However, over the years, many U.S.-based companies haven't been discouraged by these additional costs because the overall costs of outsourcing with the job training session and language teaching and outplacement requirements are still far less when compared to the costs that they would have to endure when they don't outsource. If the overall costs of outsourcing was even marginally close to the costs on domestic hiring then there is a high probability that the overall right of firing of the employers would not be employed as much as it ahs been in the past. Of the negative perception of using the firing right at such an extensive level does create negative images which the company has to spend money to correct and rebuild into positive images at a constant rate (Ryan, 2004). The U.S. Tax Inducements:

One of the facts of outsourcing is the use of the tax-free off-shore accounts that allows the transfer of money from one country to another under the radar. This is one of the biggest loopholes in the U.S. policy because it allows a majority of the wealthy groups and individuals to avoid paying their rightful taxes. Also, many of the rich corporations have avoided paying taxes under the right issued by the Congress that the profits that are earned overseas can have no taxes levied on them. There would however be a 35% tax levied on the deferrals that they bring back to the U.S. This of course was again rallied by the corporations and currently they only have to pay a total of 5.25% of taxes on the deferrals that they bring in to the United States. Jeffrey (2007) writes, "Increasingly, tax evasion is facilitated by governments that lack transparency and are not prepared to counter tax abuse. With the increasing prevalence of offshore accounts in havens like the Bahamas and the Cayman Islands, the OECD's Jeffrey Owens warns of the threat that these practices pose to sovereign governments."

This particular break and loophole has also been one of the biggest reasons why many of the U.S.-based companies have chosen to outsource overseas. The decreased level and percentage of taxes allows the companies to keep almost all of the profit that they make as well as retain a majority of the revenue earned because of the decrease costs and financial investment needed in the overseas companies. Jeffrey (2007) argues that this practice has grown because: "Offshore tax evasion is not about small islands that do not impose income taxes: It is about all countries that lack transparency and that are not prepared to cooperate to counter tax abuse. These practices make it difficult for other countries to enforce their own tax laws. With globally integrated financial markets and modern communication techniques, the creation of offshore financial accounts, shell companies and the like are just a click of a mouse away."

This particular policy has lasted as long as it has because there is the fear for the American government that unless these companies are give these tax benefits then the possibility of these outsourcing companies to create job opportunities and increase investment within the U.S. could decrease considerably which could pose serious hurdles for the economic growth of the country. He concludes, "Growing demand in recent years, the demand for offshore facilities has expanded considerably, owing to the high growth rates of cross-border investment and to the increased number of wealthy and not-so-wealthy individuals who are prepared to use the new technological and communication infrastructures to go offshore. There is also a growing use of multiple layers of transactions to structure offshore operations through vehicles located in different countries. The gradual relaxation of reserve requirements, interest rate controls and capital controls in the main "onshore" markets and the creation of offshore banking facilities in some of the main industrial countries (the United States and Japan) have reduced the regulatory advantages of offshore financial centers, making them less attractive for conventional banking."

Technological Change:

The introduction of Internet and simultaneous growth of the it industry have allowed outsourcing to be a much easier task then it has ever been before. The internet has removed all time and space barriers that previously posed hurdles for outsourcing to be conducted on a large scale. The practicability of overseas outsourcing is far more financially beneficial for the companies then domestic outsourcing or hiring. Perhaps the biggest exploiter of this technological change was Enron. David...

paid no income taxes in four of the last five years, using almost 900 subsidiaries in tax-haven countries and other techniques, an analysis of its financial reports to shareholders shows. It was also eligible for $382 million in tax refunds from the Treasury." He further writes, "The company used strategies common among U.S. businesses to avoid taxes. It also used some unusual methods, including the creation of 881 subsidiaries abroad, including 692 in the Cayman Islands, 119 in the Turks and Caicos, 43 in Mauritius and eight in Bermuda. Two Enron subsidiaries have been accused by a group of insurers of engaging in sham transactions in a tax haven, according to court papers in a New York lawsuit. Enron is by no means alone in not paying income taxes. A small but growing percentage of large U.S. companies pay no income taxes, a study by Citizens for Tax Justice showed in October 2000. The study of half the Fortune 500 companies found that 24 owed no tax in 1998, up from 13 in 1997 and 16 in 1996."
The geographic or topographic hindrances are no longer an issue because of the transfer of cooperative technical information or infrastructure through the software available on the Internet. Furthermore, the high level of dependency on the it tools and the internet has forced all of the companies in this world to invest in this sector and expand it in order to compete effectively. This dependence and investment has allowed the companies to advance to such an extent that the overseas outsourcing has become a very real option for most of the wealthy multinational corporations (Ron and Anil, 2005).

Both the private and public sectors have incorporated the use of Internet in their structures which has allowed the flow and ebb of businesses over the Internet a lot more common and popular. This has been a great advocate of the division of work and hence allowing the companies to outsource on a much larger spectrum then before. This is so because the incorporation and dependence on Internet on such a large basis has promoted the concept of modularization of the overall work (Ron and Anil, 2005).

Furthermore, the high level of technological advancements have made it easier for companies to settle down in areas where the weather or the topography might not have suited them before. For example, companies are now building industries and opening franchises in the deserts of UAE because now they have the infrastructure to do so and control the internal environment of the company with the high-tech modern machineries and tools that are available to them (Ron and Anil, 2005).

The forms of taxation

In much of the developing world, the tax burden is primarily shared by individuals. Corporation's share in the total taxes is minimal. This provides shareholders of large corporations a great inventive to shift all kinds of business operations to these countries. The developed world, in order to offset this change has begun to follow this trend as well. As David (2003) writes, "Investigations and prosecutions of suspected tax criminals have fallen by half over the last decade, even as cheating has grown. New data also show a continuing shift of tax burdens away from businesses and onto individuals. Last year, corporations paid 10.5% of all the taxes collected by the Internal Revenue Service, down from 16.4% in 1973. "

While the share of corporate profits has increased in the last three and a half decades, their share in the national tax has witnessed a steep decline. Similarly individuals have been sharing the burden of the taxes. Since 1973, corporate income taxes have risen 75% as fast as corporate profits. As David (2003) writes, "By contrast, individuals' income taxes rose 21% faster than adjusted gross incomes. Social Security taxes, which apply to the first $87,000 of pay, together with Medicare taxes, grew 82% faster than incomes."

Those prosecuting the law and ensuring that tax frauds are minimized, feel that corporate laws have become increasingly complex and difficult to understand. David (2003) further writes, "The opposite was true for corporations. Their effective income tax rates fell to 25.8% in 1999, from 32.4% in 1973, a decline of nearly 7 cents on the dollar. That decline was concentrated among the largest corporations. Corporate profits are officially taxed at 35 cents on the dollar, but the 10,000 largest companies actually pay only about 20 cents of tax on each dollar of profit. Most of the tax savings, academic studies and Senate Finance Committee reports show,…