Pfluger 1

Richard Pfluger
Prof. Huffstutter
English 101-10
19 December 2013
The Future of America: Outsourcing
Americas economy is constantly becoming more global and interconnected with other
nations. This has provided the US an opportunity to expand and become more powerful. While
the US has evolved over time through war and cultural change, the biggest way the country has
expanded is through outsourcing. According to Dictionary.com, outsourcing is the ability to
purchase (goods) or subcontract (services) from an outside supplier or source. Some
outsourcing examples include making clothing in factories in Indonesia or providing customer
service through call centers in India. Successful outsourcing benefits both the consumer and the
business, as well as the country the work is being outsourced to. The United States should
continue to outsource products and services to other countries because it allows for lower costs,
it provides an opportunity for companies to become global, and it benefits developing nations.
While the most common form of outsourcing is making products in foreign factories,
other forms such as providing customer service and research and development have grown to be
popular. Outsourcing took off and became popular because of the North American Free Trade
Agreement (NAFTA) which was signed in 1993. NAFTA eliminated trade barriers, allowing
cheaper goods in the US and more job opportunities in other countries; it was a win-win
situation. Companies outsource because it helps them gain access to foreign markets with lower
labor costs and they can provide 24/7 customer service to consumers. In turn, the companies
become more competitive and can offer low prices.

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The biggest reason why the US should continue to outsource is because it allows for
lower costs to both the consumer and the business. Americans are always searching for the best
deal, which is often the lowest price. If jobs were kept in the US, prices would be so high that
many Americans would not be able to afford many products. According to Sujata Srinivasan, a
Manchester-based freelance journalist, says that this would eliminate the middle class and create
a class division. This class division would create two distinct classes: lower and upper. There
would be tension among these two classes because there would be a big gap between the social
levels of the classes. This class division would not only affect the US, but also other countries
who depend on the US for trade and economic support.
Low prices not only benefit consumers, but also benefit businesses. When a business
outsources, they are able to produce products at a lower cost. This driving idea of lowering costs
is based off the idea of competition and producing more products for less money. If company
A offers the same product as company B but they do not outsource like company B does,
their product will be more expensive and consumers will choose to buy the product from
company B. When a company chooses not to outsource and they lose consumers, they risk
their company going out of business. Therefore, businesses need to produce more products for
less money. Lowering the cost of a product also helps the business profit more and leaves more
room for error. If there was a mistake making a product, providing a service, etc., the company
will have more money to fix the mistake. If the company did not outsource, they would not have
as much room for error and would consequently be facing greater risks.
The most common way to produce products at a low cost is by taking advantage of wages
that are lower in other countries. Most of these workers are still working at a middle class level.
In many countries, factory jobs are considered to be good jobs with a decent salary. Even if these

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jobs were in the US, most Americans would not want them. Costs are also often lower because
other countries are making products in mass quantities. When a product is made in a large
quantity, the materials are bought in bulk at a cheap price. This lowers the cost, providing more
profit and room for error to the company. There are also very limited restrictions on building
codes and benefits which saves the company money. Companies often will also avoid taxes to
profit and help make the products cheaper for Americans. In general, Americans prefer to have
cheap prices over a good quality product. Providing a product at a cheaper price not only makes
the company more competitive, but they also globalize and become larger.
Outsourcing has provided an opportunity for companies to globalize and enter a global
market. Ed Ashley, a strategy expert with over 25 years of experience in senior management,
says that this global market enables the business to offer more products and services throughout
different locations of the world (34), essentially expanding their business into a multinational
corporation. Some of the most successful companies in todays economy are multinational
corporations. A common way that a company will transform into one of these successful
corporations is by offering 24/7 customer service. Not only does this help the customers by
offering them customer service when they need it, but it also helps the company offer jobs to the
outsourced countries. This helps the outsourced countrys economy and allows the company to
build a relationship with them. Murray Weidenbaum, honorary chairman for Washington
Universitys Center on the Economy, says that after these countries are outsourced to, they will
often invest in the USs economy (33). They will do this by buying their product and help make
factories. The most important continent to build a relationship with is Asia. According to
Matthew Wade, building relationships is crucial to our engagement with Asia in the 21st
century. He says that most businesses choose to locate and outsource in Asia because of the

