Outsourcing has been a controversial subject of discussion for years. Outsourcing is contracting work for one’s business to a different company or to a different country and is a key part of globalization. Thousands of firms ranging from “mom and pop” businesses to big corporations around the world outsource work to foreign countries in order to get an edge over the competition and most importantly to save money. Two popular trends seen in outsourcing today are a lot of information technology jobs are being outsourced to India and jobs in the automotive industry are being outsourced to Mexico. Other jobs that are popular among outsourcing are content development, recruitment, manufacturing, legal outsourcing, web design and maintenance, logistics, and customer support (“The Advantages and Disadvantages of Outsourcing”). Like all things in life, though outsourcing has its advantages and disadvantages.
Big corporations have many things on their plate and getting around to every single one of them by themselves is nearly impossible. If they were to get around to every single item needed to be done, it probably would not be done well. One advantage of outsourcing is that businesses can outsource work to a company that specializes in that line of work and will do a more quality job than the business outsourcing the work would have. It was reported by the New York Times that about 90% of Apple’s iPhone parts are manufactured in a foreign country. It was also reported that it would take about nine months to find the amount of qualified engineers to supervise an assembly line for Apple in the United States; it took China 15 days. Another advantage is that outsourcing can save millions in costs. Nike is infamous for outsourcing its shoe production in order to save money on wages here in the U.S. Also studies showed that up until recently outsourcing could also create jobs in the United States. During the 1990s, studies showed that for every one job outsourced, almost two were created back home (Pearlstein). This number has decreased recently due to less outsourcing.
Opposingly, there are also disadvantages to outsourcing. One common mistake is that CEO’s often discontinue monitoring the offshore companies they contracted their business to once the contract is signed. This can be detrimental for a business because confusion can ensue at the outsourcing company without the supervision of the corporation. Another disadvantage is that there is a possibility of exposing confidential data, such as personal records or important business data and knowledge. Especially with businesses that outsource human resources, payroll, and recruitment services because of the important information those jobs entail (“The Advantages and Disadvantages of Outsourcing”). Another disadvantage is that sometimes businesses that outsource get negative publicity. For example, after the recent recession occurred, having products that were made in America was a huge trend because buying American products would help the economy. Another instance in which outsourcing can cause bad publicity is when a company lays off a lot of its own workers in the U.S. to outsource. Also, when companies outsource to poor quality companies, such as when Nike outsourced to sweatshops, it can cause horrible publicity.
Today, it seems that outsourcing is on a downfall. 54% of executives from billion dollar manufacturing companies are planning on bringing production back to the United States from China. Also, a recent study has shown that there is starting to be a shift back to North America for outsourcing jobs instead of Asia. The study claimed that U.S. manufacturers are starting to prefer Mexico over Asia claiming that Mexico “combines the relatively lower costs of China with much quicker access to the U.S. market” (Toloken). Overall, the biggest beneficiary of outsourcing is the company itself. The company doing the outsourcing has the ability to save significant amounts of money, but the economy and the citizens of the United States both take a hit in doing so. The economy loses tax revenue and the taxpayers lose jobs to other countries. The recent studies showing that jobs are starting to come back onshore is a good sign for things to come.