after taking the consent of the stakeholders of the policy (Cordella and Leslie, 2010). The objective of the policy is to develop the outsourcing as well as the competition within United States. Global companies outsource their business to other countries as they are charging less money and the work is completed in an effective way. Developing companies are the hub of outsourcing companies. Countries like India, China etc. have huge cheap labor market. Availability of cheap labor in those countries helps the outsourcing companies to earn maximum profit from the global companies. If the existing policy addresses the current problems of United States, then the global companies will not outsource their business to other countries (Hallsworth, 2011). The new policy will come up with solutions which will not only enhance the competition of the global companies but also focus the conditions of the existing outsourcing companies of United States.

The policy of outsourcing is facing tough times in United States. The outsourcing refers to the practice where the contract is provided to the third party to perform the task of the company’s employees. Such practices actually cut the costs of the company and also make it more competitive. The government policy plays a vital role in the same. It is so because they can control the regulatory bodies which in turn can control the capital markets of the economy. The companies which outsource their task to the third parties can actually make profit because the companies analyze that the cost of conducting the task in their region would be higher than the place where they are outsourcing (Birkland, 2014). The government could be very resourceful in such places if it encourages the process of outsourcing and increase the competition in the market. A competitive market will draw the attention of the investors and will also increase the cash inflow. Such activities in turn will increase the capital inflow in the market and will appreciate the currency value of the country on a global level. The government also neglected tax policies in the same where it can get more revenues as tax if the companies record good profit.

The competitive market is also very much neglected by the government but on the other hand, it is also generating income and increasing the GDP of the country. The country’s value as well as its currency is very much dependent on its economic value in the world. It is also increasing the employment level if the company starts outsourcing in its region and will also increase the real income of the people as well as increase the per capita income of the country (Edwards III and Stephen, 2013). The tax policy of the United States is also not followed in the progressive manner where high income people will have to pay higher tax but in this country government encourages people to earn more. The government is the key policy maker and they have neglected such important points where high competition, capital inflow as well as tax regulation. Therefore, they should subsidize the companies to outsource their jobs to increase the competition and increase the cash flow in the capital market to increase the wealth of the economy.

The government has to find the way to increase the competition as well as maintain the same. The main negligence of the government in this policy is the tax structure, exchange rates as well as labor market of the nation. The tax structure that should be made by the government should be to encourage the growth of the companies outsourcing their products at a low price to skilled labor of other countries. Such outsourcings are lowering the cost of production and are helping the companies to score more profits. Such profits are the source of income of the companies but some of the government restrictions are making it quite difficult for the companies. Therefore, it can be recommended that the government could encourage the profit making motives of the organization as it will gear the rate of growth in the country. Such things generally stabilize the exchange rate of the country through strategic trade of products during outsourcing.

• Conclusion

The political condition in the United States is also at its stable position and thus the growth of the country is totally dependent upon the companies that are operating in the country. As the concept of globalization is very wide but at the same time, there are some other countries which also operate in the US. As per the tax reforms they may charge a little more tax from the foreign companies. Such activities will be very much helpful for the nation. The currency stability as well as strength will also be very much helpful for the organizations as well as the nation as they will earn more during any kind of trading.

Therefore, it should be the matter of concern for the government to consider the tax regimes, exchange rates as well as the skilled labor. The skilled labor will reduce the cost of the production which will increase the profitability. Tax regimes should be in order that the nation could get the most from such profitability and finally the exchange rate should be stable as well as quite dominating in the market so as to gain through trading in the international market.