American Outsourcing: What are its Effects on the American Economy? American Outsourcing: What are i

Outsourcing happens when a company subcontracts another company to do its other business functions. This has been done by the Americans to reduce operational costs and also tap experts from other countries.

The common outsourcing functions are customer service, document management and telemarketing. Countries that are major outsourcers are India and China because they provide labor at much reduced rates. Statistics show that outsourcing is on the rise. Estimates by the McKinsey Global Institute shows that the increase can be as much as 30 to 40 percent a year for the next five years. Other studies also estimate that approximately 3 million jobs shall be moved overseas by 2015. 

Americans are starting to worry about these figures. What are the Effects of Outsourcing? It was said that the industries that shall suffer from American outsourcing should be those in the financial services and information technology. Since the labor is cheaper in other countries, companies would opt to avail of outsourcing as a cost reduction strategy.

However, this idea is making the Americans worry about the future. Does this mean that massive job losses shall occur in the future? Are there negative effects to the American economy due to outsourcing? There is no need to worry. It was said that most of the figures and statistics shown are just estimates. In reality, offshore outsourcing is very minimal compared to the size of the entire American economy. 

Moreover, although there are more jobs offered outside of the US instead of being offered internally does not mean that this has a negative effect on the American economy. More outsourcing means more companies are thriving which in turn is good for the entire economy. American outsourcing is one of the products of globalization, which have been advantages to other countries. However, the Americans need not worry that they are losing jobs, but instead look at this as a thriving business that is mutually beneficial for Americans and other countries as well.