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cheap labor. Businesses who choose to outsource to Asia will be considerably more successful
than those who do not (Wade).
When a business outsources to Asia or another country, they are handing off the risk to
another organization. There are three risks a business will always face: operational, financial, and
managerial (Ashley 33). There is always the risk that a business will not have productive
operations and they will fail to meet the quota in order maintain a profit. When they face
operational risks, they face financial risks. A company risks spending money in unnecessary
places which can lead a business going bankrupt. If a company faces operational and financial
risks, the managers are the ones to blame. A manager should lead a group of people toward a
common goal. If this common goal is not met, the manager is the one at fault. By handing these
risks off to a third party, the business has less to worry about and can focus on other ways to
maximize profit. Once a company hands off their risks and enters the global market, they become
far more competitive and successful.
Not only are there many advantages to the company that is choosing to outsource, but
there are also many benefits to the countries in which the outsourcing is taking place. One of the
biggest benefits that outsourcing brings to developing nations is capital gain. This is a win-win
situation for both countries because the developing country gets jobs and the home country gets
cheaper products. According to Steven Horwitz, an economics professor at St. Lawrence
University, companies are able to provide more jobs in developing nations than jobs in the US
because of the cheaper wages (149). While many Americans would consider these jobs to be
low class, they are among the best jobs in other countries (Griswold and Buss 50). Contrary to
popular belief, factory jobs are not the only jobs added to the countrys economy. With any
company, there are workers who manage the lower workers (in this case, factory workers). These

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managers often have worked for the same company, working their way up from their old job as a
factory worker. This shows that there is a wide variety of jobs in developing countries and that
outsourcing does in fact bring more than just factory jobs to the economy. Since the workers are
getting paid more, they are also able to buy more from their community which also helps the
economy.
As well as bringing jobs to the economy, a corporation will bring capital gain to the
country by investing in the countrys technology and equipment (Horwitz 149). Companies will
choose to buy machines and material from the outsourcing country directly. This allows the
corporation to invest in small and local businesses, resulting in economic gain for the country. It
is also significantly cheaper than shipping machines and materials across the ocean because
shipping costs have risen dramatically. As well as the significant cost to it, it also takes time for
the material to come. The time it would take for a product to appear on the shelves would be
doubled because the material would have to be shipped to the factory and then later sent back to
the US. This is one example of how a business builds relationships with other countries and
globalizes. Despite the many positives to globalization and outsourcing, there are also negatives.
One of the biggest issues related to outsourcing is quality problems. The quality of a
product is important to the consumer because if it is too cheap, it will be less reliable and more
likely to break. If this happens frequently, consumers are more likely to buy the product from
another company. Therefore, it is essential that a business has a reliable product. Unfortunately,
the better quality a product is, the more expensive it is. Brendan Koerner, an editor for Wired and
a columnist for Slate, says the cheaper the labor is, the more of a problem quality becomes.
There needs to be a fine balance among both quality and labor prices in order for a business to
retain a profit. To do this, many factories will out work that the original company gave to them,

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outsourcing the work even further. The original factory will give the design of the product to
factory B who may give it to C who gives it to D, etc. This long line of factories leads to
improper training, bad product quality, and greater odds of theft. Most of the time only the
original factory is trained by the company that is outsourcing; all of the other factories are trained
by each other. This leads to miscommunication between the factories with the workers being
trained improperly. Since each factorys goal is to retain a profit, they keep a percentage of the
money they are given. This leads to the quality lessening more and more with each factory the
product is outsourced too. The odds of theft also increase because workers are getting paid less
and less and they need to find a way to support their families. Since the work is contracted
among many factories, there is a long wait until the final product arrives at the original business.
There is also a long wait because it takes a long time to set up a factory. Not only is there
a physical factory to build, but it takes a long time to organize the managers and train the
workers. Susan Helper, professor of economics at Case Western Reserve University, says that
setting up a factory requires long distance trips for corporate. Not only is this expensive, but it
takes up time that could have been used to introduce the product in the market back home. Since
there is a long supply chain, there is also a long wait for the product to come overseas. It can take
months for a product to finally reach its destination because of the handoff time (Helper). The
company will only make money if the product is sold, so long supply chains put more risk on the
company because it takes longer to earn money. Many companies ignore these additional costs
and time in order to convince investors that they are serious about reducing costs. Dave Curran,
president of the Union of Students in Ireland, says that unfortunately when companies talk with
investors, they only talk about the benefits of investing in developing nations; they dont bring
up the negatives. Curran says that poor countries cannot simply trade their way out of poverty

