Outsourcing: To Help or To Hurt? That Is the Question

Have you ever been laid off from a job due to outsourcing? I was laid off from Dell in 2003 when they outsourced all their customer service and order processing operations to India. I know that it hurts us personally to lose that job. But does outsourcing help or hurt our economy and America’s national growth? Some experts say, in order for America to keep up with the job market, all impersonal service-sector jobs should be outsourced. Well, if you work in a call center or in a job that is easily done over the internet or by computer, you could be looking for a new job soon. And not a job in the same market you have been working in either.

The general thought about outsourcing was that lower paying, administrative work, such as order processing, transcription services, and payroll tasks, was the market that would gain most by being sent to contractors in India, China, Russia, and the Philippines. Then they added call centers and information technology to the mix. These jobs are being sent over seas by corporations due to labor being cheaper. Big corporations have found that outsourcing service sector jobs gives them the opportunity to employ three to four foreigners at the same pay rate they offer for one American. Also, due to inflation in America, manufacturing costs are cheaper over seas. Big corporations can decrease over all production and human resources costs. America has seen a loss of 395,600 jobs (Srivastava & Theodore, 2006) in the IT submarket alone in the last decade. There has only been a rebound of one-quarter (98,900) of these jobs lost. “…, the dividing line between the jobs that produce services that are suitable for electronic delivery (and are thus threatened by off shoring) and those that do not does not correspond to traditional distinctions between high-end and low-end work” (Blinder, 2006). Americans that have held these jobs are now finding the service-sector market is saturated and are having to find other means of work. In order for the average American to find work substantial enough some are returning to school. “The supposed remedy for the rich countries, accordingly, is more education and a general ‘up-skilling’ of the work force (Blinder, 2006).

Impersonal service-sector jobs will not disappear entirely from the United States, but our work force share will drastically decrease leaving a lot of Americans unemployed. The only answer for this is, “Industrial and Economic Change”. In the 1800s, our economic center was agriculture. In the 1950s, our center changed to manufacturing, and our center changed again, in the 1980s, from manufacturing to a more service oriented economy and job market. We are finding our economic center changing once again. Where we are going this time has not exactly been drawn out for us yet, but we seem to be getting there at break neck speed. Blinder (2006) says, “We have so far barely seen the tip of the off shoring iceberg, the eventual dimensions of which may be staggering.” The world has changed and now instead of thinking locally many corporations are thinking globally. Many have found that they can improve cost savings compared to domestic costs (Elliott, 2006) while helping to improve the economy of a poor country. George Elliott