An analysis of the failing economics of international technology job markets in "Is OffshoreOutsourcingWorth the Loss of Its Jobs?" by KarenGugliemo in 2007"Tech Target--CIO".
Abstract This paper explains that the basis of Gugliemo's article 'Is OffshoreOutsourcingWorth the Loss of Its Jobs?' reflects the growing economic disparity that is occurring at the domestic level in the United States and in Canada. The author points out that her research indicates the growing exponential rate of American and Canadian jobs that are being exported over to third world countries have greatly lowered wage rates, threatening the middle class in North America. The paper relates that another factor is the policy making-leverage that America wields over most third world countries supplying technology job markets in the global market. The author underscores that, since many of these jobs are being provided to economically impoverished countries, there is a marked disadvantage not only to the workers being exploited in these countries but also to the workers on the North American continent. This paper includes long quotations.
Table of Contents:
Summary
Discussion
Analysis and Critique
From the Paper "In Gugliemo's article, the issue of a vanishing middle class is a dangerous idea for native North American technology workers. When companies continually find that they can outsource jobs without government regulation, the country will find itself in a crisis. While the rich get richer, and the poor get poorer, where does the middle class go? Certainly, they would find themselves in the majority of the poor, which can constitute a real danger of stability in the country. Throughout history when the middle class is a missing link between the rich and the poor, civil strife will most likely ensue."
Abstract The paper provides an overview of recent research on the economic and labor impact of offshoring IT services to low-cost destinations. The research identifies key determinants, recent trends, occupations affected, magnitude, and benefits of offshoring to the U.S economy. The analysis indicates that the current wave of offshoring involves IT services threatens mainly white-collar occupations in the low-income group, but is counterbalanced by job creation in the high-income sectors. The research argues that the jobs lost to offshoring are a negligible percentage; on the other hand, the reduction in costs of IT services due to offshoring will increase labor productivity, job creation, boost Gross Domestic Product, and further strengthen the U.S. economy.
Table of Contents
Abstract
1 Background
2 Definition of Terms
3 Determinants of OffshoreOutsourcing 4 Outsourcing and Productivity
5 Protectionist Measures
6 Conclusion
References
From the Paper "Traditionally, cost reduction has been the overwhelming motivation and perceived payback for outsourcing. While offshore outsourcing is not new (companies have been offshoring manufacturing for many years and reaping significant cost and productivity improvements), the offshoring of business processes is still in its infancy. In the past, outsourcing has often been used tactically, as a rapid and often short-term solution to a particular need or problem, which did not form part of an overall business strategy. The experience of manufacturing illustrated that when it is possible to do things cheaper elsewhere in the world, the work will migrate there. With the relentless pursuit of the lowest global costs, offshoring is getting institutionalized in many companies. So much that firms might resort to a strategic use of outsourcing by working with one or more suppliers in order to effect a significant improvement in business performance. This enables the firm to focus on those products that lie closest to the company's core capability set and consider jettisoning the rest. "
Abstract In this article, the writer introduces, discusses and analyzes the topic of the American business practice of outsourcingjobsoffshore. Specifically, the writer discusses the cause and effect of this practice on the American economy, labor force, customer service, etc. The writer points out that outsourcing a variety of American jobs overseas has become common practice and that the cause of this practice is clear. The writer then explains that American wages are higher than offshore wages, and outsourcing, therefore, saves American companies money. The writer notes that the effects, however, are beginning to be noticed in a wide area, from customer service to jobloss. The writer argues that outsourcing overseas may save companies money, but in the end, it places them in a negative light and indicates their lack of interest in protecting and enhancing America and the American economy.
From the Paper "Outsourcing has really taken off in the last few years. Thousands of American businesses routinely outsource customer service and other jobs to outsourcers in India, China, Russia, and other foreign companies. CBS News reports, "The U.S. government does not keep track of how many American jobs have gone overseas, but there are estimates that in just the last three years, as many as 400,000 jobs have gone to places like China, Russia, and India". In fact, outsourcing is on the rise, and it looks as if that trend will continue. Another expert notes, "The number of service sector jobs moving overseas is expected to reach 588,000 by 2005, up from 100,000 in 2000". This shift of jobs to overseas locations can create several negative affects to the country in a number of areas."
Abstract This paper examines how outsourcing to India can be very lucrative due to significant cost savings and many other beneficial factors surrounding the Indian software market. It discusses offshoreoutsourcing through a review of the article, "Inside Outsourcing in India", by Stephanie Overby. It examines how, in the article, two experienced entrepreneurs share their lessons and discuss the advantages and disadvantages of Indian outsourcing. This paper also explores the history and future of offshoreoutsourcing, as well as how to successfully plan, implement, and manage such a relationship.
