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Posted on May 31st, 2012, by

Nowadays, outsourcing becomes rapidly progressing phenomenon which is getting to be more and more popular in the modern economy. Basically, outsourcing is to a significant extent determined by the process of globalization which makes it possible to outsource jobs to foreign countries that may be beneficial for both parties. At the same time, many specialists (Peterson, and O’Meara) argue about the effects of outsourcing. In general, it is possible to clearly distinguish two opposing views on outsourcing. On the one hand, there are eager supporters who sincerely believe that outsourcing can be a really effective tool that increases the effectiveness of cooperation of different companies which may be even situated in different countries of the world but work for the same objective and mutually enrich each other. On the other hand, there is the opponents of the wide spread of outsourcing who underline that outsourcing may produce a negative effect on the national economy to the extent that outsourcing¬† is viewed as a serious threat to the leading industries of American economy, including the highly technological ones.

However, in actuality, the truth is somewhere in the middle. To put it more precisely, the purpose of outsourcing jobs to foreign countries is to cut expanses and make more money.

First of all, it should be said that outsourcing has become popular since 1990s and this is why it is necessary to underline that this phenomenon is still not fully research, especially its long-term effects. At the same time, the current trend to outsource jobs to foreign countries has become really popular only within the last few years.

Nevertheless, more and more companies, including such giants of American automobile industry as Ford (Smith 2007) amply use outsourcing in their strategic development. It should be pointed out that outsourcing is a really important direction in the development of cooperation between national, namely American companies and their foreign partners. As a result, outsourcing provides American companies with ample opportunities to increase their presence in foreign markets.

In order to fully realize the actual effects of outsourcing on American companies, it is primarily necessary to briefly discuss the criticism of this phenomenon and assess the extent to which this criticism is justified. First of all, it should be said that outsourcing of jobs to foreign countries is viewed as a serious threat to the national labor market.

Basically, the opponents of outsourcing argue that in the result of the growing outsourcing of jobs to foreign countries Americans are losing their jobs in theUS(Drezner 2004). In other words, it is estimated that outsourcing undermines the position of American employees because they are gradually replaced by foreign employees.

Naturally, this threat is really disturbing to American society because potentially it means that American economy actually starts to finance foreign labor force by means of outsourcing.

Furthermore, it should be pointed out that the development of outsourcing is often criticized for the increasing role of foreign suppliers in American economy. This means that outsourcing jobs to foreign countries American companies can become really dependant on the supply of products and services from other countries (Donlon, 1997).

Moreover, it is also argued that outsourcing jobs to foreign countries also threats to the further progress of American hi-tech industry because of the replacement of American employees working in this field by foreign specialists.

In actuality, this arguments, regardless there seeming persuasiveness are still not very convincing. First of all, it should be said that the outsourcing of jobs to foreign countries does not necessarily mean the less of jobs by Americans and rapidly growing unemployment. For instance, Daniel Drezner argues that the level of unemployment had not increased considerably since the start of mass outsourcing (Drezner 2004). In this respect, it should be said that even the outsourcing of IT jobs did not affect dramatically the growth of the number of IT jobs in theUS. To put it more precisely, Dezner indicates at the fact that it is only in 2000 that a slight slow down and even decrease was observed while throughout the late 1990s-early 2000s the growth of IT jobs, namely in computing and mathematic positions, increased by 6%, while in banking and finance the growth reached 32% (Drezner 2004).

Obviously, these facts perfectly prove the substantial gap between the pessimistic forecasts concerning the profound crisis in American labor market and the reality. At the same time, it is worthy of mention that, as a rule, the outsourcing of jobs basically refers to professions which do not need a high level of qualification and, consequently, they do not represent a real threat to American labor market since, even in the US semi- or low-qualified jobs are the domain of immigrants while Americans prefer to ignore such job opportunities (Venkatraman, 1997). In such a situation, it is possible to estimate that outsourcing of jobs to foreign countries is rather an attempt to decrease the cost of labor force which is higher in theUScompared to developing countries.

In this respect, it is necessary to underline that saving costs and decreasing expenses on salary is one of the major factors that stimulate American companies to outsource jobs to foreign countries. In such a context, it seems to be quite logical that American companies basically refer to foreign companies operating in the developing countries, while the share of well-developed countries in American job outsourcing is relatively low (Stevenson, 2005). This is one of the evidences of the trend to benefit from cheaper foreign semi- or low-qualified jobs which cannot be viewed as a serious competitive power to American employees.

At the same time, it is worthy of mention that even such outsourcing is not distanced from theUSand is basically focused on neighboring developing countries. Obviously, such a situation is extremely beneficial to American companies. First of all, such outsourcing of jobs to foreign countries decreases the companies’ expanses on labor force. Also, it contributes substantially to the larger market opportunities since by means of outsourcing American companies can enter foreign markets without any serious resistance from the national governments. This fact is extremely important because traditionally national governments, especially in developing, economically weak states, attempt to protect their economies and major industries from the foreign expansion. In such a situation, it is quite logical that the access of foreign companies to the local markets is limited substantially. On the other hand, outsourcing is viewed as a kind of investments that contribute to the growth of the national economy, creation of new work places, etc. As a result, the cooperation between American and foreign companies by means of outsourcing is viewed as profitable to local markets and, consequently, national governments do not simply eliminate any obstacles, but, on the contrary, stimulate such investments. Naturally, American companies benefit considerably from such a policy because they can increase their profits through the enlargement of their customer base in the result of the possible expansion in foreign markets. Consequently, it should be said that the investments in outsourcing of jobs to foreign companies can be viewed as a hidden market expansion that is apparently highly beneficial to American companies.

Thus, taking into account all above mentioned, it is possible to conclude that outsourcing jobs to foreign markets is rather positive to American companies, while the threats of outsourcing, which are widely discussed by critics of this phenomenon, are basically hypothetical and are not supported by evidences. In actuality, outsourcing jobs to foreign countries is profitable in two ways. Firstly, outsourcing jobs provide ample opportunities to decrease expanses on labor force, which is considerably lower in developing countries. It is worthy of mention that it does not really hurt the national labor force because such jobs are low-qualified and not perspective in American labor market. Secondly, outsourcing jobs to foreign countries may be highly beneficial and opens ample opportunities to make more money due to the facilitated expansion on the local markets resulting from the elimination of fiscal and political barriers on the way of American investments in the economies of developing countries, especially those that borders on the US, such as Mexico.

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