The Role of Outsourcing in Our Global Economy

Problem Statement

In order for U.S. companies to become more competitive and efficient in the global market, some have adopted the practice of employing workers in other countries, often third world and developing nations, to reduce labor and/or technology costs. Outsourcing provides growth potential for these developing countries by boosting the money coming into the country and by providing opportunities for individual growth of its citizens. Although outsourcing to foreign countries can help to increase company revenues, decrease production costs and improve production rates, there are also costs a company must weigh when determining if this is the optimal choice. The public's perception of the company may decrease as a result of moving work overseas, as many US citizens choose to purchase only American-made products, especially during times of economic recession. This can lead to a decrease in company goodwill and negative reactions to the product brand. The company's increased revenues, however, can result in higher salaries for the retained American employee, bring in greater national profit, and can help revive or build a financially successful company. All of these issues must be considered when deciding if outsourcing to foreign countries should be adopted into a company's cultural environment.

Research Statement

The topic researched consisted of the issues surrounding the popular practice of outsourcing work to foreign countries in an attempt to determine the facts behind arguments opposing and those for this topic. Sources used to research were obtained from the University of Phoenix On-Line Library, specifically searching periodicals under the ProQuest search engine. It was noted that many recent articles had been written that support globalization and outsourcing of work to developing countries. In order to find opposing arguments on this topic, we used the peer-reviewed articles from the UOP Apollo Library Info-Trac OneFile library. Several articles that focus on the negative effects of outsourcing technological, service-oriented and manufacturing jobs were found. By reviewing the titles and abstracts of the articles, it was further determined if the articles and papers were for or against outsourcing. We further refined our search by locating articles by leading economists with more specific knowledge of the impact of globalization