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How Outsourcing Affects The U.S. Economy

by Hasan on April 16, 2013 · 79 comments

in Economy, Finance, General Business

outsourcingUpdate: This article was originally published on September 16, 2008 and was updated with new material to reflect issues relevant in 2013. Below you can find the updated content, followed by our original article on how outsourcing affects the U.S. economy.

Outsourcing has been a hot topic in business for many years.  There are people for and against it, each with reasoning that makes sense.  Some businesses like it because it can save them money on business expenses either from cheaper labor or savings on shipping material.  In some industries this is true and valid, such as in manufacturing.  Professional positions are also sometimes outsourced, such as computer programming.

Outsourcing Professional Jobs

The benefits in the case of professional and skilled labor can be questioned as there are still overhead costs related to communicating effectively and testing the final product to ensure it meets the criteria set.  This means the benefits have to be carefully weighed against the costs to make sure the outsourcing is worthwhile. And sometimes, some of those costs aren’t as obvious as they are in manufacturing industries.

That said, there are benefits to outsourcing skilled jobs when appropriate.  One such benefit is time utilization.  Most skilled jobs involve work during the day and don’t have the overnight shifts that many unskilled positions have.  However, if work can be outsourced to a country with an alternate daytime, the hours can be put to better use, having 24-hour productivity on some project or another.  For example, a local team might work during your company’s local typical working hours while an offshore team covers your “off” hours. Keep in mind though that there must be some schedule overlap for effective communication and follow-up to keep projects moving along.

Macro-economical Effects of Outsourcing on the U.S. Economy

The downside of outsourcing either skilled or unskilled positions overseas is that it does take away jobs from the country your company is located in. That in turn removes money from your country’s economy.  It might work great for your company specifically, but looking at the larger picture, it can also hurt the country as a whole economic system.

Perhaps in the future as we move more and more towards an integrated global economy this could change, but since there is a separation of country-specific economic situations for the moment, it can be detrimental to the development of nations. But this isn’t the only downside business owners should consider. After all, they need to prioritize their own company’s interests if they want to stay in business in the long run.

Effects of Outsourcing During an Economic Downturn

In times of economic downturn, like those many countries have experienced in recent years, it’s best to create jobs close to home to stimulate the economy by giving the people who live there more money to spend. This doesn’t just help the government and people in your local area. It helps your business too.

You see, when you hire locally rather than outsourcing, other people are getting paid.  These people are, in turn, your potential customers. When they have money, they can spend money. And if they can’t find work, they can’t do business with you either. It’s a big cycle that feeds into itself.  The higher income people need to rely on the middle and lower classes making enough to buy products and services from them to make more money.

So while outsourcing can make sense to a company’s bottom line when you only look at up front expenses, overall it could also hurt them if they rely on consumer spending domestically.

Overall there are both positive and negative effects of outsourcing and the decision to do so must be carefully considered on both a micro and macro economical level.

Below is our original article on how outsourcing affects the U.S. economy, published in 2008.

There has been and continues to be a lot of debate over outsourcing and while supporters say that it is good for the US economy, detractors argue otherwise.

Proponents insist that outsourcing will save money for companies, will open up opportunities and will lead to more Americans holding jobs at a higher level. They feel this practice offers substantial gains to the US economy with cheaper imports and stronger exports.

Opponents who are against outsourcing argue that hiring people from foreign countries effects the US economy in a negative way and strips hundreds to thousands of Americans of jobs, especially the skilled and semi-skilled workers. They argue that the loss of competitive advantage to other countries is permanent and the American worker and economy lose forever.

All the points seem valid in their place. It has to be agreed that outsourcing does lead to loss of jobs in the US, especially those that have minimal qualifications. On the other hand, the loss of jobs is not only limited to people with minimal skills, but also jobs of skilled labor that are being outsourced to other countries.

Americans who are in poverty and willing to do minimally skilled jobs find it harder to find jobs, and poverty does nothing for the US economy, other than reduce consumer spending and tax revenues.

There is also data that provides evidence that jobs are lost and lost forever, especially for those who belong to the low end of the food chain. A suitable example would be the manufacturing job losses examined by the University of California-Santa Cruz. In their study, they found that in a period of 20 years, in the labor intensive industries such as leather, textiles, footwear and clothing, about one-third displaced workers could not find reemployment within a three-year period, and even those people who did, about half of them experienced a substantial cutting in their wages by at least 15 percent.

The middle class American is not far behind as even his job is being outsourced. This level of outsourcing involves the computer and technology industry.

How does this affect the economy?

tightening us dollarOutsourcing in these areas does not leave enough jobs for the Americans. A jobless person cannot purchase homes and cannot spend money. When people do not buy, people that produce things do not make money too.

Another harmful effect of outsourcing is loss of income by local, state and federal governments. There are lesser payroll tax receipts and lesser contributions to Social Security and Medicare. Then there are the outgoing payments for unemployment benefits. Sales and other tax revenue suffers too.

