Outsourcing - How concerned should the U.S be with...

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How concerned should the U.S. be with “outsourcing”? A comparative analysis of outsourcing concerns. Dustin Johnston Economics 480 Dr. William Green November 21, 2009 1
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How concerned should the U.S. be with “outsourcing”? The term “outsourcing” has rapidly gained a negative connotation in the business community in the United States. The American Heritage Dictionary defines outsourcing as, “The procuring of services or products, such as the parts used in manufacturing a motor vehicle, from an outside supplier or manufacturer in order to cut costs.” What this means is that outsourcing is truly anytime that one company, individual or country uses another company, individual or countries’ products or services. In the international community, the stigma over outsourcing focuses on one aspect of outsourcing called “off-shoring”. Off-shoring is the removal of businesses or jobs from ones home country and the movement of that job to another host country, where some type of advantage can be found; as opposed to on-shoring, which is the exporting of jobs to rural parts of the United States. Because of this, the term outsourcing can be thought of as and will be used interchangeably with the terms off-shoring and off-shore outsourcing. The overt concern that the average American places on outsourcing can be seen in the popularity of books such as The World is Flat by Thomas Friedman, The Tipping Point by Malcolm Gladwell, The End of Poverty by Jeffrey Sachs and Three Billion New Capitalists by Clyde Prestowitz. The unifying topic in each of these books is that the global economy was once dominated by the west, and that this dominance is slowly being whittled down in an increasingly “flat world” (Friedman, 2005). Outsourcing began gaining popularity in the early 1980s with the increasing dissemination of the world wide web and the availability of the internet (Noe, 2009, p. 9). The reason for all the controversy over off-shoring is because close to 1 million white-collar jobs have been moved from the United States to India, eastern Europe, Southeast Asia and China in the last eight years. The effects that this has had on the United States is not just the loss of these jobs, but is compounded by the loss of salary growth (Noe, 2009, p. 109). During the typical recession, salary growth in the United States is typically six to eight percent; however, over the past ten years, the average salary growth during an economic recovery has been negative one percent. To further exasperate the problem, the first decade and a half of serious outsourcing by the United States was in fairly low wage, low skill jobs to countries mostly like Mexico, China and Latin American countries (Prestoweitz, 2006, p. 246). These jobs were in the areas of copying, construction, agriculture, and were not thought of as a serious threat to the juggernaut that was the United States economy. However, for the past eight or nine years, the type of jobs that have been leaving the United States have been high pay, high knowledge base
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Outsourcing - How concerned should the U.S be with...

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