Advantages and Disadvantages of Relocating Overseas

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INTRODUCTION

Businesses in the United States have developed a new business model predicated on finding and using the most rewarding benefits provided by developing countries. They have found that where better-trained workers are performing the same task at a lower overhead than their US counterparts, and with spiraling benefits costs the trend toward relocating companies overseas. Reports from Congress have found that relocating has had a negligible impact on the integrity of U.S. economy. There is no doubt though, that U.S. firms are increasingly looking at lower-wage countries to build their workforce. The Bureau of Labor Statistics does not yet keep data on the number of jobs transferred out of the country, and companies have kept their data hidden on this issue. Little is known about the number of jobs that have left the U.S. to other countries and in addition, their affect on the economy.

The economy has seen many affects because of globalization and the relocating of jobs. Historically, the U.S. has had a manufacturing influenced economy and then a focus on service related jobs. However, globalization has allowed companies to find new regions where the same work is done with less costs. This encourages firms to outsource the low-skill jobs to overseas markets. Company executives believe they will save money by substituting high-skill, low-cost foreign labor for American workers. The economical liberalization of China, India, and the former Soviet Union satellite nations has added billions of new skilled workers. But the more important factor, one that is overlooked by most observers, is the fate of U.S. workers no longer plays a role in corporate decision-making. If there is no cost to destroying U.S. jobs, then companies will seek to lessen their labor costs, spurring transfer of high-skill, high-wage jobs. Company execu¬tives are acting rationally, trying to increase profits for their companies, and we pass no nor¬mative judgment about this. On the other hand, workers fearing their jobs will be outsourced are also acting rationally when they express concern about it. They know that if they are fired, the likelihood that they can find a job with a similar pay is low.

RELOCATING INDUSTRIES OVERSEAS

There is a growing concern among American workers the economy is being hollowed-out by a new form of Relocating overseas. American firms have begun to employ foreign workers or subcontractors for a wider variety of Businesses and service jobs. This article does not intend to deal with whether American companies sending jobs overseas is good policy as the arguments are well-defined. Rather, we dispel the rhetoric from reality and describe how Relocating overseas will affect the American economy and local economic development Computer programming and it associated industries has been the first to move overseas. Technological compa¬nies have a greater presence in low-cost countries than with any inherent characteristics of those jobs or industries. Financial services companies are the second movers because they have close ties with information technology companies and see that they have been successful in their migration. Companies are taking the latest tools, techniques, and technolo¬gies to the high-skilled workforces overseas. In essence, companies are now
competing U.S. workers against overseas workers, and by taking the latest tools to the overseas workers, they are taking a major competitive advantage away from U.S. workers.

JOB MOST AFFECTED BY RELOCATING

There is a wide variety of jobs, some high-skilled some low that are vulnerable to being out-sourced: computer programming to insurance-claims processing to radiology to legal work. Analysts at UC Berkeley have estimated that as many as 14 million, or 11 percent, of all U.S. jobs are at risk....
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