Outsourcing is nothing new. In the early 19th century, Britain imported cotton from the United States, then spun the cotton and weaved the fabric in England and then exported the finished textiles abroad, mostly to India, then its colony. UK kept about 80 percent of the monetary gains from these exports, adding to its national wealth. After some time, the mill owners came up with what a “so-called” smart idea – that they could grow the cotton in India and shift the textile machines there too, which will enable them to save money on wages and shipping expenses. This felt like a great idea, but then the monetary gains being repatriated to England was only 15 to 20 percent of the total value of the textiles in the form of profit.

Now 80 percent of the created monetary gains remained in India, which was a great loss to the British economy that resulted in unemployment as well as social unrest.

United States also faces similar problems. By outsourcing, not only skilled labor is lost but monetary gains too. What must be understood is that service jobs do not pay as much as manufacturing jobs do nor do they create national wealth. On the other hand, they absorb wealth. Manufacturing jobs have by far the greatest impact on national economy, in terms of losing skills and the time taken to retrain such a force. Another thing is the loss of industrial infrastructure with the closing down of U.S. factories and then exporting of capital abroad. This money is then not available for U.S. economic expansion.

Service jobs on the other hand do not need so much training and very little capital investment. U.S. companies derive savings in wages and more importantly in health benefit payments by outsourcing these jobs. Of course there is no doubt there is loss of national wealth by sending money abroad to pay their wages and salaries.

An argument pro outsourcing can say that short-term job losses brought on by outsourcing are mitigated in the long run by gains to American workers from consumption growth and free trade in low-wage countries.

Certain professional roles like retail, personal care, catering cannot be outsourced because of inherent personal interactions between the consumer and the deliverer. Because the service sector encompasses about 70 to 80 percent of the U.S. economy, outsourcing can impact only a sliver of U.S. employment.

According to research data, more than 400,000 U.S. jobs had moved abroad and the total is estimated to hit 3.3 million by 2015. That’s just above 200,000 jobs lost every year to global outsourcing, a trivial problem in the context of the normal churn of the U.S. economy, where about 7 million jobs were gained and lost in each of the previous four quarters.

Many government agencies outsource a part of their work in order to save millions of dollars, which helps US economy and helps federal spending. The theory here is that paying people less for work means that these companies have the ability to produce things cheaper and will be able to transfer these savings to their consumers back in the U.S. Cheaper rates means more consumers buying the products. One example is that of the early 90s, when the price of personal computers dipped because the U.S. chip manufacturers outsourced this offshore and thus reduced chip prices anywhere between 10 to 30 percent.

So who actually benefits from outsourcing?

U.S. investors, shareholders and American consumers derive the benefits of outsourcing, although sometimes at the expense of American wage earners.

Another supportive argument is that outsourcing jobs to other less developed countries helps those countries economically and helps increase trade for US products. It also gives those countries the ability to pay back their debts to the U.S.

Experts believe that the greatest saving potential comes from outsourcing simple assembly work or services. Since there is not much capital involved, except for training people in other countries and payments for displaced U.S. workers, there is no other major investment.

Outsourcing is a difficult issue to tackle and everyone, the supporters and detractors agree on one thing – that outsourcing cannot be eliminated completely. Some people feel companies that outsource should be taxed for outsourcing and those that do not should be rewarded.

{ 75 comments… read them below or add one }

nadja007 October 17, 2008 at 9:25 pm

Yes, it is true outsourcing is the greatest saving potential most especially to the internet marketers. It is advantageous for both service consume and service provider.

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Steve Kay January 27, 2012 at 8:06 pm

HUH?

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san,san June 2, 2012 at 2:10 am

NOT TO BE CONCERN, THE ARTICLE WRITER IS COMMENTING ON HER OWN ARTICLE. AND SHE’S FROM ANOTHER COUNTRY.

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muthu October 18, 2008 at 6:31 pm

This is interesting article.Economic arguments about offshoring aside, I think there’s a structural problem which most of the arguments are missing: the general response to the issue of off shoring jobs has been to say that the economy will need to retrain, that white computer programmers — the trend includes customer service reps, financial analysts, accountants and lawyers will need to learn new things to make themselves competitive.But now US economy fell down. then outsourcing are affected probably.
———————
Muthu

Business Sales

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BSimmons October 21, 2011 at 3:39 pm

Would love to know what research data is being used to support these statements?
Most research and surveys can be manipulated to what you want it to. Having worked for Market/Research Analysts, this is quite common. Therefore most of the data is misleading and does not represent the whole picture.

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Steve Kay January 27, 2012 at 8:08 pm

HUH again! I could not follow the attempted thought stream.

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Sridhar December 26, 2008 at 1:43 pm

Nice Explanation.

