Outsourcing, no word in today's workforce is so loved or hated. Depending on who you are it is the greatest thing ever or some evil deed of evil money hungry businesses at the expense of American workers. But what is the truth? Is it good? Is it bad? Is it both?
Perhaps more importantly, what is it exactly? Many people think that outsourcing is jobs that were held in this country going somewhere else. That is not entirely accurate. Outsourcing is actually one company paying another to do some work for it. Outsourcing can be as simple as paying a company to paint your building. Or it can be as complex as paying a company to control your human resources department.
When you think of outsourcing it is probably more accurate to think of it not as people's jobs that are going somewhere else but as a job, as in something that needs to be done, going to another business. For example if you have a company of forty people and you decide to get a new computer system for everyone. You may pay another company to do your IT and customer support for those computers. There for you didn't take away a job from someone you just didn't create one for the need. You paid another company to do it. They then can use one of there people who is familiar with the system already, or they take on the cost of training someone.
Companies outsource for many different reasons. Perhaps the best know and least understood of those is to save money. Most people probably think that it is just greedy rich CEO's trying to get richer. While in some cases this may be true, more frequently it can be in response to an overall downturn in the economy. Companies trying to maintain in the hard times are forced with trying to find ways to save money. According to Jule kha Dash in her article "Cost cutting may spur IT deals" on computer world. com "The cooling economy may prompt firms to outsource more IT or cost cutting reasons".
In the same article they stated that in a pole given to 150 American and European companies 39% of the companies listed saving money as there primary reason for outsourcing. Saving money was the number one answer given. When companies save money theoretically so do the people who rely on that company for goods and services. If GM saves money than your new car theoretically should be cheaper and that's the way it is supposed to go for any other product or service. This is always the case though. Saving money can be a way to increase the profit margin for companies.
The save don't pass the savings on to you and pocket the money. This can be good for employees at the company (probably more so the higher you go up) and it can be good for stock holders if it is a publicly traded company. Sometimes the companies can reinvest the money back into the company and use it for marketing or innovations which can intern help the company make more money. Saving money isn't the only reason to outsource though. In Dash's article the number two reason given was "Having access to experts" that was given by 38% of the companies.
But what does that mean? Simply put it means that good help can be hard to find. And if you " re a company that needs to have something done it may be hard to wait and see if you can find people that are able to do the work for you. It may be easier to outsource to a company that already has skilled employees trained to do the work. In the days were most outsourced jobs were low wage and for unskilled labor most people didn't pay much attention. Or no one brought it too there attention.
When a McDonalds closes not many people think about the people who are loosing there jobs. I mean who in the U.S. wants to work a minimum wage job anyways right. But when the jobs are of people who are making forty to eighty thousand a year people sit up and pay attention. Middle class hard working people are loosing there jobs something has to be done.
This is the United States who has better trained people than us? But when people ask these questions they often don't like the response. Countries like India, and China have for years pushed there society to strive to stay cutting edge with science and computers. They have more people who are better trained to do the jobs than the U.S. does and more importantly to companies they are willing to do it for a lot les money.
According to an article on e week. com by Lisa Va as one regional sales manager boasted that "offshore labor costs can be as cheap as $1 a day". Companies outsource to many locations while it is true that many jobs are going so called "offshore" to places like India, China, the Philippines and Eastern Europe many are not. Some companies just outsource to other companies in the same country because they may have more experience with it. Ford may only want to think about developing and assembling cars and trucks. They may want to leave all the IT worries to a company like Compaq. IT is just one of many skilled jobs being outsourced.
Everything from human resources to finances is fair game in today's market place. If it is easier or cheaper to do so go ahead and out source it. So who is outsourcing? Most obviously large companies are. But also small companies are and increasingly the government.
President Bush and the current administration are pushing for more and more government jobs to be outsourced. There policy is that they would like up to 50% of all jobs to be at least be considered for outsourcing. Once again IT is a key candidate for outsourcing. The U.S. government spends $44 billion a year on IT. And any money they could save would for them be good. Part of the problem is that the government can't compete with private companies for skilled labor.
They are unable to compete with the wages private companies are able to provide. Also it used to be that people would go to the government for jobs because it was believed that working for the government had more job security. But with budgets being cut and large numbers of people either being fired or having there jobs outsourced people are more reluctant to work for the government. And since while President Bush was governor of Texas the state became the state with the most outsourced jobs, it doesn't look like government out sourcing is going to be slowed anytime soon. In this an election year outsourcing is a political buzz word. Senator John Kerry supports tax breaks for companies to keep jobs in the U.S. his theory is that if you give them enough tax breaks it would become more cost effective to them to keep the jobs in the United States.
Many opponents to the idea say that it would be hard to give enough tax breaks to make it worth while for the companies. Is it a great idea? Is it a naive idea? Is it just to appease out of work people and get them to vote for him or is it just another political promise that will be unable to be fulfilled by our government? Who knows? President bush on the other hand who is for outsourcing stands on the other end of the spectrum.
He says that companies competing for government jobs are good it will create competition for government jobs and save the government money. This is also controversial since some of the things being discussed for outsourcing are things like HR and finance which in the past were deemed to important to be risked with outsourcing. What are some of the good aspects of outsourcing? Outsourcing can be good.
It can increase completion for jobs for the government saving them money. It can save company money which in turn theoretically will save you money at the store or the next time you buy a truck. You may also be able to have closer access to more knowledgeable workers. What are some of the problems with outsourcing? Jobs being lost are just one of many possible problems with outsourcing.
When jobs are outsource to other countries there is always the chance of political unrest in those countries. If that country has an unstable government the company wanting to outsource needs to weigh there choices carefully and take a gamble. Also companies are shown to have a dip in moral when they outsource existing jobs. Why have loyalty to a company if they don't have loyalty to you.
Weather you are for or against outsourcing there are both good and bad things about it. You may not be able to make companies choices for them but you can affect the government's attitude by voting. Just remember when you buy your next $40 DVD player that there is a reason it is so cheap.