Is outsourcing beating up the U.S. economy badly? According to renowned economists, outsourcing causes many economic issues such as increased volume of unemployment, backsliding employee compensation, dwindling middle class and a sluggish economy.
Studies have pointed out that offshore outsourcing has had least effect on unemployment, instead, may have actually added jobs as an overall result.
The main reason why companies choose to manufacture a product offshore is to minimize cost. Offshoring the production allows the company to offer the product at a cheaper price. When prices are lower, more Americans can avail the products, thus increases profit. Delta Airlines for example, moved 1,000 jobs to India in 2003. Offshoring to India was able to reduce costs by $25 million. Delta Airlines’ cost reduction and profit improvement funded 1,200 new reservation and sales positions in the United States culminating in net job growth.
The outcome of outsourcing can be lower costs for companies, substantial profits for stockholders and of course, cheaper prices for consumers eventually leading to a better standard of living and improved employment rate.
Source: Community Digital News