Outline
Executive Summary
Introduction
History
Advantages of OffshoreOutsourcing Disadvantages of OffshoreOutsourcing Planning the Outsourcing Relationship
Implementing the Outsourcing Relationship
Managing in an Outsourcing Relationship
Current Affairs
Future
Conclusion and Recommendations
From the Paper "It is important to remember that outsourcing does not shift all responsibilities to service organizations. When stockholders, government agencies, customers and vendors demand answers to key questions, you can bet that they will not stop with the outsource service organization. In fact, most legal and fiduciary responsibilities cannot be shifted at all. The bottom line is this, when there is a serious problem, key questions to be answered, or operational shortfalls, the responsibility resides with management and not the service organization."
Abstract The paper looks at research that shows how the vast majority of joblosses do not involve the foreign relocation of work at all. The paper addresses the positive effects of outsourcing, including the creation of additional domestic jobs and its benefits to international trade. The paper provides a case study analysis regarding outsourcing in India and concludes that outsourcing is likely to be a good thing for the U.S. economy and for international trade.
Outline:
Introduction
Reasons for Outsourcing Actual Rate of JobLoss Attributable to Outsourcing Positive Domestic Effects of Outsourcing Benefits to International Trade
Outsourcing Case Study in India
Conclusion
From the Paper "In the past few years the United States economy has emerged as a growing economy, dramatically and irreversibly impacting the global market. One of the most significant impacts of this growing economy lies in the area of outsourcing to foreign countries. The United States government and large corporations view outsourcing as a method of enabling international trade to prosper and allowing industries to grow. This economy has an international impact in regard to the recent trend in outsourcing and off-shoring; many domestic headquartered companies are now turning to outsourcing manufacturing and production to drive down costs."
Abstract An opinion paper which argues that offshoring is not the problem with the American job market. The writer claims that CEOs in companies have only one interest in mind--to inflate the company's profit and not to increase wages when due. The writer argues that outsourcingjobs off American soil is not the cause of the job market crisis, but it is rather the fact that wages are too high in America.
From the Paper "Statistics indicate that offshoring does not substantially affect American jobs. According to the Department of Labor Statistics (US Department of Labor [DOL], 2004a) over the past twenty four years information jobs and manufacturing jobs are the only sectors that have had a net loss in jobs, and if you look further back in the data you would see that manufacturing jobs have had a turbulent cycle of boom and bust since 1939. Even with the job losses the hourly rate of manufacturing employees has steadily risen since records have been taken."
Abstract This paper discusses what motivates Western companies to outsource and includes the effects it has on the American job market. The paper also makes the rather bold claim that, while outsourcing has denied jobs to experienced workers in the United States, much evidence proves the practice indirectly produces more jobs at home. The paper contends that the willingness of overseas workers to accept significantly lower wages challenges local companies to consider the extent of their obligation to employees.
From the Paper "In a significant report by Gartner, Inc., the leading provider of research and analysis on the global Information Technology industry, one out of every ten jobs in American software industry by the end of 2004 will completely move to low-cost emerging markets like India, China and Russia since United States companies have moved to cut costs. In recent years companies have acknowledged off shoring as a viable, long-term, cost-effective means to staying competitive in the global market. In the article, "More tech jobs going overseas. Trend is hurting U.S. programmers," the consulting firm Cap Gemini Ernst & Young reports, "an average computer programmer in India costs $20 per hour in wages and benefits, while an American with a comparable degree and experience costs $65 per hour." In an article by Amit Asaravala, titled, "Biz Panel Touts 'Offshoring,'" the Forrester Research Group, an independent technology research company that provides advice about technology's impact on business, reports that by 2015, "$136 billion in wages will shift to overseas workers" who are willing to accept far lower salaries than U.S. workers. The willingness of overseas workers to accept significantly lower wages challenges companies to consider what extent their obligation is to employees."
Abstract This paper discusses why outsourcing helps and protectionism hurts the United States' economy. It provides an overview of a series of articles and research papers which discuss the impact of offshoreoutsourcing on the American economy. It analyzes whether it is ultimately better for America to be challenged competitively or if it is more prudent to protect American industries.
Table of Contents:
Summary
OffshoreOutsourcing Has Become the Political Football of Choice
OffshoreOutsourcing Hits Iowans Hard
Evaluating Lou Dobbs' Commentaries on OffshoreOutsourcing Making American Manufacturing Lean: A Perspective
Conclusion
From the Paper "Instead, the author takes the approach of looking at the concepts of lean manufacturing as the true point of differentiation and long-term growth of American manufacturing. Link (2006) argues that efficiency and cost reduction through lean manufacturing techniques can actually forestall or even stop the outsourcing of jobs en masse. The other side of this argument however is that many Indian outsourcing companies including HCL, Infosys, Tata and others can deliver a 40% reduction in the costs of doing a complex task or process, which would ironically alleviate the pressure on companies to outsource their core business. The author tends to applaud the Toyota Production System too often, and could have made the entire article stronger by showing the ironies of Toyota themselves doing much of their outsourcing work on non-strategic parts of their business so they could focus on the core aspects of next generation auto development."
