The above title is an example of just a few of the opinions voiced by many Americans when the prospect of outsourcing jobs to India is discussed. It is hardly surprising and completely understandable that even the mention of the word outsourcing is often met with the reaction, “Stop outsourcing jobs!” “No to outsourcing jobs.”
Job opportunity and job security are issues that few people are immune to; the status of the job market affects the majority of us. As the majority of Americans equate outsourcing jobs with job loss, the negativity the process of outsourcing jobs receives is expected. Furthermore, not only do Americans feel that outsourcing jobs is a threat for one’s personal job security, there is a firm belief that outsourcing jobs is damaging to the US economy as whole. As a result the practice of outsourcing jobs not only touches one on a personal level but also one’s patriotic sentiments. On all fronts, the practice of outsourcing jobs receives a low opinion.
However although, “no to outsourcing jobs” is the consensus is, “no to outsourcing jobs,” actually in our best interest? Is the reaction received to outsourcing jobs justified? Does outsourcing jobs really worsen the US economy? Does outsourcing jobs really equal lost American jobs?
Outsourcing jobs is damaging to the US economy? To deduce if this is myth or reality one must take into consideration several factors.
1) What made America the richest nation in the World?
America is not the factory of the world like China or as oil rich as the Middle East. So what made America the richest nation in the World? Answer: America’s strong business institutions.
American companies are globally present in virtually all industries; food, media, software, automobiles, pharmaceuticals, insurance, hardware, construction, tourism, aviation...etc Most importantly US firms are successful in these markets not just domestically but globally too. Quite simply, America exports business to the rest of the world, better and more than any other nation.
2) The Globalized World we currently live in:
Whether we like it or not globalization has well and truly arrived. To succeed businesses must be aware of this and use it to their advantage.
Undoubtedly there are many ways, but one obvious way would be to take advantage of the rising Indian market. Currently India and China has a combined middle class of over 700 million people. This middle class is hungry for and spending big on US products. What does this middle class mean for American companies? Answer: considerable opportunity and new markets to sell to.
3) Outsourcing jobs is crucial to selling to such new world markets:
For US firms to sell to new world markets in India and China, US firms must continue outsourcing jobs! Why? Only the most successful organizations will be able to capitalize in these new markets. By outsourcing jobs, companies increase their efficiency, reduce their cost and in turn become more competitive.
India is renowned for its I.T technical talent, (hence the considerable size of the I.T outsourcing jobs sector). India produces more English speaking I.T graduates every year, than any other country in the world. If American companies stop outsourcing jobs, then Indian companies will have a distinct advantage over American companies; access to low cost professional employees.
Thus if an American company stops outsourcing jobs to India, how can that American company compete with an Indian company in the Indian domestic market? If American companies stop the process of outsourcing jobs, Indian companies will always be able to offer the more low cost service/product. By not outsourcing jobs, American companies would be unable to capitalize on the ever expanding Indian market. Additionally, by not outsourcing jobs, American companies would not only lose the Indian market but also other rising foreign markets e.g. China, Malaysia, Brazil etc. If American companies stop outsourcing jobs Indian companies will not only out compete American companies in India but also abroad.
4) Not Outsourcing jobs could also threat the US domestic market:
Indian companies or other foreign companies outsourcing jobs could also be a threat to US companies in the US domestic market. If by not outsourcing jobs, American companies can be out-competed in foreign markets then the same can hold true in the American market.
By not outsourcing jobs, American companies not only potentially lose foreign markets but also risk losing the US domestic market.
6) Europe and Japan will continue the practice of outsourcing jobs:
What about companies from other 1st world nations? Multination companies from Europe will continue outsourcing jobs to India irrespective of the US position. Will American companies be able to compete with well established multinational corporations that have considerably reduce their costs via outsourcing jobs to India?
7) Outsourcing jobs because of supply shortage:
Many companies start outsourcing jobs because there is a technical shortage for the respective position they seek to fill. Outsourcing jobs when there is a skills shortage enables America to benefit from India’s technical talent pool. By not outsourcing jobs this does not necessarily mean the position will be filled by an American at home. However by not outsourcing jobs this will reduce an American companies efficiency and competitiveness.
8) Outsourcing jobs reduces cost:
By outsourcing jobs US companies are able to reduce costs for the US consumer. $50 or $200 for the same software… you decide?
9) Outsourcing jobs leads to re-investment in the USA:
Outsourcing jobs enables US companies to be successful on a global scale. The revenue generated on a global scale enables US companies to re-invest in the USA and create new industries, sectors and jobs. Outsourcing jobs assists job creation in the USA.
10) Outsourcing jobs benefits HP and IBM:
Hewlett Packard and IBM obtain 50% of their revenues from markets outside of the USA. That HP and IBM are outsourcing jobs is undoubtedly justified when this enables them to increase their revenues from markets outside of the USA. If HP and IBM stopped outsourcing jobs they would be out-competed in foreign markets whilst also potentially risk losing the US market.
Conclusion:
In conclusion, outsourcing jobs has many beneficial implications for the US economy. The more successful US companies are globally the more successful the US economy is. The success of US companies globally is directly linked to whether they implement the practice of outsourcing jobs. Accordingly it is paramount the US does not prohibit or discourage the practice of outsourcing jobs.
