What are the positive effects to the economy of outsourcing or offshoring jobs?
The labor cost is one of the factor why companies or manufacturing industries outsource jobs and in general we think that this is a negative thing. Are there even positive effects to the economy if we outsource the jobs?
Taxes would be less. Labor cost would be much less as labor in developing countries is paid only 10% of that what is paid in home countries. In some developing countries, labor unions are weak or not working at all. Some benefits, like social security premium, are not paid to offshore labor. Multinationals employ labor three months, lay off then reemploy to override payment of benefits like Christmas bonus or 13th month pay. One employed for over four months is entitled to 13th month pay.
Many people may not want to hear this, but, outsourcing lowers the costs of products and services. Most of the things that people buy or use every day would be completely unaffordable if manufactured or supported in the US.
Why outsource? Sooner or later someone in the outsourcing country will decide to clone the work you are outsourcing and sell it direct to your customers for less. Outsource making shoes and suddenly shoe factories will spring up.
You make a good point. But that copying is likely to occur anyway. In any case, those who choose to outsource are looking to reduce current costs and meet quarterly profit goals. They are not thinking ahead.
Well Sid, there is a difference between someone copying you, and you paying someone to learn how to do things who then copies you. Ten years or so ago software development was outsourced to India. Now the firms outsourcing have Indian competitors.
There is certainly a benefit to the other country but the costs of outsourcing are passed on to the government or community in the outsourcing country.
Also while you are outsourcing and laying off other people's customers, other companies are doing the same and laying off your customers.
So overall there are no long term benefits to the economy as a whole, though individuals may prosper.
As a U.S. citizen, I am 100% against outsourcing our jobs to foreign countries. The only positive results of sending jobs to another country occur in the already overflowing pockets of greedy corporate CEOs. The average worker ultimately is forced out of work, faces losing their home, not being able to have disposable income and may eventually end up in a lower paying job...only if they can find one. Business owners and corporations should not receive tax breaks or incentives if they ship jobs that able bodied people here in the States can perform. Our standard of living is not the same as many other governments. Therefore, isn't it unpatriotic to force our citizens into menial, substandard wages in order to compete with the allure of poverty wages found in other countries? We have worker rules and regulations in this country for a reason and those before us fought long and hard to maintain a good standard of living and I'll be dipped why any REAL U.S. citizen would support outsourcing. Okay, I'm stepping off my soapbox now, but I think I made my point. I fly the American flag that is made in America for many reasons...the most important one being we have sacrificed much and are proud to be Americans.
But that is capitalism, in order for the business to have more profits, the costs should be reduced, in this case, labor? Do you believe that when a company profits, it will increase its investments and in turn gives more tax to the country?
pagesvoice: Patriotism and capitalism are incompatible. Or to put it another way, money's only loyalty is to money.
The only positive results are for the CEO's, and the corporate big wigs who get to stuff more money into their fat pockets. It's pure greed at the most disgusting level, and you can ask the millions of unemployed who's familys have suffered because of this sick behavior the same exact question.
To outsource a production implies to draw cost advantages. When a company manufactures elsewhere she pays less taxes and has a lower cost labor roughly. What do we have in return? Products with lower quality at a cheaper price. However when it comes to our BELOVED brands, we notice that their price did not vary. They are still unaffordable. What does that mean? Simply that the low cost of the production is not repercuted on the sale price and is pocketed by the multinationals.
Meanwhile US workers don't have jobs and pay the higher price for products made by American offshore companies. An absurdity. Meanwhile, those same companies dispose of governmental tax reductions and so forth.
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