Affect Of Off Shore Outsourcing
Essay Preview: Affect Of Off Shore Outsourcing
Report this essay
Off-shoring is affecting the U.S. economy greatly. Off-shoring is taking away jobs from the American people causing a rise in the unemployment rates. Not only is off-shoring taking away jobs, but it is making it harder to find new jobs. It needs to be considered that jobs are not the only thing being shipped out, but Americans personal information as well.
Off-shore outsourcing is when a company sends work overseas. One main reason is to cut costs and save a certain amount of money by paying less in wages. Off-shoring has become more common since the 1990s. What would a person do if his job was taken away and given to someone else in another country? The most common jobs that are outsourced are manufacturing jobs but many corporations are now moving white collar jobs, mostly Information Technology (IT) jobs, overseas. This is causing the value of the American IT Employee to depreciate and making it harder to compete for these jobs. Universities are starting to train around globalization to make IT students more knowledgeable on global economics. Outsourcing overseas is also causing unemployment rates to climb.
Starting late 1990s, due to Internet bandwidth becoming affordable for transmission of messages containing tables, graphs, images, audio, and video, it has increasingly become feasible to outsource IT Enabled Service to offshore countries (Ahlawat & Ahlawat 2006). Some of these jobs are high waged positions that are provided from some financial services and insurance companies. These employers found that they could cut costs by paying lower wages. The minimum wage in the U.S. is much higher than the going rate of China or India, which are the two major countries that receive off shored work from the U.S.
Off-shore Outsourcing
Ahlawat & Ahlawat found that from 1999- 2002, the number of manufacturing plants in the U.S. had declined by 20,000 while U.S. multinationals opened 246 facilities in foreign countries. Imagine how many employees were let go due to these corporations closing up shop in the U.S. and moving to a foreign country! High tech occupations are leading in the unemployment rates. It was found that the unemployment rates for computer programmers had risen to 6.7% in 2003 from 2.5% in 2001 (Melymuka 2004). While researching it was found on a tracker provided by, techsunite.org, that 469,996 jobs have been off shored since 2000. Since 2005, 103,436 jobs have been off shored. Out of the jobs moved since 2005, 29% were lost, that is 30,000 jobs. What would these 30,000 employees do? They need money while they look for a new job so the first place they will most likely go is the unemployment line. It was stated in Outsourcing America (2005) that the Forrester Research, Inc., a consulting firm, predicted that approximately 3.4 million white collar jobs and 136 billion in wages would move overseas by 2015 (Hira 2005).
The table provided on the next page shows projected numbers of jobs that will be moved overseas. Now finding a new job in the information technology is becoming a lot harder for these people that just lost their jobs; since a lot of the companies are resorting to off shoring and paying less in wages, these new job seekers have to short-sell themselves a bit and make less money to get the job. Not only do they have to compete with lower wages but the will have to compete with the recently graduated students. New graduates becoming more knowledgeable in global economics due to universities adapting to the rapid growth of off shore outsourcing. Perry (2004) stated UNC makes sure students see first hand what global economics looks like.
Off-shoring Outsourcing
Table 1
Projected Numbers of U.S. Jobs to be Moved Offshore, by Profession.
(To Low Wage Countries Such as China, India, Russia, and the Philippines.)
Profession
By 2005
By 2010
By 2015
Art, Design
2,500
8,000
15,000
30,000
Architecture
14,000
46,000
93,000
191,000
Business
30,000
91,000
176,000
356,000
Computer
102,000
181,000
322,000
542,000
Legal
6,000
20,000
39,000
79,000
Life Sciences
4,000
16,000
39,000
Management
3,500
34,000
106,000
259,000
Office
146,000
410,000
815,000
1,600,000
Sales
11,000
38,000
97,000
218,000
TOTAL
315,000
830,000
1,700,000
3,400,000
Note: Numbers have been rounded
Source: Near Term Growth of Offshoring Accelerating, Forrester Research, Inc., May 14, 2004.
Note: From Outsourcing America, by Ron Hira and Anil Hira, Ch. 4, Copy right 2005.
Off Shore Outsourcing
Security is also a big concern with off shore outsourcing. It was mentioned before