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The Pros and Cons of Outsourcing Jobs

Many companies large and small outsource certain types of work to workers in foreign countries. Some common examples are technical support phone lines, manufacturing, and even writing. Some of the often mentioned countries benefiting from these outsourced jobs from the US and other areas are India, China, and Mexico because they can generally offer cheaper labor. There are often debates about the benefit and drawbacks of outsourcing, from how it can save a company money to how it can hurt communities by putting many people out of work. There are several pros and cons to outsourcing labor. Here are a few:

Pros of Outsourcing

  • Keeps a company’s personnel expenses down (lower salaries, less room needed for workers in the primary business location, less paid for benefits, if any, etc.).
  • The lower employee costs give businesses a chance to spend money in other areas, such as research and development.
  • Lower wages can mean improved productivity, because more workers can be hired for the same amount of money, or less.
  • Fewer workers in the original company location means that more space there is available for other uses if needed.

There are also several common complaints about outsourcing jobs to countries with lower living wages, and the effects on residents of the company’s original towns or cities.

Cons of Outsourcing

  • Local workers lose their jobs (sometimes in large numbers, which can effect the overall economy of an area negatively).
  • Some control over employees is lost when they’re in a different location than top-tier management.
  • There are often problems with quality and communication in outsourcing work to other countries, especially when language barriers exist between those workers (such as in support positions) and a company’s target market of customers.
  • Sometimes outsourcing leads to a boycott of the company’s products or services in their home country or locale.

It’s important for companies considering outsourcing jobs to know and consider all of the potential pros and cons involved with the decision, in order to make the best choices for their company in the long haul.

3 Comments

  1. Karen Cayamanda

    Outsourcing offshore also allows companies to have access to a highly skilled workforce. The debate on the positive and negative effects of outsourcing is usually grounded on the same arguments–higher unemployment rate is the tradeoff of increasing efficiency and decreasing costs through outsourcing. The better course of action, considering the big picture of world productivity, is hard to tell and concretize. And the best thing to do, like what you said, is to choose what’s best for the company in the long-run.

  2. Jennifer Mattern

    Well, technically that first sentence is only half true. Outsourcing offshore doesn’t give a company access to a highly skilled workforce. It’s not a perk of outsourcing. You can find a highly skilled workforce at home too. The only perk in that sense is that you can get the skills at a lower cost — big difference (and not always the case).

  3. Constance Floyd

    So far as an Australian business owner, outsourcing and offshoring has worked out for me. It has been a great experience working with high skilled workers like Filipinos who can do the job for you in a lesser cost. I think if you are a small business owner you should give this a go!

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