Outsourcing
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Outsourcing has become a major issue this past year. The main reason is the onset of a presidential election in November. Those opposed to outsourcing say it is merely a trend. For example, “Joe Ironside, business agent for the Machinists Local 831 in Cedar Rapids, said anything they can get rid of or do at one-tenth the cost theyll do” (Foley, 2004). Proponents of outsourcing “point to findings by the McKinsey Global Institute, which said of the $1.45 to $1.47 of value created globally from every dollar a domestic company chooses to divert abroad, the U.S. economy captures $1.12 to $1.14, or 78 percent of the total value” (Bourge, 2004). Obviously there are many reasons why businesses are utilizing outsourcing, and there are many reasons why people are enraged about the increase of companies participating in outsourcing.
One of the main reasons companies are employing outsourcing is the decrease in salary costs when compared to the United States. For example, “Kaiser Vice President Mary Henderson said the company has transferred about 200 information -technology jobs to Indian companies, paying between $25 and $30 an hour instead of $80 to $100 an hour in the United States” (Ridder, “High-Tech Workers Nervously Eye Work”, 2003). This is an enormous cut in cost for Kaiser. Kaiser and other information technology companies operate this way because they are trying to meet their quarterly projections and keep their investors content. Companies previously worried solely about profit to stay in business, but now companies have investors. Those investors want to see soaring profits so they receive the maximum return on their investment. Of course, the CEOs of companies make money from this alliance as well. For example, “Aviva last month revealed operating profits of 1.91 billion Pounds, after it cut cost through outsourcing to India and improved its profit margins. In December the company said it was preparing to cut another 2,350 jobs as part of a drive to reduce costs by an additional 250 million pounds” (“Aviva chiefs Pounds 1.1m pension top-up, 2004). What was most interesting about this revelation by Aviva, was that “the head of Aviva received a 1.1 million pounds increase of his pension fund last year,” (“Aviva chiefs Pounds 1.1m pension top-up, 2004) because of the cost cutting measures they implemented. Even though this company is in Great Britain, many CEOs or heads of companies are considering outsourcing to increase their year end profits. One business that is truly growing in India is call centers. “Indias premier software lobby, the National Association of Software and Service Companies predicts call centers will be one of the biggest drivers of growth in their industry” (“India is outsourcing rajah”, 2002). The most astonishing aspect of the boom of call centers is the salary numbers. For example, “call centers in India can pay annual salaries of $2,400 to $4,000 per year, compared to an average of $16,000 to $20,000 in the United States” (Ridder, “Call Center Workers Fear Loss”, 2003). Furthermore companies get more then just a cost benefit. “The labor force is highly educated and speaks excellent English and it isnt uncommon to find Indian college graduates in jobs that are filled by people with high-school diplomas in the United States” (“Ridder, “Call Center Workers Fear Loss”, 2003). Many Americans fear new jobs will not return because U.S. companies have to pay benefit packages to its employees. Companies in India do not have to pay for benefits for its employees, which helps reduce operation costs. Clearly white collar U.S. workers are highly concerned about outsourcing.
The cause for concern among the white collar U.S. workers is the long-time and specialty employees are being excused at an increasing rate. For example, “Cynthia Chin-Lee of Palo Alto began looking for work after she was laid off in the summer of 2002 from her job as a documentation manager at a software firm, but after several months she landed a full-time position as a technical writer with another software firm. The problem is she is bewildered and worried, because she sees more technical writing jobs moving overseas. She wonders if she should develop some other skills” (Ridder, “High-Tech Workers Nervously Eye Work”, 2003). What has become increasingly interesting about outsourcing now is the growing rate of occurrence. “Tech jobs are moving to India faster than manufacturing jobs moved overseas in decades past” (Ridder, “High-Tech Workers Nervously Eye Work”, 2003). The result is the creation of an unemployment line of white-collar workers. The problem is the vast majority of white-collar workers have mortgages, school loans, car loans, and families that require money. Many companies did not realize that the rate of jobs moving to India is surpassing the new jobs being created in the United States, thus creating a backlash against the companies. What is intensifying this backlash is the “employers are asking the workers they are laying-off to train their foreign replacements” (Armour, 2004). As said by Rep. Don Manzullo of Ill., “thats like digging your own grave” (Ridder, “High-Tech Workers Nervously Eye Work”, 2003). The statement made by the congressman is all to true and the whole process is enraging many unemployed workers. The problem many companies are experiencing is white-collar workers are starting to organize and or ask for help from current union officials. In Seattle for example, union officials are lobbying to get bills passed to place restrictions on some of the companies. Even though the economy appears to be improving the quality of the economy is still poor. Companies are making money, but many people are still unemployed and do not have money or are using credit cards to survive. For instance, as a returning student, I had to take loans out from both the government and a major bank. I have borrowed $35,000 just so I can finish my education, in anticipation of getting a well paying job. The biggest of my worries is even after graduation, I will not be hired due to thousands of better applicants offering career experience, better education, or willingness to relocate for a position. Many Americans are facing the same pitfalls as I. A number of Americans use their savings, and others, like me, take loans out to try and excel. In my opinion this is a growing number of disadvantages to outsourcing. Workers will now have to find other means of making themselves marketable to companies. Those currently considering going back to school