Outsourcing
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TOPIC: Outsourcing is a normal function and the government should not interfere – NO
Outsourcing of U.S. jobs to overseas locations is an inevitable step in the growth of our economy and should be allowed to evolve naturally and without government intervention. Outsourcing increases the number of U.S. jobs, improves wages and has resulted in a healthy economic growth.
Global Insights chief economist, Dr. Nariman Behravesh, recently led a research team to determine the impact outsourcing has on the U.S. economy and the I.T. industry. In their findings, it was reported that global outsourcing saves money, giving companies the ability to create more jobs within the United States (90,000 new jobs in 2003). The report also revealed that outsourcing can increase the net pay of U.S. workers by helping keep inflation and interest rates low and productivity high. Real wages for U.S. workers increased 0.13% in 2003 and could climb to 0.44% by the year 2008. (Brunelli 2004)
The higher productivity created by outsourcing will allow the economy to grow faster, creating the conditions for higher overall employment. Catherine Mann of the Institute for International Economics and the Presidents Council of Economic Advisers has estimated that GDP growth between the years of 1995-2002 would have been lower by .3% without outsourcing of jobs in information technology. (Brainard and Litan 2004)
Though an unmeasured effect, outsourcing could potentially accelerate the formation of innovative products and services. A recent trend for some newer firms has been to use highly trained foreign technicians to build prototypes of new products and services. These firms, that still employ U.S. workers to bring these products and services to market, can now develop these products and services faster and at a lower price. (Brainard and Litan 2004)
Aside from the many economic gains achieved through outsourcing, many companies have used it to increase overall sales. Specifically, the Boeing Company utilizes outsourcing not just for cheap labor, but to place work in countries where it is also trying to sell planes and to spread risks on new projects by farming out work to foreign suppliers. (Cook and Nyhan 2004) For example, with