Abstract The paper details the many advantages and disadvantages of outsourcing American jobs. The paper contends that there is a balance American companies need to strike between giving away their autonomy for the sake of gaining greater expertise and insight, and the offloading of non-critical and often routine tasks. The paper emphasizes that offloading non-essential tasks is important, yet retaining control over their quality is just as critical.
Outline:
Introduction
Effects of Outsourcing on American Jobs Summary
From the Paper "For any company or industry to remain competitive, it must focus on its core strengths, and given the turbulent economic and political climate globally, the ability to consistently and intensely focus on ones' core strengths can mean the difference between survival or not. The debate rages on relative to the effects of outsourcing on the American economy and workforce. Supporters contend that outsourcing gives their companies the ability to focus on their core strengths by offloading non-critical and routine tasks (Travis, Meunier, 2004) (Travis, 2003). Additionally there are the cost advantages (Survey: Virtual Champions, 2006) and the ability to gain access to expertise at a lower cost than hiring a comparable expert as a full-time employee (Survey: Virtual Champions, 2006) and (Travis, 2003)."
Abstract The paper discusses how many companies are lowering their costs by using offshoreoutsourced resources on a project-by-project basis. The paper explains that companies who are getting the best results from outsourcing are following three major strategies: saving money without impacting strategic direction, accessing specific skill sets of the outsourcers and selectively hiring the talent needed on a per-project basis. The paper provides a summary of the advantages and disadvantages of outsourcing.
Outline:
Executive Summary
How Companies Are Making IT Outsourcing Work
Advantages and Disadvantages of Outsourcing
From the Paper "All companies are asking their IT departments to reduce IT costs and head count, and this is hitting IT departments the hardest. Yet as the research in this paper shows, the majority of jobs being outsourced are those that deal with repetitive, mundane and easily replaceable processes. These areas of any company are ripe with cost reduction strategies. The Draconian notion of trimming all IT costs is unrealistic; rather the focus on fine-tuning strategic benefits is critical. These mundane and easily automated (and therefore outsourced) tasks account for 19% of the IT budget by many industry sources, making them an attractive target for cost savings."
Abstract This study looks at the outsourcing of American jobs and how this is affecting the workers in America. There are many serious effects on the country, both positive and negative, that are related to the fact that many jobs are being outsourced, but there is also the issue of what the media wants individuals to believe about outsourcing and what it really accurate. Dispelling the myth that outsourcing is nothing but dangerous and problematic is also important. The study uses qualitative methods to show that outsourcing can be good for the economy and for the country, although not necessarily for the specific workers. Some may find better jobs, but many others do not, and therefore there are both pros and cons to the issue of outsourcing American jobs to other countries. The explains that why companies do this varies based on the company, but the main reasons appear to be profit margins and the ability to high more highly-skilled workers in America with the money that the company saves by sending the lower-skilled jobs overseas.
Outline:
Chapter One: Introduction
Problem Statement
Purpose of the Study
Importance of the Study
Scope of the Study
Rationale of the Study
Definition of Terms
Overview of the Study
Chapter Two: Review of Related Literature
Chapter Three: Methodology
Approach
Data Gathering Method
Database of the Study
Validity of Data
Originality and Limitations of Data
Summary of Chapter Three
Chapter Four: Data Analysis
Chapter Five: Summary, Conclusions, and Recommendations
Bibliography
From the Paper "The plight of the American worker is something that has been lamented throughout history for various reasons. Some of these reasons were really more significant than others, and some of the reasons were simply complaints that the workers felt that they could get away with. However, outsourcing is somewhat different than just a workers' complaint. The reason behind this is that outsourcing affects so many different people for various reasons. From the poorly-skilled immigrant that is desperate for a job to the corporate executive that loses his job because there is no longer anyone for him to supervise, outsourcing can affect almost everyone.
The issue of outsourcing is one that has been misunderstood for many years. There are individuals that study it and discuss how significant it is, and there are others that see it as some kind of made-up problem that is really not important enough to focus on. Both of these are valid points of view but, in recent years, it has generally been accepted that outsourcing is problematic for many American workers today, and that the study of it is important. Unlike standard business problems, such as issues with profits or employee morale, outsourcing is not something that can be 'cured' by making some adjustments to the business as it is understood in the traditional sense. It affects so many people that there is a real issue of what it is doing to the country as a whole."