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and expect to be competing with large nations that have a strong economy. There is no single
solution that will bring a country out of poverty. While a country cant just outsource and expect
to be out of poverty, outsourcing is a step in the right direction. Outsourcing brings capital gain
to a country, makes new jobs, and brings investment in the countrys economy. Despite the
negatives to outsourcing, the positives far outweigh them.
The US should continue to outsource products and services to other countries because it
allows for lower costs, it provides an opportunity for companies to become global, and it benefits
developing nations. Outsourcing has been growing and benefiting the US since NAFTA was
signed in 1993. If outsourcing was not effective and efficient, it would not be around today.
Americans want to have cheap products and services even if it comes at the expense of other
people and countries. The biggest issue with outsourcing is quality problems. Americans will
turn to another company if the product is too cheap of quality or too expensive. Therefore, there
needs to be a fine balance among both quality and cheap labor. As the world continues to
globalize, outsourcing will be necessary to keep businesses thriving. If a business is not
competitive and not offering their product cheaper than the competition, then they will go out of
business. Outsourcing also opens up the economy for the country to become global and
interconnected with other nations. This allows for free trade rather than having a tightly regulated
economy. Because of the many positives to outsourcing, the US should continue to outsource. If
they do, they will continue to be a competing country in todays ever-expanding global economy.

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Works Cited
Ashley, Ed. Outsourcing for Dummies. Indianapolis, IN: Wiley Publishing, Inc, 2008. Print.
Curran, Dave. "Globalization Does Not Benefit Developing Nations." Globalization. Ed. Louise
I. Gerdes. San Diego: Greenhaven Press, 2006. Opposing Viewpoints. Rpt. from "Rigged
Rules and Diminished Progress: The Failure of Globalisation." Indymedia Ireland. 2004.
Opposing Viewpoints in Context. Web. 9 Dec. 2013.
Griswold, Daniel T., and Dale D. Buss. "Offshore Outsourcing Has Many Economic Benefits."
Outsourcing. Ed. David M. Haugen. Detroit: Greenhaven Press, 2009. Opposing
Viewpoints. Rpt. from "Outsourcing Benefits Michigan Economy and Taxpayers."
Mackinac Center for Public Policy Brief (16 Sept. 2004). Opposing Viewpoints in
Context. Web. 22 Nov. 2013.
Helper, Susan. "Outsourcing Has Contributed to the Loss of Manufacturing Jobs."Does
Outsourcing Harm America? Ed. Katherine Read Dunbar. Detroit: Greenhaven Press,
2006. At Issue. Rpt. from "The High Road for U.S. Manufacturing." Issues in Science &
Technology 25 (Winter 2009): 39-45. Opposing Viewpoints in Context. Web. 6 Dec. 2013.
Horwitz, Steven. "Globalization Benefits Developing Nations." Globalization. Ed. Louise I.
Gerdes. San Diego: Greenhaven Press, 2006. Opposing Viewpoints. Rpt. from "Free
Trade and the Climb out of Poverty." The Freeman (Mar. 2005). Opposing Viewpoints in
Context. Web. 22 Nov. 2013.
Koerner, Brendan I. "Returning Manufacturing Jobs Will Strengthen US Economy."What Is the
Future of the US Economy? Ed. Ronald D. Lankford, Jr. Detroit: Greenhaven Press,
2013. At Issue. Rpt. from "Coming Home: In a Radical Departure, Many Businesses Are
Discovering That Manufacturing Their Products Onshore Rather than Abroad Is More
EfficientAnd Cheaper." Saturday Evening Post 283.5 (Oct. 2011). Opposing
Viewpoints in Context. Web. 6 Dec. 2013.
Outsourcing. Dictionary.com. Dictionary.com, n.d. Web. 24 Nov 2013.
Srinivasan, Sujata. "The Other Side of Outsourcing." Hartford Courant (Hartford, CT). Aug. 15
2004: 1+. SIRS Issues Researcher. Web. 3 Dec 2013.
Wade, Matthew. "The up side of outsourcing." Sydney Morning Herald [Sydney, Australia] 12
Jan. 2013: 8. Opposing Viewpoints in Context. Web. 22 Nov. 2013.
Weidenbaum, Murray. "Outsourcing: Pros And Cons." Executive Speeches 19.1 (2004): 32-37.
Academic Search Complete. Web. 22 Nov. 2013.