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Success Recipe: The Benefits of Outsourcing

Say, for example, your employee earns $30 an hour, so to reduce labour costs, you hire someone outside the system to do the same job for les...

Say, for example, your employee earns $30 an hour, so to reduce labour costs, you hire someone outside the system to do the same job for less.

This is called outsourcing your services. The hired person will do the same job as before, however, it will be at a reduced cost to the company.

By @Comic24Derick

Outsourcing is trending but a contested topic in business and politics across the globe. Steve Jobs, Barack Obama, and Bill Gates have all shared their thoughts on the growing concept.

Outsourcing of services began in 1989. Three decades later, it has become a business strategy for many big companies, not limited to Nike and Goldman Sachs, giving them an advantage over their competitors.

Nike is reportedly outsourcing almost 100 percent of its production line. Others argue that it causes the loss of jobs. Entrepreneurs who support it say it promotes free trade, creating opportunities in less developed nations. After all, a business exists to make profits.

Give and it shall come back

“In the long run, outsourcing is another form of trade that benefits the U.S. economy by giving us cheaper ways to do things.” – Janet Yellen.

While critics of outsourcing call for the abolishment of the exercise, Yellen, an American economist declares subcontracting services to other nations is a way of exporting goods and services that will benefit the nation.
 “Reliable data on the outsourcing of American jobs is sorely missing from the debate on globalization.” (Image: Pixels)
Goods can now be manufactured at a lower cost, which will benefit consumers who will buy them at cheaper prices because production costs have been reduced.

Larry Elder also advocated for outsourcing saying: “Outsourcing and globalization of manufacturing allow companies to reduce costs, benefits consumers with lower-cost goods and services, causes economic expansion that reduces unemployment, and increases productivity and job creation.”

Outsourcing is the way

Instead of painting a gloomy picture over the trend, the talk radio host and attorney believes it will create more job opportunities. 

For companies, outsourcing is the way, Lee Kuam Yew mentioned boldly. “If you deprive yourself of outsourcing and your competitors do not, you’re putting yourself out of business.”

Companies that do not subcontract run the risk of being outsmarted by their strategically positioned competitors. You have to choose between your business growth or watch it fail, while you pay higher wages. 

The truth is that developing nations have lower wage demands as compared to the U.S., therefore it makes sense to recruit employees in India, for example.

“And just remember, every dollar we spend on outsourcing is spent on U.S. goods or invested back in the U.S. market,” mentioned Arthur Laffer. “That’s accounting.”

A symptom of bad governance

“Outsourcing is a reflection of a bad economic environment domestically,” Ron Paul argued. “If you fix that, you fix outsourcing. Our primary export is paper money, and that should change if you change the monetary policy.”

The retired politician, tellingly points that outsourcing is more than just making profits, it is a disease that eating the American society that needs to be addressed. If the American policies were aligned and fixed, outsourcing will be history, added Paul.

Fighting in Paul’s corner was Ed Pastor, an American politician, saying the act was robbing Americans of their job opportunities. “I will support legislation that benefits the American worker and prevents the outsourcing of American jobs.”

Fair labour laws

As more nations enter the outsourcing pool, wages have been reduced because of greed, leading to the exploitation of the employees, argues Brian Behlendorf. Rather, it should create better working environments, and improve lifestyles in those countries.

“Engineers in the developed world should be arguing not for protectionism but for trade agreements that seek to establish rules that result in a real rise in living standards,” revealed the American technologist. 

“This will ensure that outsourcing is a positive force in the developing nation's economy and not an exploitative one.”

Preserving American dream

Rather than shift jobs abroad, Martin Luther King III dreams of a day when resources are invested back into the American economy to develop local people in the fast-changing world. To King, America is lagging, while other nations are benefiting at its expense.

“Reforms are needed to stem the tide of outsourcing good jobs to other nations and to educate and train American workers to meet the challenges of the 21st-century world economy,” voiced the American human rights advocate.

The Indian revolution

“India’s great economic boom, the arrival of the Internet and outsourcing, have broken the wall between provincial India and the world.” – Aravind Adiga

With the advent of outsourcing, three decades ago, India has witnessed huge growth over the years, earning the lion’s share of the billion-dollar industry. Indians, mostly in the technology professions are benefiting from outsourcing done by American firms.

To Adiga, this is an achievement that has enabled the nation to interact with the world and become part of the global village through technological advancement.

Azim Premji, another Indian tycoon and advocate of outsourcing welcomed the idea, calling it, “The important thing about outsourcing or global sourcing is that it becomes a very powerful tool to leverage talent, improve productivity and reduce work cycles.”

A nation with more than a billion citizens, American companies are benefiting from recruiting employees at cheaper, affordable rates, employing more labor, resulting in fast production.

You can’t stop the wave

“Outsourcing is inevitable, and I don't think it's necessarily treating people like things.” – Stephen Covey. 

As more nations come on board as outsourcing hubs, Covey understood the wave was getting stronger and no amount of advocacy or denial could stop it. He however cautioned about abusing people’s rights while companies seek to make huge profits.

Gita Gopinath chose to praise the U.S. for outsourcing, rather than attack it, calling it a strength. “One of the strengths of the U.S. economy is its ability to most efficiently employ resources both domestically and from around the world and outsourcing is one such example of this,” he said.

Robots compete with humans

“To be sure, robotics are not the only job killers out there, with outsourcing stealing far more gigs than automation.” – Daniel Lyons.

Before the advancement of outsourcing, robots were seen as a real threat to human beings, however, the progression of subcontracting has presented a new threat, according to Lyons.

Even with more praises, sadly, there is no documented, credible information, and research. It cannot be quantified and the benefits are not quantified. There seems to be a lot of secrecy in the industry and its full effects on global trade.

Dan Lipinski said: “Reliable data on the outsourcing of American jobs is sorely missing from the debate on globalization.”

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