Abstract Information technology (IT) jobs are amongst those most frequently being outsourced to other countries, especially to third world nations. There is a complex set of reasons behind the outsourcing of these jobs that cannot easily be dissected. This research attempts to simplify the overall picture of IT outsourcing, and to project the future of outsourcing of IT jobs in America.
Outline:
Introduction
Literature Review
Information Technology
Corporate Reform
Globalization and Outsourcing Government Outsourcing
From the Paper "Economically, when the state and federal governments are outsourcing IT jobs to India, and other third world nations, the predicted result is that those nations will see an increase in education and training for IT and IT related jobs. That the outsourced jobs will serve to jumpstart industries, employment and growth in a third world country. That this growth, especially in a field that will continue to experience growth such information technology, will serve as an economic stabilizer for the country where those jobs are outsourced to. That this economic stabilizer will serve America well in economically linking that nation to America, creating a political cohesion that will replace economically what has long been established militarily as an ally between nations. This will bring the third world nation into the work market and global community with strong ties to the United States, and it would, from a political perspective, follow that those nations would be supportive of US initiatives on the world front in matters of economic and strategic importance to the United States".
Abstract This paper examines outsourcing and explores the business rationale, the concept of comparative advantage and the pros and cons of this process. The paper addresses outsourcing as a political issue.
From the Paper "According to an article in "Economist" outsourcing to other countries has become a hot political issue in America. President George Bush's chief economic adviser told Congress in January that if a product could be produced more cheaply abroad, Americans were better off importing the product than producing it at home. This is the essence of the law of comparative advantage. Although America's economy has lost jobs since the start of the decade, the vast majority of these job losses are cyclical in nature not structural."
Tags:Outsourcing, overseas, IT jobs, US economy, cost, benefit, comparative advantage, cost cutting, efficiency, unemployment
Abstract The paper presents an overview of the outsourcing controversy. The paper describes important research reports on this topic and evaluates their accuracy.
From the Paper "Outsourcing is a term applied to a variety of practices that in essence mean that entities external to a firm contract to perform functions that otherwise a firm's employees performed. When the issue of outsourcing first became a public issue in the United States two decades ago, the concern was that corporations were transferring in-house jobs to independent contractors who would hire lower wage and benefit employees to do the work of company employees under union contract."
This paper is a complete quantitative research project, with an extensive literature review, that explores the impact of outsourcing on the American worker and the American economy.
Abstract This paper explains that the study investigates the impact of outsourcing specifically on white collar workers in the high-tech industry, who are increasingly becoming more affected by the phenomenon of offshoreoutsourcing. The author reports that the methodology for the study was a questionnaire, using a 7 point Likert scale, which was sent to 65 randomly selected computer programmers employed in the U.S. at Microsoft, Cisco and Apple. The paper indicated that the quantitative research and the literature review conclude that outsourcing is a serious issue, which impacts American workers and the American economy; however, it is clear that the practice of outsourcing is here to stay. The paper includes the questionnaire and many quotations, tables, figures and graphs.
Table of Contents:
Introduction
Context of the Problem
Statement of the Problem
Research Questions
Significance of the Study
Limitations of the Study
Review of the Literature
Globalization
Politics of OffshoreOutsourcing Trends in OffshoreOutsourcing Most Popular Countries for OffshoreOutsourcing Impact of OffshoreOutsourcing on the American Worker
Impact of OffshoreOutsourcing on White-Collar American Workers
The Impact of Outsourcing on the American Economy
Security and Cultural Barriers Associated with OffshoreOutsourcing The Future of offshoreOutsourcing Methodology
Methodology Overview
Methodology Survey
Subject Population
Data Collection
Organization of the Study
Results
Discussion, Conclusion, Implications
Appendix
Survey
Letter Sent to the Appropriate Managerial Personnel
Low Labor Cost Chart
Number of U.S. Service Sector Jobs Projected to Shift Offshore Share of Projected American Jobs Moving Offshore Workers Displaced From and Reemployed in Full-Time Wage and Salary Jobs Hourly Compensation Costs
Hourly Compensation Costs for Production Workers
Employment Cost Index
Employer Cost for Employee Compensation
From the Paper "The literature review asserts that a great deal of the focus on outsourcing began as a purely political issue. The literature review indicates that politicians used the slowdown in the labor market, to assert that the cause of the slowdown was offshore outsourcing. The literature review also found that many major media outlets had many reports on the topic of outsourcing, which may have distorted the true facts concerning the nature of outsourcing on workers and the economy. On the other hand, many years after that election, offshore outsourcing seems to be an issue for many American workers."
