Outsourcing

Introduction

Outsourcing of American jobs overseas is displacing American’s in the United States. American blue-collar workers and the Middle Class American will soon be a word of the past if the US government continues outsourcing the low-skill jobs overseas.

One of the concerns in regards to the outsourcing of jobs is that wages of American jobs versus the wages of the Chinese, Japanese, Indians and Philippians are much less. If these workers were using the same identical technology and having the same identical skills were paid the same wages, there would be no problem. (Greene, 2006) It’s also believed that if the US continues to trade freely with the overseas countries then the powerful drag of their far lower wages will begin dragging down American’s average wages. (Greene, 2006)

Economist has found that tax cuts offered to large manufactures have caused productivity to go up. The manufactures are actually given tax breaks to be able to purchase more machinery to do the jobs and therefore fewer laborers are needed, causing a large number of workers to be displaced. The tax act that was initiated by Bush administration for big businesses was the “bonus depreciation”. Under this act the more the companies spend on equipment the less the tax they have to pay.

The American economic recovery is several years old but yet jobs and workers income have failed to recover as it has in the past. It is estimate that the outsourcing of jobs is swiftly moving up the chain to skilled and specialist workers. The question remains is anyone safe from outsourcing? (Business Week p.26)

Overview

What is Outsourcing?

Outsourcing is transferring services or operating functions that are traditionally performed internally to a third-party service provider and controlling the sourcing through contract and partnership management (Roberts, 2001). It is a concept that has evolved from a manufacturing perspective to a strategic perspective, which views the concept as a way for organizations to focus and be more competitive. The basic premise of outsourcing is that a specialist organization can perform a particular service more efficiently than can internal operations because a specialist organization has an inherent advantage in producing and delivering