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Social Effects Of Outsourcing

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Autor:   •  November 29, 2010  •  2,665 Words (11 Pages)  •  776 Views

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There is no denying that outsourcing is a major phenomenon on a massive global scale. The Information Technology field is a major contributor to global outsourcing. Outsourcing is currently a major social and political issue in the United States. At stake are thousands of jobs ranging from help desk operators to software programmers. The financial impact outsourcing has on the global economy is also a key factor.

The advancement of information technology has spurred many high tech corporations and start up companies within the last few decades. The advent of the internet opened the world to online business technology and commerce while simultaneously fueling globalization. Private companies began to appear on the internet in the nineties, contributing to the expansion of their businesses and services on the world market. The late nineties brought the dot com boom to the forefront with internet companies prospering and expanding their operations. The burst of 2000 essentially ended the boom and soured the economy, particularly in the technology sector. As time passed, companies recognized the need to cut operating costs, reduce personnel and save their resources. Hence, outsourcing came to the forefront as a way to stay competitive. Developing nations like India and China have come to light in recent years as they have a wealth of computer engineers and programmers who will work for low wages. Outsourcing has become such a common practice that it is now considered a benefit to the world economy “We know that outsourcing is a $400 billion a year industry and IT outsourcing is a vital part of the industry. A slump in IT outsourcing would mean a loss for the global economy.” (Ghimire) The world must accept that outsourcing is a major staple to the world economy.

However, with every step forward, come two steps back. Companies continue to outsource jobs overseas, leaving thousands jobless in the United States. Companies have emphasized costs cutting and profits rather than focus on the social change outsourcing has done to American Society and the economy. The era of technological outsourcing has essentially lowered the Information Technology talent significantly, as far down as the college ranks. In 2004, nationally, enrollments in computer science and computer engineering were down 23 percent that year. At MIT, the premier engineering school, enrollment in electrical engineering and computer science has fallen 33 percent in two years. (Roberts) The IT industry, particularly in the manufacturing field has suffered many job losses due to irrational outsourcing. As one of the largest industries in the U.S over the last twenty years, this has as still impacts the economy today. As the economics suffer a downturn, the effects also carry on to the families as well. We come to a point in our society where we must ask ourselves whether outsourcing’s economics and staying power is more of social importance then the moral dilemma of shipping American jobs overseas.

The standard of living in today’s modern world is without a doubt high and boisterous. The number of industrialized countries has skyrocketed in the last half century and many more countries are still developing. The information technology age of the twentieth century has literally developed the world into a connected and networking society. Outsourcing of this technology to other countries has given them an edge of completion over the U.S. and other rich nations. Many speculate on the benefits of a globalized society. The advancement of technology is the key factor in the development of the industrialized world. Computers allow industries, businesses and nations to interlink with each other to further trade through instant information. Countries are able to open their markets on the world stage and compete globally. As competition grows globally, so does the spread of technology. A Globalization and Growth study showed various developing countries around the world have shown increases quality of life by taking advantage of a globalized economy. The study shows that 24 developing countries that increased their integration into the world economy over two decades ending in the late 1990s achieved higher growth in incomes, longer life expectancy and better schooling. These countries, home to some 3 billion people, enjoyed an average 5 percent growth rate in income per capita in the 1990s compared to 2 percent in rich countries. (World Bank) However, Globalization is a force that can be attributed to the inequalities that rest in industrialized and developing nations. The distribution of income is substantially higher in developing nations, giving prudence that only white collar workers with technological expertise and education are benefiting versus blue collar workers. Increasing industries have significantly damaged environments around the world and now global warming is a worldwide issue. Poor nations are also left out and steadily declining as they are considerably persona non-grata on the world markets. The information highway has given prudence to the world economy, but is steadily heading into different directions of uncertainty--particularly in the United States.

As Information technology has vastly helped shape globalization in the modern age, the same can be said in reverse. Corporations worldwide now have the capabilities to compete internationally thanks to the advancement of technology. Today new transportation and communications technologies allow even the smallest firms to build partnerships with foreign producers to tap overseas expertise, cost savings, and markets. (Saxenian 2002) These reasons immensely contribute to the need of outsourcing overseas. Perhaps no better area that defines outsourcing is none other than the Silicon Valley. Located in Santa Clara County, California, the area is home to major worldwide technology corporations. The area has attracted foreign born researchers, engineers, programmers, etc. that have found opportunities there. The rising costs to compete globally has virtually forced many companies and businesses to ship jobs like telephone operators, manufacturing and even software engineering to countries like India who will do it at a fraction of the cost. These corporations also recruit foreign born U.S trained workers to mitigate worker costs as well. Companies looking to outsource jobsвЂ"including Microsoft and IntelвЂ"have even organized job fairs in Silicon Valley for foreign-born, US-trained tech workers willing to go back to their homelands. (Richards/Margolis, 2004) Additionally, these companies save on paying taxes because their profits are generated overseas and virtually are not taxable. Outsourcing has contributed to many corporations staying afloat globally by reducing cost at the expense of the American

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