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Raven Allen January 2, 2009 at 12:45 am

I quite agree. In fact I was thrilled to read your article. I am currently writing a paper to support the creation of GMACs (government managed/accredited companies) and GMSPs (government managed and sponsored provisonal workforce), briefly; a GMAC is a company either managed/owned by the government to produce goods and services that may be sold to various buyers, yet providing these goods and services to its native population at a discount not available to non-native populations as a means to absorb workers that are not employable; while subjecting them to similar conditions and standards of performance expected from those working in private companies, but are subject to disciplinary actions including firing. These workers would become a repository for skills and knowledge that is necessary to maintain infrastructure, or are in danger of dispearing due to their rarity in an increasing technical market place: masonary, wood working, glass blowing, blade smithing would be examples of these types of skills threatened by increasing technical expertise.

A government managed and accredited company would be treated in terms of its accreditdation like a school that is seeking accreditation in order to apply for government funding. It would be forced to meet certain conditions in order to be eligible, but would possess a government overseer capable of influncing its decisions and planning its future; a great many non-profit industries could be created under this provison.

I believe that we have focused too mmuch on the poor as scapegoats for our failing economy and not really addressed why our economy is failing.

J.R. Allen BA The Psychology of Economic Development Among Minorities, MA Clinical Psychology

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Raj March 9, 2009 at 10:21 pm

Nice Article

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cindy July 23, 2012 at 8:01 am

nice

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Cristal December 5, 2012 at 3:07 pm

yea…

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Justin April 15, 2009 at 8:34 am

Who wrote this?

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Not Important October 20, 2009 at 12:47 am

I think outsourcing helps america. If we didn’t have outsourcing all our goods and services would cost way more than they do now. It’s cheaper to make goods in other countries than here. Also, I watched this thing today and it said that since 1992, 361 million jobs were lost, BUT, 380 million were gained! And by outsourcing you are actually creating more jobs because a business doesn’t have to fire it’s workers because it now has enough money to pay all the workers.

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John Q September 23, 2011 at 10:01 am

What type of jobs were created ? In the long run, America will not have a middle class and therefore, it will look and feel just like all the other countries of the third world. In some states there are shanty towns already springing up . This is a sign of the citizen inability to afford adequate shelter. Education in America will soon only be for the rich that can afford to pay the tuition of the “for profit” education providers. Only the rich will be able to see the doctor since most citizens will not be able to afford it and of course — we are not socialistic; therefore, simple medical issue will soon deteriorate into long term deadly maladies. The direction is country is going to too dismal to contemplate. All America should travel to a third world country and try to see how the less fortunate exists.
BTW — soon we might be outsourcing our prison system too. The social and economical pressures might be too much, for the weaker among us — thereby forcing many into a life of crime which will force the government to seek cheaper alternatives for housing growing the burgeoning prison population. Enjoy the ride on the gravy train while it is still rolling: outsourcing is good. Slavery benefited some of the power men of the day also.

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John McCann November 5, 2011 at 9:40 pm

…and you are an ignorant!

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Steve Kay January 27, 2012 at 8:10 pm

OMG! Does not make sense no matter how it is translated!

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nemat August 19, 2012 at 10:15 pm

hello.excuse me i cant speak engelish very good.u said since 1992, 361 million jobs were lost, BUT, 380 million were gained?What type of jobs were created in america??in2003 North Carolina lost 8.4% of its total furniture industry employment?so where does these Unemployed workers work now?do u think they find new jobs?what jobs for example??i am waiting for your answer.i,m from iran.thanks

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Travis March 26, 2013 at 9:26 pm

Outsourcing to a degree creates cheaper products and a higher standard of living, but too much of it will cause deflation. Deflation is caused, in this situation, when a large amount of job loss is incurred by a large amount of outsourcing. Less consumer spending means less investing for business, which is less GDP, therefore less production and causing a negative inflation rate. In the U.S., however, there is an institutionalized inflation rate, which means during times of decreasing production there will still be money being put in the money supply. If you didn’t know, increasing the money supply without an increase in production will cause inflation, and if production falls while the money supply expands, than this will increase inflation.

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mztweety April 13, 2010 at 12:05 am

i feel as though this article is very detailed but i do disagree wit some of the comments …… i feel as though we are not focusing on the less fortunate enough because they are the ones who need the jobs the most .. without them the economy will fall …. i say this because over at least 150,000,000 people are unemployed and with the outsourcing the rates are going to keep increasing which means money production will crash causing the outsourcing to stop …… we cant still outsource with no money being spent.

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sam April 21, 2010 at 11:01 pm

Outsourcing is the largest wealth extractor of our time.

Outsourcing is no different than slave labor. It does not work in the long-term for everyone. A long time ago companies used to import slave labor to their factories, but now technology has enabled them to bring the factory to the slaves.

The “global” playing field will only be level when it is no longer cost effective for companies to hire labor in India, China and other popular outsourcing destinations. America needs to enforce a “VIRTUAL FOREIGN EMPLOYEE” tax on all US corporations that hire foreign employees to work on US based projects.

