Outsourcing IT Jobs Pros And Cons Essay - 952 Words

Outsourcing IT Jobs: Pros and Cons In 1973, a monumental shift was prevailing where U.S. companies were sending low skilled jobs within the manufacturing industry to offshore countries to reduce labor cost while maximizing profits. The effect of the jobless manufacturing work force was a shift of those laborers to focus on and perfect the service industry of what it is today (Koch 1). During the high tech recessions of the late 1990s and a nominal expansion of the present time, the Information Technology industry, an industry which through continuous innovations enabled the companies and corporations of America to become more efficient and productive, is also facing the outsourcing similarity with manufacturing. While outsourcing†¦show more content†¦This resulted in net losses or barely positive net income. As a result, the CIO’s budgets for their Information Technology spending were greatly slashed by 20 – 50 percent. In an effort to achieve the optimal return on investment with their new budget, CIO’s began to send Information Technology jobs offshore to lower wage paying countries. My company also followed the industry trend and moved 50% of the application developer and system engineering jobs to Bangalore, India and 50% of call center jobs to Penang, Malaysia. While most companies moved jobs offshore by laying off U.S workers and re-hiring the staff abroad, my company chose softer methods like voluntary separation packages and attritions which achieved the same objective without demoralizing the U.S. employees. In economic terms, moving jobs offshore is a result of the external factors. By definition, externality exists in economics any time there is a separation of costs and benefits, and the decision maker does not have to incur the full cost but receives the full benefits of the decision (Terry 2). When looking at the overall picture of moving jobs offshore, the first thing that comes into many CIO’s mind is the externality factor, but ma ny companies saw beyond that and saw an opportunity to globalize their work force. There are lots of benefits from hiring lower wage laborers but there are also an equivalent amount of consequences associated with thisShow MoreRelatedOutsourcing And Its Effect On The American Economy1398 Words   |  6 Pagesof outsourcing. Although outsourcing is financially beneficial to large businesses, it has detrimentally impacted the American economy through raises in the unemployment rate, lost countless tax dollars and compromised the integrity of products received. Outsourcing is a business tactic that consists of moving production of a product to either a sub-tier vendor or moving operations away from the company’s home country in order to eliminate costs. Recently, the most common way of outsourcing isRead MoreOutsourcing : Outsourcing And Outsourcing1579 Words   |  7 Pagesâ€Å"Outsourcing refers to obtaining certain services or products from a third party company, essentially sourcing something like accounting services or manufacturing of a certain input to another company. While many think outsourcing refers to using a service provider in another (usually cheaper) country that is not necessarily the case. Outsourcing can be done to a company that is located anywhere, the location isn’t important.† (Offshoring vs. Outsourcing, n.d.). There are many reason a businessRead MoreAnalysis of Three Videos on Outsourcing967 Words   |  4 PagesCritical Thinking Assignment: Overseas Outsourcing Introduction One of the most polarizing business practices of the last two decades continues to be the decision on the part of businesses to outsource production of their products to third world nations, The are a myriad of benefits and risks to outsourcing, often as diverse as the companies that choose this strategy as a means to compete globally (Beasley, Bradford, Pagach, 2004). The three videos analyzed in the paper have successfully definedRead MoreMabuhay Pumps Company1205 Words   |  5 Pagesdifficult for Renzo to point out that outsourcing their foundry production, would help the company in more ways than they expect, even though it is a huge change from the norm. Renzo believes that outsourcing will lessen expenses, generate more income and save enough money for future use or plans. 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Instead of relying only on domestic workers, many companies also outsource some of their labor into foreign markets. This practice can have negative effects on the economy overall, individual businesses can often benefit from this practice. Outsourcing offshore can allow companies to tap into foreign markets and expandRead MoreThe Advantages and Disadvantages of Outsourcing1442 Words   |  6 PagesWhat are the advantages and disadvantages to outsourcing in the global marketplace? In these times of great globalization where many countries have erased their borders when it comes to trade outsourcing has become an option for many companies. Whether or not to outsource is a key question that companies must consider. According to the Pros and Cons of Outsourcing, â€Å"The decision to outsource or not is a matter of finding the right balance-the balance between managing labor costs, workflow, employee