Outsourcing Harms and Threats the United States’ Economy

Topics: Outsourcing, National Competitiveness Council, Competitiveness Pages: 4 (1212 words) Published: March 19, 2013
Outsourcing Harms and Threats the United States’ Economy
“Outsourcing happens when a corporation decides to purchase a kind of product or service from a source outside of the company” (Herbert, 2004). It generally refers to products or services that were once done in-house, now purchased from a source external to the company. “When a multinational company moves or expands some of its operations and jobs to overseas locations, this is referred to as off shoring or offshore sourcing” (Herbert, 2004). Corporations are willing to develop their outsourcing strategy because outsourcing would enable U.S. companies to lower their prices in foreign markets and take advantage of growing incomes in those nations. However, a growing trend in the economy about the negatives of outsourcing cannot be ignored by public. Three of the most important negative effects are the risk of losing key skills to competing for the future, the risk of decreasing the employment of U.S as well as the threat of national competitive and safety. Outsourcing cause to lose key knowledge and the capacity to innovate “Decades of outsourcing manufacturing have left US industry without the means to invent the next generation of high-tech products that are critical to rebuilding its economy.”as noted by Gary Pisano and Willy Shih (2009) in a classic Harvard Business Review article, “Restoring American competitiveness”( p.1). It is undoubted that creating job offshore instead of using high-paid U.S. workershelp companies cut cost effectively.To competewith those developing countries’ companies who possess labor absolute labor advantage, it is crucial for U.S. companies to take advantage of the lower overseas. However, the process also acceleratesthe transfer of knowledge to foreign workers. Plenty of them then go back to their local companies and take away the advanced technology of U.S. So these developing countries, such as India and China, not only have low-cost laborbut also rapidly assimilate the...
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