If skilled engineers from foreign countries want to work for US corporations on product versions that will be sold to US consumers then allow these skilled foreign engineers do it from the US headquarters of these corporations not from their home countries such as India.

Until a “virtual foreign employee tax” is enacted no one in America could compete with someone in India or China as a lot of people living in those countries could afford to live on $5,000 USD /yr. It’s not a matter of skill or education those are cop out excuses the real decision about outsourcing is cost and payroll savings.

Trust me I know I am a former Senior EVP of a large Fortune500 technology company and I was in charge of locating and managing the company’s outsourcing partners

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No Name May 26, 2010 at 8:42 pm

This is sooo confusing!!!!!

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Riconet June 29, 2010 at 1:14 pm

Very deep article.

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Anon August 26, 2010 at 9:12 am

I don’t agree that outsourcing in the long term is beneficial for this country. I do agree it does bring costs down on goods we purchase. In the short term it may create more jobs with the cost savings but in the long term it becomes cyclical. With the exportation of our manufacturing and IT jobs overseas it leaves namely the service industry and some of the white collar jobs to maintain these relationships with the foreign partner. These same people are now forced to apply for a lower paying position even possibly in a completely different field. Now people with degrees are taking positions from people who don’t have them and the position didn’t previously require a degree. And to compound it with the number of people on the job market you have more people with master degree’s applying for jobs that may have only previously required a batchelor’s. Of course the company is going to exploit the person with the master’s. So cyclically this squeezes more and more people into shuffling for lower paying jobs with a higher level of education and squeezing out many other prospects who are less qualified. We are really exporting our intellectual and skilled labor jobs and keeping namely the service industry. When this contrasts enough the cost savings from outsourcing won’t outweigh the millions more of people each year making less money as we lose our higher paying jobs to overseas companies and the downstream effect of less purchasing begins as there is less wealth in this country to spend. Of course then with the average salary in the US declining it won’t matter that it costs less to purchase the goods here since more and more people’s budget’s become stretched thinner and thinner if there lucky enough to still have a job.

So once again just like with the market it appears it is all about the short term gain and not the long haul…

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Mike January 29, 2012 at 6:29 pm

> Of course then with the average salary in the US declining it won’t matter that it costs less to purchase the goods here since more and more people’s budget’s become stretched thinner and thinner if there lucky enough to still have a job.

I’m surprised there seem to be so few people who understand this.

The entire model of outsourcing is based on the idea of “manufacture at low cost, sell at high price”. This works when low paid jobs are outsourced and the local workers can focus on higher paid jobs.

But the moment highly paid / highly skilled jobs are being massively outsourced, this model must eventually break down. On one side of the equation there simply wouldn’t be anyone left to pay this high price. In other words, the price must go down.

On the other side of the equation, with the influx of money and eduction the people where work is being outsourced to probably are going to want the luxury products themselves too. But you can’t offer them at a price that’s affordable locally (otherwise some smart person will just export them with a small markup). So, wages will have to go up in those “third world countries” (this is already happening, most evident in the big cities in China).

In the somewhat longer term the net effect might be that products will mostly be sold at the same market where we outsourced all our work to, and we will simply be too poor to buy any of those products at all (except for a small elite that got rich from this “wealth swapping”-operating).

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sumitfrancis gomes September 12, 2010 at 8:28 am

I AM AN INDIAN , WHAT I SUGGEST UNITED STATES OF AMERICA ITS LOOSING ITS OWN JOB, ITS GIVING AWAY JOB OPPORTUNITIES TO OTHER COUNTRIES LIKE INDIA, USA SHOULD THINK ABOUT ITS CITIZEN’S FIRST NOT TO MAKE THEM UNEMPLOYED.BY GIVING THE JOBS TO INDIA INDIA IS PROSPERING ECONOMICALLY, WHEREAS USA IS FACING UNEMPLOYMENT AND CITIZENS OF USA ARE GOING CRAZY AND CRIME TAKES PLACE IN USA.

ITS ADVISABLE STOP GIVING JOBS TO INDIA IMMEDIATELY

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Also Concerned July 4, 2011 at 5:43 pm

Thank you for being a voice of reason. For such a great country we do some really stupid things.

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Shushma Frazier November 11, 2011 at 5:13 am

I think you make a good point and I agree with you.

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Leo March 8, 2012 at 7:30 pm

Nice try, America.

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max May 3, 2012 at 6:21 pm

good for you

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Chercher September 29, 2010 at 3:24 pm

Doesn’t sound like anyone commenting HAS been outsourced… believe me not funny! I worked 21 years for a hospital who decided to kick our transcription department out the door. We were given the opportunity to work for the new company… production only pay, basically a sweat shop atmosphere. I am losing a great deal of money, maybe even my home. What is really annoying is the hospital I worked for is funded largely from federal and state taxes; there should be some kind of penalty for businesses that choose to outsource and receive tax dollars. Also they had just paid 20 million to purchase the medical center across the street and took on many new employees. Thought for sure they would be changing the 401K since their contribution had been 2-1/2 times what the individual’s was, but no the big wigs just want more money in THEIR pockets. They could have cut it back just a bit and kept us. Selfish greedy pigs. Oh and now it takes so many more people to do what was once a fairly uncomplicated process producing excellent medical documents, which are now somewhat less than that.

