Impact of Outsourcing and Suggested Solutions

in Outsourcing

A proposed solution to ease the negative impact of outsourcing in the USA and other countries.

Synopsis

In recent years, American corporations and companies of all types and sizes
have benefited from sending their work overseas to lower-cost of their
operations. It is estimated that as many as 200,000 service jobs could
be lost each year for the next 11 years.

Does this mean that to get cheaper cost of products we will allow the
exploitation of minimum wage in the USA and indirectly violate our basic
human right of deserving meaningful employment in the USA ?

Here are some impact points of outsourcing and proposed ways to address
this issue to provide much needed relief as we struggle to handle this
situation for ourselves and the next generation to come.

Outsourcing & Proposed Solution

The origin of outsourcing in America dates back to the 1970 when a major
corporation developed its IT industry in India. Somebody had figured that
instead of paying somebody $10 an hour in USA, it would so much cheaper
to pay a foreign worker less than $2 an hour so as to produce a product
that will cost much cheaper and increase profit margins to boost a company
chances to succeed. By cutting costs and increasing profits they started
the ball rolling to effectively lower the American standard of living.
The impact of this trend affects American students, who spend a fortune
to get an education in America to seek employment in America, only to find
themselves being displaced by foreign workers.

This, my friend, is perfectly legal to do and from a capitalistic vantage
point. This model is good for doing business and boost profits. This trend
will continue because the cost advantages given to the citizens are simply
hard to ignore as nobody is thinking about the long term impact on their
own lives. The damage to society, and to the economy, in the long run may
greatly outweigh the short-term benefits of outsourcing currently experienced
by businesses today.

Outsourcing in the USA. needs reform to give back to its citizens,
in another way, what they are taking away from them.

The impact points and suggested solution for outsourcing are as follows:

1. By turning a blind eye towards the impact of outsourcing,
the US government is not honoring its own policy about minimum wage. If
a worker is removed because an employer could get the same work done for
much less than the minimum wage, then the minimum wage law has been violated.
Because by not having a job this worker is now even below the wage system,
so why not just pay him the same and bring down the standard of living
in our country to the one that we are outsourcing our jobs to ? Because
having any job will be better than not having one. We know that this strategy
will not work and hence is not an option that will provide a solution to
this problem.

2. It is discouraging to know that addressing the negative impact
of outsourcing is not one of the top agenda of any political candidates
trying to woo people to vote for them into office for 2008.

3. The workers who are losing their jobs to outsourcing are being
made to train their replacement if they wish to receive any exit benefits.

4. Very soon USA will not be able to manufacture small items
such as shoes or nails because we will have killed our entire industry
one sector at a time.

5. Outsourcing is not one person's fault, it was brought into
existence because US citizens wanted to get paid high salaries but did
not believe in paying higher prices for their American made better quality
products. Instead they started to accept lower quality products at substantial
lower prices. Hence this imbalance encouraged industries to provide lower
quality products that are made overseas. The Americans did not see this
one coming, as their prudence to save money and get a good deal ended up
costing them in the long run. To feed this trend, industries started
to disband local shops to produce goods outside the country and offer lower
prices that the people were interest in paying.

6. Here is my proposed solution. Nobody seems to have presented
this as an option to the American people. The employees being outsourced
who do not have another job lined up to support themselves and their family
can seek some relief from this outsourcing situation. For every 100 jobs
that will be outsourced, corporations should be required to reserve 25
(25%) of them to allow US workers to take those jobs by being able to obtain
a work permit to the country of destination.

Not everybody will take this opportunity to pick up this position and
live in another country. But those who will be hurting the most and are
willing to try something new will be wiling to do so. This will reduce
the impact of unemployment due to outsourcing and rehabilitating
displaced workers will be much easier than having to retrain them for another
profession.

The downside of this move will be that the workers accepting such positions
to work overseas will have to accept employment at the wage rate as the
ones at the same level in the foreign country. Not a point of major concern,
I hear these IT workers are paid very handsome based on the cost of living
in that country. US companies have to write this up as part of the contract
before transferring work to their country. This will be similar to how
people from all over the world came to USA to work. Now it is time to reverse
that flow of workforce to allow people to be move where ever their job
takes them.

7. Here is another unusual way to help reduce the cost of producing
goods in the USA. A noteworthy observation of outsourcing has been
that I never hear about management in corporations that have been outsourced.
If it is about lowering the cost of operations, then those
that are demanding the highest salaries in a corporation need to be targeted
first. This is something that will give the most benefit to cost cutting
in any multi-stacked management style organization, typically seen in American
corporations. But it is no secret why this has not happened yet. Who makes
the decision to outsource and displace those who have no say in this matter,
you got it, its management. Therefore this suggestion is at least unworkable
at this time, but it is an idea to look at seriously as a corporation looks
at new ways to get leaner and shed some of its major expenses.

8. The career paths of the next generation of Americans can be
sustained by training them appropriately. Our children should not pick
professions that can put in a box and shipped abroad for processing. Hence
they need to become professionals who can provide services locally, namely
plumber, electrician, doctor, auto mechanic. You can see where this is
going. Anything that cannot be shipped overseas is what we need to do.

9. On the flip side, it has done wonders for the countries where
America has outsourced our jobs to. They have gotten to use our products
and designs. They have created a market for our products and western culture
that allows them to bring their standard of living to match ours. They
enjoy thinking like us and living our lifestyles which will automatically
encourage them to demand higher pay scales. If all this goes in the right
direction we will have raised the world standard of living in countries
where we have outsourced our work.

Pardon me for being politically incorrect but candidly truthful.
What I have presented is based on the facts that are affecting the lives
of people in the USA. If you neglect the signs of change now then it will
consume us and affect our family's future as well. So let's do something
about as it is not too late to help ourselves.

Comments

Being a capitalist economy, it has always been about making $$$, raising
profits for self gain. But, when did our corporate leaders stop caring
about the future of the American families and the generations to come?
Why we are hell bent on reducing our higher standard of living and reduce
the quality of life that we had in the USA.

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Solomon Borgawker has 1 articles online

Solomon Borgawker

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Impact of Outsourcing and Suggested Solutions

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This article was published on 2010/04/04