Outsourcing is generally conducted for the benefit of the individual firm, but often creates negative outcomes for the economy at large. The best way to understand the economic issues surrounding outsourcing is to understand the economic tradeoffs at play. Two case studies will help in fostering this understanding. Fishman discusses the experiences of Wal-Mart suppliers, struggling to compete in a global marketplace. Friedman discusses some of the non-economic factors involved in outsourcing, looking at the issue from the other side of the ocean. Wal-Mart is often criticized for outsourcing American jobs, Fishman notes, and he presents evidence that it does facilitate this practice. Wal-Mart's mission is to offer low prices to customers as a matter of competitive policy, and do to this is must find goods from the lowest-cost producers. Given the factor input costs in the United States, this usually means outsourcing production to low-cost countries, where the prices of land, labor and doing business in general are lower. China is the usual location, but there are other countries as well. The story of Carolina Mills is a good example, where the company simply could not meet Wal-Mart's price and was forced to either lay off American workers for those overseas or to lose their contract to another supplier who could meet Wal-Mart's price. Fishman presents several similar anecdotes as well. The idea is that Wal-Mart's quest for efficiency and low prices is emblematic of American business in general. There are, after...
Americans benefit from having access to lower-priced goods. It facilitates more consumption and higher quality of life, on average, because it allows even those who earn little to live better. High income earners do not likely see much benefit from the Wal-Mart strategy, however. By keeping prices low through outsourcing, American firms do one of two things, both of which are generally considered beneficial. Either they offer low prices like Wal-Mart, which contributes to lower inflation, or the companies pocket the difference like Apple and earn higher profits for their shareholders. Whether the wealth is distributed broadly (Wal-Mart) or concentrated (Apple), more wealth is created through outsourcing strategies that emphasis cost control and efficiency.
Contracting officers today must have the skills or competencies required to become the business leaders of the future (Steele 2000)." An article found in the ABA Banking Journal asserts that Chief Information Officers are interested in it outsourcing because companies are able to acquire it skill sets that may not be present at the internal level. In this article Siemers (1995), explains that One of the reasons CIOs believe that
Outsourcing has made great controversy within a number of industries lately. Essentially, outsourcing is "the act of one company contracting with another company to provide services that might otherwise be performed by in-house employees" (Conjecture Corporation, 2012). Yet, this movement is not as easy or pain free as it sounds. Yes, outsourcing can help keep costs down and allow a company to remain globally competitive; however, outsourcing can also cost
Outsourcing Shipping Management Outsourcing is a process by which an organization takes the services of an external party to perform some of its operations or functions. Outsourcing is also done by shipping firms all over the Globe (Outsource Freight, 2012). Ship owners generally outsource their operations and management functions to the external parties against for a particular period of time and against a specific sum of money (Lorange, 2009). Outsourcing of
Outsourcing ZeusCorp is known for its effective and efficient outsourcing practices. The cost of labor is examined to elevate at a very high pace ever since the global inflation has taken roots in the contemporary market place. By comparing the currency rates and the cost of labor the fact become vivid that outsourcing from third world and other developing countries is a cost effective solution to successfully penetrate the market of
Outsourcing Among the list of controversial issues relating to jobs and the economy in the United States, outsourcing is right up there near the top. Politicians frequently attack each other using the phrase, "sending our jobs overseas…" and many a politician has been stung by this accusation. Thesis: While there are clearly benefits to be realized by companies that engage in outsourcing, there are also difficulties, drawbacks, and unanticipated expenses associated
Outsourcing The Impact of Outsourcing on Information Technology in the U.S. The greatest impact of outsourcing has been the decrease in the number of jobs in U.S. And this is only a continuation of the process that had begun earlier with the contracting of jobs by the large companies to small suppliers. Only now the jobs are going overseas and this is hurting the chances of certain categories of Americans from getting
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