Outsourcing Has Become a Controversial

Outsourcing has become a controversial and a highly debated issue. The level and the scope of outsourcing has increased dramatically over the last few years. The cost effectiveness, competitiveness and other advantages that outsourcing offers to the companies and its effect on the U.S. economy on the whole is intertwined with implications for the local workforce. As we march into the global economy we have some conflicting decisions to make and this requires a careful consideration of both immediate facts as well as long-term implications. As for the long-term implications, embracing outsourcing is an indispensable solution particularly in the evolving global market. The cost savings enabled by outsourcing will be reinvested locally creating more jobs for the local workforce. For example the $25 million in cost savings by Delta airlines which outsourced around 1000 jobs to India helped the company create 1200 new positions within the United States. [Murray Weidenbaum]. Further, the prevailing fear that all service jobs will be outsourced is far reaching as most service industries require domestic support.

Our immediate concern however, is the loss of jobs that we see particularly in the IT and customer support sectors. It is a fact that many major American corporations are shifting their developmental facilities to offshore centers. Software giants like Oracle and Microsoft have moved part of their research and developmental facilities to Indian units. Similarly in the banking sector World Bank, ABN Amro and many others have shifted their back office and accounting operations to India. [Wharton School] Overall the effect of this is the loss of around 400,000 U.S. IT jobs to offshore locations. However, the open labor market conditions that exist in the U.S. gives a remarkable flexibility and this is reflected in the fact that every week more than a million workers either quit or get laid off and are replaced by other personnel.