October 29, 2013
Should Companies Continue to Practice Outsourcing?
Recently offshore outsourcing has been developing quickly, and the tendency seems inevitable. It refers to the non-core business delegated to the operation of external third party. More and more companies are practicing outsourcing in order to keep their companies profitable. At this point, it is beneficial to those companies. However, those companies should see the impacts or disadvantages of practicing outsourcing. Even though outsourcing could be beneficial to some companies; nevertheless, it should be stopped because not only can it cause negative effects on economy, and it also causes many problems in developing countries, such as environmental damage, poor working conditions and workers’ safety problems.
Outsourcing can have great negative effects on domestic economy. Since corporations cut jobs in the U.S. and send them to other countries, this could contribute to greater domestic unemployment rates in the U.S. The impact of increasing unemployment rates could have a snowball effect on the state economy. Government will be affected by receiving less tax revenues; this means people in the state will receive fewer benefits from the government. Meanwhile, unemployment means more people need assistance from the government. For example, losing a job can be stressful for most people; they may develop serious health problems after they are unemployed, but they lost their health insurance, so they will need either money or help from the government or other programs to help them with their health condition. This greatly contributes to the financial deficit of some states at some point.
Moreover, from the economic perspective, outsourcing can also have a negative impact on small local businesses. Large corporations are able to send their factories overseas to lower their manufacturing costs and thus lower the price of their products to compete with others. In consequence, small local...