Outsourcing of American Jobs to Other Countries Strengthens the US Economy

0 Comment

Corporate restructuring, downsizing, and layoffs have led to fundamental changes in the workplace on a global basis. Senior executives and corporate leaders around the world agree that outsourcing is good for the world economy. These executives also realize that outsourcing can deliver more than just labor cost savings (Daga Kaka, 2006). While in all markets executives think outsourcing is better for the world economy rather than their own markets, the issue has become politically sensitive in America (PP, 2004). The issue has become highly emotional because of two dramatically different effects – while some claim that it will result in layoffs and dislocation for many US workers, most economists believe that it will ultimately strengthen the US economy (Otterman, 2004).Strong arguments against outsourcing have arisen from statistics revealed through surveys and studies. According to a study by the Information Technology Association of America (ITAA), migration of tech jobs to low-paid foreigners has eliminated 104,000 American jobs, nearly 3% of the positions in the U.S. technology industry (MSN Money, 2004). Outsourcing causes damage to the people and the communities and there is an impulse to protect the American workers. Outsourcing has been referred to as the ultimate betrayal of the American workers which is morally repugnant and profoundly un-American. A survey by Merrill Lynch indicates that the proportion of IT projects outsourced to India by Fortune 500 companies could increase from below 5 percent to over 15 percent in the next two years (Solita Systems, 2002 cited by Nair Prasad). A research report from Deloitte showed two million of the 13 million jobs in financial services across Western economies will be transferred to India by 2008 (Moller, 2006). Arguments in support of outsourcing are equally strong. Despite the recent economic downturn, according to a McKinsey analysis, the U. S. economy created an average of 3.5 million new jobs in the private sector per year (Otterman).