Wednesday, August 8, 2012

The Pros and Cons of Outsourcing US Jobs to Developing Countries


Take this puzzle : The United States has a high unemployment rate at 8.2% as of June 1, 2012, and a 10 million manufacturing jobs that are still vacant to date. A survey of more than 1,300 US employers showed that about 49% of companies in the US have had problems filling in mission-critical positions. Why then are US workers not filling in those vacant job posts?

The apparent reason for this imbalance is the skills mismatch. The most in-demand jobs require technical training and experience plus multiple skills. A company in the US looking for an electrician is actually looking for an electrician with engineering background to respond to the complex nature of the projects available. And because workers in the US are not applying for the position which may be due to lack of qualification or wage issues, such positions were made open to workers from developing countries by way of outsourcing.

Many multinational companies in the United States have long been outsourcing their workforce in developing countries.

Benefits or Pros of Outsourcing

  • Cost-effective. There are many US multinational companies that are into cost-cutting choose to outsource some of their company’s functions to outsourcing companies from other countries like India, the Philippines, and China, to name a few. With outsourcing, the US multinational is able to cut their operational costs and make substantial savings for the same work done for less pay and excellent quality.
  • Generate employment and industrialization. Outsourcing not only benefits the multinational company in terms of growth and savings, but also facilitates generation of employment and industrialization. This benefits the worker and his country’s economy and development.  

Disadvantages or Cons

  • Negative impact on the US economy. By outsourcing some of the tasks and functions to developing countries, the US company is earning more and helping to develop and grow   the economy of the developing country. And it is said to have a negative impact on the US economy.
  • Imbalance in economy and policy. Outsourcing of jobs means that there are no more employees employed for the position When the employment goes down, this will create or start the discontent among the workers with their employers, in which case some talented unemployed workers might lead to immigration top other countries, draining the US of its valuable workforce.

Companies in the United States should therefore strike a balance between outsourcing to developing countries and fulfilling their duties as socially and economically responsible employers. With the race to future affluence, the only thing that will matter is talent. The skills gap that are causing the high unemployment rate in the US today will not likely close in the near future. This means companies and countries that can develop, train and retain the highest skilled talent, will come out on top.  

With the huge number of unfilled positions in the US, developing countries like the Philippines, India, or China will continue to train workers and employees with the technical knowhow and expertise on the job posts as they await for those companies with unmatched positions to outsource those positions.

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