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max May 4, 2012 at 6:27 pm

less words plzzzzzzzzzzzzzz

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Russell Smith November 1, 2010 at 3:04 pm

How refreshing it is, in this U.S. political silly season, to see a well-balanced discussion on outsourcing! The statistics suggest it is likely that off-shore outsourcing leads to more jobs in the West, not fewer. http://bit.ly/c42NES On the legal process outsourcing front, I’ve seen with my own eyes how off-shore legal outsourcing, especially high-end, legal services KPO (knowledge process outsourcing), creates more legal work in the West, as deals previously undone, and litigations previously settled (or never filed), due to excessive legal costs, are suddenly affordable.

Russell Smith
http://www.sddglobal.com
high-end legal outsourcing

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John Q September 23, 2011 at 10:10 am

The benefits of outsourcing experiment is term. The negative will be materialized in the long run and at this point, no one can full predict how adversely it will impact the nation as a whole. Every middle class American is affected or know a few people affected my this scourge called outsourcing/off-shoring of just the importing a lot of cheaper labors.

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WeZ October 10, 2011 at 12:22 pm

Well that’s great if your a lawyer, but what about the larger percentage of factory workers, do you have some interesting statistics that show they have more job opportunities, and lets not herar about a Macdonald and star bucks vaceny list.

Incidentally it was interesting to note the ratio of lawyers to the basic American worker ratio is not an easy one to fine, surface to say they are niche,

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Sean McElhone November 7, 2010 at 3:33 am

The whole model of outsourcing is loyal to one common goal amongst corporations — making profits. This means people are a means to that end. But even worse we as consumers are doing the same thing with products, we are looking for the cheapest products, and this forces us out of our own jobs. If we all supported our own products made in our own countries, we would all have jobs that could pay for the goods we produce cause wages would match the cost of goods.

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Jennifer Peebles February 3, 2011 at 9:23 pm

I have been researching outsourcing for school, as I read these articles, they all say that outsourcing will create new higher-paying jobs. This arguement has been going on for the past ten years. And in 2011 I have failed to see any articles that show outsourcing has created new higher-paying jobs and what those jobs were. From the studies I have seen outsourcing has only created lower cost products and services, not higher -paying jobs.

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Mike January 29, 2012 at 6:37 pm

Indeed. If jobs that require an MSc or even a PhD, years of experience and dedication (like top of the crop computer engineers) are being outsourced, what higher-paying jobs are there to create?

These already are reasonable speaking the kind of jobs that need the most education. Are we going to create jobs here that have a professor title as entry level requirement? How realistic is that?

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Carney February 4, 2011 at 3:10 pm

Nice artilce. I agree with you all the way

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johnny February 10, 2011 at 5:24 am

It does not take a rocket scientist to know that if you outsource too much, you will have a lack of jobs in your home country.

If Americans learn to work together to build this country back up. We can easily bring unemployment down to record lows.

Learn how you can help
http://letshelpamerica.com/save%20america%20pages/%282-6-11%29consumerscontroltheeconomy.html

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phil March 9, 2011 at 10:15 pm

Outsoursing is not good for america. putting people out of work. and having them work at some meanial job at half the pay. is killing this country. no job’s no pay means no spending
no spending means no selling . thus the whole damn thing go’s down the drain. and 80 years of unions and hard work . will be broken by the republican party. and when all is gone
the upheavel of the people will be so violent . we will not have a country anymore . so if all these big republican big shots think it’s worth ruining this nation over there monatary greed stand by to reap the wirl wind. and once it starts there is no turning back.

give it a good think is greed worth it

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WeZ October 10, 2011 at 1:00 pm

I Agee , we don’t have to go to far back in history, to see what happened to the proud nations such as Germany when it’s back was put up against wall, the sentiment of the country is given by it’s average working people, not the wealthy elite, if the degradation is not stopped soon, a hundred years of leaning democracy will be lost in a tempest.

