Nature and Origins of Outsourcing
Outsourcing began in the 1980s when US companies extended their foreign operations from Asia to Central America South America and other parts of the world. .During the 80s European manufacturers also started outsourcing. Outsourcing and increased international trade was now becoming a global phenomenon. Outsourcing started after World War II because before that international trade wasn’t as developed as it is now, due to increases in technology in the years after the war, which reduced the costs of transportation and communication. Like other economic principles, nature and origins of outsourcing can be seen from different angles.
The best way to view nature and origins of outsourcing from a global point of view is its positive relationship that increases international trade. On a worldwide scale, outsourcing does not constitute a loss of jobs, rather a shifting of jobs from one country to another. When looking at the actual statistics unemployment has not increased in the US because outsourcing has increased. Along with outsourcing, follows “insourcing”. According to monetary breakdown, more goods are outsourced to the US than the US outsources to other countries. Although the US does outsource some jobs to other countries, the greatest benefactor of outsourcing is the U.S. itself
Although the subject has become the subject for headlines only quite recently, nature and origins of outsourcing has been going on for quite some time. Many service companies started creating jobs for overseas workers to gain a foothold in foreign markets. They provide their educational and technical expertise to customers where they are and conducts audits, provide consultancies wherever the customers are. Basically, they do not ask that these customers come to the States for services. Foreign markets are expanding rapidly as numerous domestic ones have become filled to capacity. Approximately 60% of the revenue of American information technology companies originates from other countries.
In various industries, from banking to consumer products, job placement to aerospace-many top firms report that their overseas sales are much more than their sales in the United States. There are innumerable reasons for companies to outsource many different jobs, but the best and most well-known and important reason is that it saves a lot of money. Most of the companies that turn to outsourcing jobs do the work for much cheaper, as they don’t have to provide additional benefits to their workers and have the least overhead expenses to pay out. Depending on the country, it may also be more affordable to outsource to companies located in different countries.
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