Question

Do you feel that outsourcing by MNC’s improves the household buying power of the host country while increasing jobs that were lost?

Also example of increasing jobs, and decreasing employment ?

Answer 1

There are positives and negatives for everything we do. Similarly, Outsourcing has also its critics all of the developed countries. Critics believed that outsourcing from developing countries or countries with lower wage rates results in the degradation of the standards of the goods and services an American supposed to have due to the lower standards of the outsourcing country. Further, they believe that the U.S will not outsource from those countries because they are not meeting the standards set up by the government of the U.S.

Outsourcing from developing countries could help a lot in growing their G.D.P of their country. Thousands of jobs will be created in the host country. Women will be empowered, Production capacity and growth will be seen in from macro to micro industries, small business to farmers. Today the US is enjoying the top spot in the global market due to outsourcing only. Hiring from the countries where there are lower-wage per hour results in very lower services costs. Further, procuring sub-assemblies/ items which they need for very lower labor cost results in the production of the item at comparatively lower prices and exporting them globally resulting in huge capital profits for the company. If a company in the country is doing well it very benefits for the country, it brings revenue in terms of tax, helps in the growth of GDP and most of all it brings Reputation globally.

The primary disadvantage of outsourcing is un-employment. As per the reports in US outsourcing of 14.3 million which is more than double the unemployment in the country (5.9 million). Critics say if those who are working part-time (4.3 Million) would prefer to continue to work full time then also there will be enough employment vacancies in the US, hence it should be restricted.

As said before along with the advantages there are disadvantages too. But Here what is import is correctly weighing what is a necessity at the point of time. If the US put any laws in forth against the Outsourcing, definitely it will make US lose its position as leader of the global market. Restrictions on Outsourcing results into hiring US employees at higher wages per hour impacts the price of the final product and loss in its position as a competitor. Hence rather than considering the restrictions on Outsourcing, finding an alternate method is the best solution.

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