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phil March 9, 2011 at 10:20 pm

my idea is to do away with the republican party and the democratic party.

form a coalition of buisiness minds. labor minds. safety/education/ banking minds.

banking should never be allowed to make policy concerning the nations well being

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phil March 9, 2011 at 10:27 pm

carney
are you nut’s or are you some kind of independent gazillionair. just wait and see 2012 is just around the corner. god help us if we have a total colapse. the riots will be brutle. where will all these rich basta*ds go when they have no money. and what they have is worthless. you only have to look at 1929 when rich people where jumping out of windows in new york to los angeles

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packar March 20, 2011 at 3:23 am

I AGREE AND DISAGREE TO THE COMMENTS.BUT I BELIVE EVERY ONE IN THIS WORLD IS A OPPORTUNIST AND WILL GRAB THE CHANCE.HENCE THE RULE APPLIES “FITTEST TO SURVIVE” NOT ONE BUT ALL PRODUCTS WILL BE OUT SOURCED IN FURTURE FROM DEVLOPED COUNTRIES AND AMERICAN EMPLOYEE CLASS MUST BE CAUTIOUS AND BE CONCIOUS TO ACCEPT REDUCDED SALARIES AND DO FAIR PLAY FOR SURVIVAL.

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Mark April 21, 2011 at 5:53 am

Outsourcing to China then giving goods from China import duty discounts is by far the worst thing the USA could have ever done to it’s citizens and economy. The ONLY winners related to outsourcing are the company owners that do the outsourcing. Look at all these industries that were once our pride. The Garment industry, the Steel industry, the Automotive Industry, and over 30% of all light manufacturing. All gone. POOF! And now careers like engineering, graphic design, and even customer service to name but a few. I guess it’s great that we can buy certain things at a lower price now because we are all making substantially less, thanks to outsourcing.

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Cameron May 24, 2011 at 5:30 pm

I really agree with this. This really helped me out with my school project. Thanks so much

cameron

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Concerned July 3, 2011 at 7:39 pm

I agree with so many views on this page. I believe that companies that outsource should be taxed Import fees. I believe that the decline in the economy comes from the lack of work due to jobs lost from outsourcing. and I believe that if factories and other manufacturing business come back to the American people, prices will begin to balance out. What the bottom line is here is Greed. CEOs, CFOs, industry leaders are greedy in wanting more buck for their product, and in the beginning, they get it because well they reduce spending to make products. . . Until their laid off employees run out of money because thay cannot find other Jobs. I also believe that the American worker is greedy. too many people want to be paid TOP dollar for Minimal work. Yes I believe that People in labor intensive jobs should be paid well, but there is a limit. (trust me I know, I am in a labor intensive job. you might say at the moment, I myself am outsourced. go Army). Job seekers in America want to start off making more money than they are worth, and big business says no these people work cheaper. When i was 16, there was a divide. Fathers went out and earned the big bucks as skilled workers, mothers if they worked usually made lesser money in jobs such as retail, and secratorial jobs, and kids, well if you were 16 to 18, you worked the lower end jobs like Fast food, and seasonal jobs while studdying for a trade. BUT, Everyone was working. it hasn’t been until recently that I have noticed people are beginning to become less greedy. I noticed this when I saw how hard it was for my teenage daughter to get a job. Middle aged well educated people are being forced to take the lower paying jobs they once scoffed at and left to the kids. What am I getting to with all of this rambling. Simple, GREED must be eliminated. If the CEOs and big business would stop worrying about being Fortune 500, and worry about Fair wages for American workers while still turning a Profit no matter how large, and American workers would be willing to work for said FAIR wage, Prices will begin to fall in line, and the economy will begin to turn around. I mean really, why are we being so Greedy. When you die, how much your corporation made you won’t matter, you will be gone, and it sure as heck ain’t goin with you. What I do not agree with is the Government managed work force. but that my friends is another subject for another day.

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Evil Republican Agenda July 4, 2011 at 5:39 pm

You state,”U.S. investors, shareholders and American consumers derive the benefits of outsourcing, although sometimes at the expense of American wage earners.”

In reality the only people that benefit are Investors/Shareholders as this practice fattens their bottom line. Even then it’s only temporary as the recession has proven. This practice aggressively attacks the consumer because slowly there are fewer and fewer of them with their futures constantly diminishing. So what if I can buy a coffee table at Walmart for 89 bux. My neighbor the master woodworker is unemployed etc., etc.

Bottom line, you can’t give tax breaks to the wealthy without stipulating that if you (wealthy business owner) accept the reduced tax rate you’ll have to employ and manufacture American. Otherwise suck up the more than fair 40% tax and go “outsource” your labor to China until the cows come home.

Additionally, You can’t allow Chinese containers to be almost duty-free while all other import goods cost painfully high duty-rates to enter the country. With these 2 simple strokes of genius we have decimated the American working class. Thanks W. We really appreciate it.

Wake up America and take your country back from lobbyists (large corporations) that could give 2 beans about your welfare. What’s it going to take?

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Dajjer July 11, 2011 at 5:48 am

Please join my group college grads against outsourcing. On Facebook.

