Brenda Cheng

OUTSOURCING
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Definition:
The action where business' create jobs overseas to function at a less expensive cost.
Taking one part of an organization and sending it to a company in a foreign country, creating a binding contract to produce goods on their behalf. 
 
(Below: link to an in depth definition of Outsourcing)
What is Outsourcing?

Purpose:

To lower costs/expenses.
This action in turn will allow products & services to cost less. Outsourcing is also a legal way for an organization to act immorally by avoiding corporate taxes (U.S. has the highest corporate tax rate of 39.2%). Corporations also get huge tax breaks if they are, so most companies are only paying 10% or less on taxes.

Negative Side Effects:

More jobs here in the U.S. are being taken away to be given to other countries due to the lower costs and minimal regulations.
Not only are unskilled workers in the U.S. are unemployed and losing their jobs, but skilled workers are also in the mix, such as attorney's and computer programmers. As jobs are transferred over seas, they will most likely never return to the U.S, this in turn, over time, will hurt the U.S. economy. 
Over time, as the jobs are being sent overseas, many of the former employees will in then apply for unemployment which will then lead to unemployment checks from the government. As the unemployment rate raises, so will the federal deficit which stands at $1.3 trillion. 
 
As foreign countries are being dealt the unskilled jobs and with so little job regulations, they are being treated unfairly and in horrible working conditions. Even though the U.S. corporations are aware of this, they rarely act upon doing the right thing and forcing those companies to treat their employees fairly, they believe it isn't in their power to do so, and it is up to the foreign country's government and corporations.
 
(Below: link will further explain the negative aspect of Outsourcing)
The Negative Aspect of Outsourcing


Positive Side Effects for Corporations:
With companies being able to find an outside source to accomplish some of the production at a lower cost, it doesn't only benefit the profit margins of the organization but also the consumers. As the expenses are lower for the organization, so will the costs of products and services will be. When organizations are able to "send off" the less important aspects of their company, they will also in turn be able to focus more on the core competencies of the company. Corporations will also have a limited liabilities to the corporations that work on their behalf, they wouldn't have to worry about pay, treatment of employees overseas, and the working conditions, even though these are immorally wrong for a company to do this, it is not illegal in some foreign countries. Corporations believe that they benefit because foreign countries have less regulations than the U.S. such as child labor, working hours, and laws dealing with clean air factories, etc. 

With corporations dealing with a highly competitive economic market, they assume that for the best interest of their shareholders, they must find ways to raise revenue and cut costs/expenses. They will be willing to do anything they can to make shareholders "happy", even if it meant cutting jobs here in the country in which they operate in. 
 
(Below: link will further explain the positive aspect of Outsourcing)
Positive Effects of Outsourcing

Who benefits from outsourcing?
Shareholders, U.S. investors, and consumers at the cost of shortages of jobs in the U.S.
 
World's Top Outsourcing Countries:
  • India
  • Canada
  • Mexico
  • China
  • Philippines
  • Indonesia
  • Singapore
  • Malaysia
  • Thailand









Informative Videos:

PROS & CONS OF OUTSOURCING

PRESIDENT OBAMA'S ADDRESS FOR
CORPORATIONS & ELIMINATING TAX BREAKS

INSOURCING VS OUTSOURCING: TELL SERIES 2012


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