Outsourcing of American Jobs

OUTSOURCING OF AMERICAN JOBS

As the twenty- first century advances, Americans have begun to notice a growing trend in their economy: the accelerating loss of jobs to overseas workers. We can give this phenomenon multiple names "outsourcing", "offshore outsourcing" (Ron & Hira, 2008). A phenomenon that cannot be ignored.

We can define outsourcing as a process by which a company or a government agency moves jobs from its home country to a foreign location, or chooses to increase the production of goods or services by using a foreign third company, rather than provide employment to the resident countries workers, who are equally capable of producing such goods or services (Ron & Hira, 2008). It is the basic idea of substituting third party contractors for domestic labor.

While national media and some election campaigns suggest that global outsourcing is a new trend, the facts are that USA firms have been globally outsourcing jobs for decades. On a broader scale, global outsourcing first became popular in the apparel and textile manufacturing industries during the late 1960's and 1970's (Madigan, 2003). Later came automotives, computers, electronics, and other forms of assembly work during the 1980's (Murray and Kotabe, 1999). Most recently, the focus has been on the growing trend towards outsourcing of jobs in knowledge work in software design, technical support, telemarketing, call centers, and back office work (Mandel, 2003).

According to some observers, outsourcing as a general business practice becomes most common during recessionary economic cycles (Bardhan and Howe, 2001). In recent years, the pace of global outsourcing has accelerated as firms all over the world attempt to develop strategies that seek out low cost advantages. For example in one survey of over 428 of the fastest growing companies in the USA, all of them had used global outsourcing in at least a part of their business ( Greco,1997).

While many companies outsource some of their functions, some studies have suggested that for service firms, the corporate strategy will be to typically retain core functions internationally (Murray and Kotabe, 1999). A major reason for this is the difficulties encountered with outsourcing. However, Insinga and Werle (2000) identify the primary pitfall of international outsourcing as the upkeep and maintenance of workers at the local site for example communication problems, cultural differences and norms have all led to some firms having major problems as they outsourced work abroad.

Multinational corporations that have headquartered in the U.S. conduct a great deal of offshoring or outsourcing and have numerous facilities in other nations (IBM, for example, has plants in 167 countries and employs 320,000 persons worldwide). Such multinational corporations may choose to offshore their work by contracting with a firm that is owned by foreign

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