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Frankie Fuentes July 23, 2011 at 5:33 pm

Americans, the only thing you could do is to help the 3rd world countries plan their population. We’re supplying too much man power to the workforce that your investors couldn’t resist tapping in. You have no choice. You have to compete. You need to outsource to stay competitive on the prices of your products and services. It’s either you outsource or de-valuate your currency. We are now in the era of globalization and you have to accept that. No form of protectionism can get you away with that unless you want complete isolation with the rest of the world like North Korea. You simply can’t compete without outsourcing. Everyone does it. And people from the 3rd world are getting better and smarter. Other countries have opened to foreigners so their investors don’t need to outsource. I know you don’t like that either.

I’m from a third world and I can feel your pain. I know how it feels to lose a job to a cheaper competitor. I guess the only thing that I could do is to influence my people here to be responsible in family planning.

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John Q September 23, 2011 at 10:22 am

Yeah, getting smarter at doing stupid things like supporting corrupted government and religion to the point of death. Like having too many kids because their religion said it is correct to populate the world. I am from a 3rd world country and I have seems many other third world countries. Given all the money in the world — India, and other developing countries, will still be a horrible place for many to live.

You are correct, they are getting smarter

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Amanda August 3, 2011 at 3:00 am

I thank you for whoever posted this (3 years later) it really helped for the paper I am writing. But I have to say, I am against outsourcing myself. My family has been impacted hard because of it. We’re middle to lower class and my dad alone has lost his job three times due to this business practice. The big cats that go on about how it doesn’t really effect the job market obviously have never tried to find an entry level position or any kind of work if you don’t have a degree. And if my notes are anything to go by the money they make from this ‘outsourcing’ doesn’t really benefit the common person. Most of it goes straight into the wealthy’s pocket.

Continue to take away our jobs and this country isn’t going to survive. Their little bit about how it helps other countries makes me scoff. How can you possibly help others if you yourself are in trouble? If we don’t have work, we can’t spend, if we can’t spend, you don’t have business, if you don’t have business, you fall and you take those jobs in the other coutnries with you.

Maybe I’m bitter because my dad hasn’t had a job in over a year and I just spent the last several months applying to every this place and that trying to find something to sustain myself while going to school. 200,000 + jobs a year gone is 200,000+ opportunies and people out of work. And like they said by 2015 that’ll becomes 3.3 million. How is that not affecting?

Sorry for the rant, but thanks again for the article.

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beloved September 21, 2011 at 2:30 am

I completely disagree with all of you. The outsourcing of jobs can bring down the entire economy. Soon the government will be after your jobs and you wont agree with them anymore. Once they cut more and more jobs then will start going for higher positions such as teachers. It will then ruin the education of children who dose not even understand whats going on.

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chery chery September 21, 2011 at 2:32 am

You understand exactly whats going on.

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Mischievous November 11, 2012 at 10:20 pm

The government is already affecting teachers and education. The impact that the government has had on this building block of our country is quite disasterous not to mention wasteful as far as spending. Rather than use what was already in use and working, it has re-invented the wheel so to speak at least every six years.

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chery chery September 21, 2011 at 2:33 am

richtig

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John Q September 23, 2011 at 10:39 am

In the long term, the very long term, when America doesn’t have a middle class and we are dispersed all over the globe trying to make a living — we might start gaining some of those jobs again since it will be cheaper to manufacturer here in the 3rd world. We are also exporting our culture of greed so there is a silver lining to this cloud — in the very long run.
In the words of wall street fat cat Gordon Greko, “… Greed is good”

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Derp October 17, 2011 at 2:13 pm

Derp. If the CEOs are getting rid of American jobs then they are satisfied with the work ethic of the offshore people. The CEOs are the bosses of their company, most of them built from scratch. Stop demonizing them before they all outsource everyone in their company.
Government funded jobs outscourcing however is like a freakin oxymoron. GG Stupid US government.

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Timothy December 14, 2011 at 4:09 pm

Outsourcing is a good thing.
The american dollars that go offshore have to be spent somewhere – america is the obvious place.
The money is spent on tractors, winebago’s, cocacola, education, travel, anything else america chooses to export.

Big comanies outsource the work but keep the sales american based.
IBM pc’s, ipads, microsoft software. The money comes back when these are sold to other countries.

I think people would like to blame their countries economic issues on outsourcing.

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Bill December 24, 2011 at 8:31 pm

look at the cost to u.s.a. that no under ware is made here no shoes are made here but new balnce no cars are comepleatly bult here i would like how many of the man that are making the parts out side of usa can buy a $40k car on $2.00 a hr.job or how can they buy a $40.00 pair of shoes or tv at $1000.00 or eat at mcdees orbuy there child a cphone for $149.00 and $45.00 per.mouth and this why the ssi is done. when we had the jobs here that would mean that when a new worker started he or she would pay in but we don’t have the jobs we will R.I.P.

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LimitOffshoring January 5, 2012 at 10:07 pm

follow @LimitOffshoring

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Your mom January 9, 2012 at 2:15 am

I smell cinnamon rolls

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max May 4, 2012 at 6:31 pm

i smell cheese

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Vlad Shamis February 24, 2012 at 4:30 pm

Half Time in America
For my money, the best ad run during the Super Bowl was the one by Clint Eastwood. You could say it made my day.

It is half-time in America, and I think a lot of Americans feel that way. It’s a time when we need to make a commitment to winning, to trying harder than the other team.

I see a lot of American companies trying hard to win. But I also see a lot of them giving up. They’ve told themselves that it’s too expensive to build American products, that customers care more about price than pride of workmanship, and that a free market means being free to ship jobs overseas so long as an American company makes the profit. I wonder what Coach Clint would say to them?

As a CEO of a software company, and as a first-generation American citizen, I made a decision a long time ago NOT to use offshore companies. And it’s not just because of politics; I believe the offshore model is fundamentally wrong for software development. Think about it: the offshore business model is to reduce the hourly wage and throw a lot of high-turnover engineers at the problem, which makes the problem deceptively cheaper but ultimately bigger. The real question is how productive are you and your team….?

If your team is 10x more productive than ever before – who cares about cost per hour?

Just ask Jeff Peoples – CEO of Window Book….

http://www.qasignature.com/site/Company/PressRelease/WB10xProductivityIncrease.html

I take pride in offering a better service for less money than my offshore competitors, and we’ve prevented a lot of software companies from going offshore for their entire development. In fact, we’ve even been approached by offshore competitors who wanted to outsource to us!

Today, we’re showing the world that American companies have what it takes to win. We recently signed a customer agreement with one company in Russia; another in the Ukraine is evaluating our qaOptimization solution as I write this.

The second half is going to be interesting. Which side of the ball are you going to be on?

So every time the offshore guys call me and ask me about my offshore plans … I say they are huge – we plan outsource all the jobs from Bangalore to Boston – wanna play? They usually do not call me again but spend significant amount of time on qaSignature website. Were they are learning one thing – MADE IN USA!

Vlad

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Tariq March 23, 2012 at 8:26 pm

It is amazing to see that almost none of the comments actually look at the situation rationally, but more from an emotional, nationalistic angle. It is simply the forces of economics that outsourcing will continue in the future as it has in the past. I mean it is the basic principle of capitalism to ensure the most efficient production. If this means displacing a few for the benefit of the more, then so be it. I mean nobody can micromanage to the individual worker but it is the collective benefit that should be maximised. By large the American politicos know this I.e. not to mess up with the system although popular politics sometimes upsets the order.
If America really needs all the jobs in house, then I have a better system I.e. the planned communist system of economy where there will be no unemployment, no great disparities in income, BUT the standard of living of 300 million people will be greatly reduced.

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prince omar May 23, 2012 at 5:37 pm

a good argument for an international forum.

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nemat August 19, 2012 at 10:39 pm

i think outsourcing strategy is good for some countries like america and so bad for iran.in america workers that lost their jobs can find new higher value-added jobs but it is not in iran.

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outsourcing trends October 1, 2012 at 9:49 am

I totally agree with nemat. and liked this article very much. Thanks for sharing!!!!

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D Right One November 18, 2012 at 10:05 pm

Outsourcing for American unskilled an skilled labor is not good. Once there were plentiful jobs in manufacturing and generally making things. Those are the best jobs for blue collar and many white collar jobs in that sector. Now that there’s been a push for outsourcing to China and India, those workers are now in retail or warehouse jobs. These jobs pay much less and have fewer benefits. The result is many are on welfare or don’t have the money to buy “stuff” that they used to. It’s a downward spiral to a less prosperous country.

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Cristal December 5, 2012 at 3:08 pm

its just too much to understand its just confusing… ;/

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chantelle April 24, 2013 at 10:02 pm

How does this affect shareholders?

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Anna May 9, 2013 at 5:13 pm

I don’t have time to read this but… could someone please tell me if this article is for or against outsourcing?

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http://Www.sbwire.com January 26, 2014 at 12:29 am

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Joyce April 15, 2014 at 10:46 am

I also highly recommend you to try this link: https://www.youtube.com/watch?v=bBJfyVMKMk0. It will help you explain everything you want especially for the Why is Outsourcing Good for America..?

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Truth Seeker April 16, 2014 at 9:44 pm

Outsourcing and Off-shoring should be made illegal! Sending American Jobs to Foreign Lands is killing the American Economy, destroying the Middle Class, and significantly reducing Federal and State Tax Revenue. Anyone who does not see this is either an Ostrich with their head in the Sand or is a member of the greed camp.

The Private Sector has been decimated by Outsourcing and Off-shoring and just wait till another few million lose their jobs simply because their job can be done via a computer. The well-paid services jobs are moving offshore at a rampant pace. Politicians will not stop Corporate American from “Hollowing Out America” because they are being “paid off” making them just as corrupt as the Executives that are looting their own companies.

America is on track to become another “Tourist Destination” where the only jobs available will be in Federal, State, and Local Government with Food Stores, Retail, and Restaurants rounding out the rest of our economy.

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